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American Morning
Budget Battle May Necessitate Dipping Into Social Security
Aired September 10, 2001 - 11:33 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: President Bush travels to Florida today to pitch his education plan and to prod law makers into action, but he does so against the backdrop of a growing battle over the budget surplus, and the blame game over who is responsible for its shrinking size.
Joining us now to talk about it, CNN senior White House correspondent John King. John?
JOHN KING, CNN SENIOR WHITE HOUSE CORRESP.: Leon, a tough week for the president. Some tough choices facing the president. The budget battle always takes place in the fall, this one of course taking place amid signs the economy continues to struggle. Last week's unemployment data, the latest. The White House looking at a key consumer spending report due out today as another indicator. The president facing pressure from some Republicans to cut taxes again, but the Democrats would criticize that. One proposal also, to keep a political promise to not dip into the social security funds.
Some in Congress say, let's have an across-the-board spending cut. Now, economically, some economists would say that's a bad idea. The government should not cut spending just when the economy is struggling to begin with, and the Democrats will criticize the fairness of that. They will say, so you're going to have an across- the-board cut? Cut the same amount of money, say, from the fund you use to buy paper and paper clips for the government, than you would from the money that goes to education.
So the president facing some tough choices as he goes into his very first major budget battle with the Congress, the economy overshadowing every single debate. Leon.
HARRIS: John, you just mentioned a moment ago, that the Republicans, there are some out there already talking about another tax cut, like the capital gains tax cut specifically.
What is the president saying about that, though?
KING: Well, the White House was very cool to the idea at the beginning. Now the White House says it has an open mind, and will look at it. That, a reflection of the political dynamic here in Washington, the increasingly pressure, especially from congressional Republicans. Remember, they face the voters first, next year. The president still has three years before he does. They think the president and the Congress need to do something because of the compiling data showing a still-slowing economy.
One of the arguments against that, though, is the Democrats will argue this a capital gains tax cut generally benefits wealthy investors and big corporations. So, again, a fairness argument as you get into the politics of this. And some also would say that selling off in the markets, something that would happen if you had a big cut in the capital gains tax, might also scare away individual investors, like those who would want to put money into 401(k)s or bond funds.
HARRIS: John, you know we've been hearing the Democrats, many of them saying that -- bringing up the fact that this budget is going to result in the tapping into of the social security trust fund.
What is the president's thinking about that right now? He's made a promise in the past to not touch social security. Is the thinking there changing?
KING: Well, the thinking there is changing by necessity, simple math. One of the things the administration will say, that if it has to dip into the social security surplus in the current fiscal year, the budget -- the government budget that expires -- the government budget year that expires on September 30th, the Bush administration will blame the Clinton administration, saying that that was a budget it largely inherited. Democrats, of course, will say presidents are elected to make tough choices and that Mr. Bush should put forward his plan to prevent that from happening.
From an economic standpoint, again, many economists would say it's not such a bad thing to dip into the social security surplus, the government has done it before, over and over and over again. And that cutting spending would hurt the economy right now. But that is a very strong political promise made by Democrats and Republicans, and the major topic in the debate right now.
HARRIS: John, one of the leading Democrats -- sorry, Republicans, is speaking right now.
John King at the White House, we thank you very much.
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