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American Morning

New Math Finds More Dollars for President's Programs

Aired August 16, 2001 - 10:34   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.
STEPHEN FRAZIER, CNN ANCHOR: Welcome back to CNN Live This Morning, where it seems social security is no longer in a lockbox. The latest indications are that President Bush and his allies in Congress are now ready to tap social security reserves for other budget expenses.

The story now from CNN White House correspondent, Major Garrett, who is traveling with the president in Crawford, Texas. Major, good morning.

MAJOR GARRETT, CNN CORRESPONDENT: Good morning, Stephen. Well, I would say to your introduction, not exactly. There's some new math in Washington, some new math the White House has come up with and it's arrived at a convenient time.

What is that new math? Well the White House says, through its spokesman Ari Fleischer who talked to CNN just a few moments ago, that the White House has changed the way it accounts how payroll taxes come into the government. As a result of that change in accounting, the government has found a few extra billion dollars.

Why are those billion dollars important? Well, because the economic slowdown has reduced overall tax revenue to the government, and there are some in Congress who believed it has reduced it so far that this year's surplus might be smaller than the social security surplus. Meaning that Congress and the White House may be forced to tap into what had been off-limits in that lockbox you referred to.

Now, let's go through some of the numbers here. The projected surplus for social security payroll taxes this year is $157 billion. The White House says that number holds, and the White House will in no way touch that money. What does that money do? Well, it buys bonds. What do those bonds do? They pay off debt and social security, which allows social security solvency to extend many years in the future.

What Congress says is it may be forced to spend money below that $157 billion, tapping into that social security surplus, that lockbox you referred to. But the White House says absolutely not, thanks to this new math. The new math and the new arrival of this extra money will allow it to still meet all of the president's budget obligation, it says, without tapping into that social security surplus.

But I guarantee you, Stephen, Democrats on Capitol Hill, Democrats across the country are going to have a different set of numbers, a different set of math. They say it's rooted in the old way Washington used to count this money, and they'll say the president is in fact tapping into that surplus. Stephen.

FRAZIER: I can hear them now. I can imagine, Major, we're going to hear about fuzzy math in a minute. But this is basically an accounting change. Is that right?

GARRETT: It's an accounting change. Here are some of the other numbers. Ari Fleischer says, the White House press secretary, that this new method of accounting basically accounts for three years of miscounted payroll tax revenue sent to the government by a total of $5.6 billion.

But he also says the White House is changing another number, which is money that had been counted in that overall budget surplus that was really devoted to postal service retiree benefits. He says they're taking that out. So, subtract $1.3 billion.

The aggregate number, he says, $4.3 billion, which is going to leave enough money for the government to spend all the things it wants to do on education, defense, environment. All the priorities without touching that social security surplus.

But let's face it, Stephen, there's going to be a lot of disagreement about this math and a lot of political fighting about who or who is not touching that social security surplus.

FRAZIER: Well there's no disagreement about how nicely you explained all of that. Major Garrett from Crawford, Texas. Thanks a lot, Major.

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