By
The Associated Press
WASHINGTON - New projections for an enormous $3.12 trillion surplus over the coming decade are proof that "there's enough money" for debt repayment plus more spending and tax cuts, President Bush said yesterday.
The nonpartisan Congressional Budget Office formally presented its new projection, which excludes Social Security, to the Senate Budget Committee yesterday. Details of the huge estimates emerged Tuesday, giving added momentum to Bush's plan for a $1.6 trillion, 10-year tax cut.
"I was pleased to see the CBO number. I think it helps further the case that there's enough money to pay down debt, to meet priorities and to give some of the money back to the people who pay the bills - that's the taxpayers," Bush said in a Cabinet Room meeting with leaders of the House and Senate tax committees.
Democrats emerged from the session not so sure.
"I don't believe that you can do all three of those in an appropriately balanced way," Sen. Kent Conrad, D-N.D. told reporters. Rep. Charles Rangel said Bush, while making a real bipartisan attempt to work with Democrats, made clear in the closed-door meeting that "he's the president and he would have the last word."
"He also made it clear if we weren't positive, he didn't have to be positive either," said Rangel, D-N.Y. "He was smiling when he said it."
Democrats, who mostly prefer a smaller tax reduction than Bush's, argued that the huge surplus projections could prove overly optimistic if the economy's recent sluggish performance becomes a long-term problem.
They also said the costs of Bush's tax cut and expected spending boosts for defense, prescription drugs, education and other programs could erase the surplus and push the budget back into deficit.
"There is risk here," Conrad said at the budget panel meeting. "And that should caution us in terms of the commitments we make."
Conrad said he prefers dividing most of the non-Social Security surplus evenly among tax cuts, new spending and other efforts such as debt reduction. That led the Senate Budget Committee chairman, Sen. Pete Domenici, R-N.M., to jokingly congratulate him for beginning to move toward accepting an ever-larger tax reduction in light of the growing surplus projections.
"Some on the other side are beginning to understand ... that we can't leave that sitting around, it's taxing the public too much," Domenici said.
Eager to cash in on the tax-cutting momentum, Senate Majority Leader Trent Lott, R-Miss., said he believes lawmakers can ship a completed tax package to Bush by Congress' Independence Day recess.
CBO's $3.12 trillion surplus projection, which excludes added surpluses expected from Social Security, is for fiscal year 2002 through 2011. It is this non-Social Security portion of the surplus that both parties feel is available to pay for tax cuts or higher spending.
The new CBO surplus projection is nearly $1 trillion bigger than the agency's last estimate in July, which covered 2001 to 2010. It is $670 billion larger than the projection President Clinton made for 2002 to 2011 before leaving office on Jan. 20.
Noting that the 1997 budget-balancing deal between Clinton and Congress was aimed at balancing the budget by 2002, Domenici said, "It's an understatement to say we've more than exceeded that goal."
The Congressional Budget Office also expects Social Security surpluses to total $2.49 trillion from 2002 to 2011. Both parties have long called for using all of that to reduce the national debt. During his presidential campaign, Bush proposed using some of that money also to help set up individual investment accounts.
Combined, the overall budget surplus would be an astronomical $5.61 trillion over the decade, CBO estimated. Actual surpluses could be smaller than the budget office estimates if the economy hits a prolonged slowdown.
Underlining that uncertainty, about two-thirds of the projected non-Social Security surplus for the decade - or $2.1 trillion - would come in the final five years of the 10-year period. Most economists agree that it is extremely difficult to predict accurately that far into the future the performance of the economy and of the federal budget.
The CBO figures are significant because Congress usually uses the agency's estimates when it does its budget work. The Bush administration, in office for less than two weeks, may not produce its own surplus and economic estimates until at least next month.
Reflecting recent signs of an economic slowdown, CBO lowered its estimate of U.S. economic growth for 2001 to 2.4 percent. In July, it had estimated 3.1 percent growth for 2001. Lower economic growth results in smaller federal surpluses, since the government collects less revenue and spends more to help low-income people.
The budget office expects the economy to become healthier next year, however, and to grow at a faster rate over the entire decade than it estimated in July.
