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American Morning

White House Math Finds New Money

Aired August 16, 2001 - 11:32   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: The White House adding billions of dollars to the federal budget surplus, using an accounting maneuver that the Democrats may call a gimmick. CNN White House correspondent Major Garrett is live now from Crawford, Texas. He explained this to us a little while ago, and we're going to need to hear it again, Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: I am sure you will, Stephen. All right.

Is this new math? is this fuzzy math? Is this an accounting gimmick or is it accounting accuracy? Well that's going to depend a lot on what party you're in. If you're a Republican you are probably thinking it's new math and it's accurate. If you're a Democrat you probably think it's fuzzy and a gimmick.

What are we talking about? Well, we're talking about a coming struggle in Washington over the social security surplus, something that both parties have said can not be touched. President Bush has also said it can't be touched as well.

Although, Office of Management and Budget, which is the agency the White Houses uses to do all of its federal accounting, says that it has found about $5.6 billion in extra revenue. Where did it find it?

Well it found that money by going back over payroll tax receipts received back through years 1998, '99 and 2000. It says that revenue should have been counted, but it wasn't.

Well, what does all this mean? It means that there is now $5.6 billions extra that Washington can spend if it wants to. With that $5.6 billion, the White House will argue that social security surplus will not be touched in any way, shape or form this year, no matter what Congress does.

Now Democrats will say that's not true. You just can't find this kind of money. And because the White House can't find it, in the opinion of Democrats, it will have to touch the social security surplus.

One last point: What is the social security surplus? Well, social security is financed through payroll taxes. There's a surplus of that revenue right now, it's $1.57 billion. Everyone has said we can't touch that. Well, now we're going to find out, when the Republicans and Democrats argue about this, who in fact is touching it and who is not. Stephen.

FRAZIER: Major, we've got to move on. But just as I say thank you, just set me straight here. Is this like pulling on a pair of pants and finding a $20 bill that you forgot you had? Are you considering it new money?

GARRETT: Well Washington does that a lot. And you can say to yourself, it's awfully convenient to find this money just now when there's so much pressure on the Bush administration to make sure it doesn't touch that social security trust fund. They say: it's only a coincidence, we're all in pursuit of pure accuracy. That's what they say.

FRAZIER: Major Garrett in Crawford, Texas, with the president. Major, thanks very much.

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