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CNN Live At Daybreak

Debating the Budget

Aired August 23, 2001 - 07:54   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.
COLLEEN MCEDWARDS, CNN ANCHOR: Well when word first came that President Bush was going to cut taxes, many Americans started looking for their check in the mail. But with the stagnate economy, will people end up paying more than they bargained for, especially with the budget surplus now down some $120 billion?

Well joining us to give opposing views on this are Robert George, an editor with the "New York Post" and a panelist on CNN's "TAKE 5" as well. And Faraj Chideya, a journalist and author who runs the Pop and Politics Web site.

Thanks both for being here.

ROBERT GEORGE, "NEW YORK POST": Good to be here, Colleen.

FARAJ CHIDEYA, JOURNALIST: Thank you.

MCEDWARDS: Robert, I'm going to start with you and I want to spend just a little bit of time on the numbers because I know you guys disagree on this, but let's look at the current estimates. The government's to run a surplus of about $600 million, that's the surplus outside of Social Security. A lot of people say that is a negligible amount. You've got a $1.9 trillion budget, that what essentially is happening are people are watching that surplus dry up.

Robert, what do you think?

GEORGE: Well, what's actually happened is, sure you've got -- you've got less revenues coming in because of the economic slowdown. But what's happened is, if you go back to last November and December, Congress and the -- and then President Clinton sort of went on this nice little spending spree where they all added about $50 billion on -- into the appropriations bills. So the combination of this and, yes, obviously you have the $38 billion going out because of the -- of the tax rebates. Yes, you do have a smaller -- you do have a smaller -- do have a smaller surplus, but the money going back to American taxpayers I would argue is a good thing whereas the extra government spending is a bad thing.

MCEDWARDS: So even with a dwindling surplus you say keep going with the tax cuts?

GEORGE: Yes, absolutely. And you also have to keep in mind with this tax cut, the tax rebates in particular, are something that the Democrat Congress insisted as a price basically to pass the -- to pass the tax cut. Republicans were a little bit reticent -- hesitant, I should say,...

MCEDWARDS: Right. Right.

GEORGE: ... to pass -- to pass that.

MCEDWARDS: All right.

GEORGE: But the...

MCEDWARDS: Faraj, I know -- I know you want to challenge this so let's get you in here.

CHIDEYA: Well, I think that when you really crunch the numbers the overall surplus that remains after the cushion that's needed for Social Security really drops to something like a few billion dollars -- $1 billion to $6 billion, which, in government terms, is pretty much enough to get you subway fare from, you know, Penn Station down to the East Village.

And really what we're talking about is the fact that these tax cuts that the Bush administration proposed are just so large that the whole idea of a surplus is gone. Now I think that there's one positive upside to that and one positive upside only which is that Americans react much better when our back is to the wall. When we don't have any money, we have to really think what our priorities are.

So when we had a lot of money we said, oh, health care, that's a good idea, let's think about it. Now we have to realize that there are tens of millions of Americans without health care. We've decided to give back these tax rebates, largely to wealthy Americans, and poor and middle class and working class Americans still don't have health care. A lot of children are still not being educated, and we have to think about what our priorities are. Tax cuts were never the top priority for most people, not even most people who voted for the Bush administration. We have to think about what we're doing.

GEORGE: Well, I do partly agree with Faraj in the sense that the shrinking surplus does force us to prioritize. And I think we'd have to ask ourselves, you know, can we afford -- both the Republicans and the Democrats are still talking about prescription drug benefits for Medicare and so forth. You know that's another -- that's another $35 billion to $40 billion at minimum. Is it something that we can afford, that's something that everybody's going to have to sit back and assess.

MCEDWARDS: And just really quickly, Faraj, you're going to get the last word here because we have to go, what if -- what if the projections for subsequent years are wrong?

CHIDEYA: Well, I think that basically the projections are very fuzzy in part because we are in what some people are calling the first global recession because all of the global markets are linked. Right now all of the global markets are falling in tandem. The European markets, the Asian markets are all tanking. We don't even know what the projections are. What we do know is that these tax cuts are going to get more massive over time. We should really think about adjusting those.

MCEDWARDS: All right, got to leave it there, I'm sorry.

Faraj Chideya, Robert George, thanks both for your time this morning, really appreciate it.

GEORGE: Thanks, Colleen.

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