Return to Transcripts main page

CNN Live At Daybreak

Budget Surplus Is Gone, Social Security Surplus May Be Next

Aired November 30, 2001 - 06:10   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.
DARYN KAGAN, CNN ANCHOR: In Washington, a flood of deficit spending. Just say the words social security. And recipients and contributors alike say, OK, what do you have now? Well, the now what is, don't bet the farm that your social security will be there when you need it.

CNN's Brooks Jackson follows the money.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): When the Twin Towers collapsed, something else was going too: those huge federal budget surpluses -- gone.

RUDI PENNER, FORMER CBO DIRECTOR: We're talking about an overall budget deficit for 2002, and the old goal of trying to have a surplus as big as the social security surplus now looks totally beyond reach.

JACKSON: When President Bush took office, growing surpluses were projected far into the future. Back then, the Congressional Budget Office projected a $359 billion surplus for the fiscal year that began last month, and more each year after. But in June, the president signed a huge tax cut.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The surplus is not the government's money.

JACKSON: Meanwhile, Wall Street struggled, the economy weakened and those January projections wilted. By August, about all that was left was attributable to social security taxes.

Then, came September 11, the travel industry devastated, the economy pushed deeper into recession. And those August projections were slashed again, this time by a bipartisan analysis of the House and Senate budget committees. Wednesday, the president's budget director said even those surpluses were gone.

MITCH DANIELS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: It is, regrettably, my conclusion that we are unlikely to return to balance in the federal accounts before possibly fiscal '05.

JACKSON: And by Thursday morning, Democrats were saying, it's all the president's fault. SENATOR TOM DASCHLE (D), MAJORITY LEADER: And the reason why we're facing that deficit is because of the tax cut. So I hope that no one will be misled or in any way fooled by this notion that somehow it's the downturn of the economy, or it's the war on terrorism.

JACKSON: Where did the money go? Let's look at bipartisan figures for the current fiscal year.

That $359 billion surplus was cut just $38 billion this year due to the tax bill, according to the CBO. Bigger tax cuts come in later years.

Other factors took away another $145 billion, even before the September 11 attacks, mostly spending increases and a weaker economy producing less tax revenue.

Since then, according to the budget committees, the economy has taken away $80 billion more, miscellaneous spending increases, $10 billion, emergency anti terrorism spending, $25 billion, $6 billion in aid to airlines, $4 billion more in interest payments, leaving an estimated $52 billion surplus this year, all social security money, by the way. And Congress is debating measures that would spend far more than that just to stimulate the economy.

PENNER: My own guess is that by the time the dust settles, we'll be talking about a deficit in the $50 to $100 billion range.

JACKSON (on camera): So it's not just the tax cuts. It's that, and the economy and the war and a sharp change in congressional thinking or spending social security money used to be unthinkable, and now is unremarkable.

Brooks Jackson, CNN, Washington.

(END VIDEOTAPE)

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.