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American Morning

Administration Says That Budget Will Not Be Balanced For a Few Years

Aired November 29, 2001 - 09:26   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.
PAULA ZAHN, CNN ANCHOR: Let's bring Kelly Wallace into the picture who has more from outside the White House. Good morning. How are you doing this morning?

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Paula. Well, certainly the gloomiest assessment yet coming from the Bush White House. And, Paula, you know it was just several months ago when the country was projected it to have surpluses over the next several years. Well, that all has changed.

Mitch Daniels, the White House budget director breaking the news yesterday. He said, based on the fact that the country is in a recession, based on the cost associated with the September 11th terrorist attacks, and based on some shrinkage when it comes to long- term economic growth, he said the country will return to the red this year and remain there for at least a few years. Here's, first, what Mitch Daniels had said yesterday.

(BEGIN VIDEO CLIP)

MITCH DANIELS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: Adding these factors together, it is regrettably my conclusion that we are unlikely to return to balance in the federal accounts before possibly fiscal '05. That is within the next two years. Things will have to break right for us to do that.

(END VIDEO CLIP)

WALLACE: Now, Paula, the big question: Why did Mitch Daniel say this now? Well, administration officials say his words really reflect the new reality, but also a message to lawmakers not to push for more federal spending, saying that the government simply can't afford it, and you know the backdrop here, this is as Democrats and Republicans start negotiating over an economic stimulus package.

The administration is saying the best way to simulate economic growth and get the country back to surpluses is to push for tax cuts. Some Democrats, though, want more federal spending to help the unemployed, so, you know, the blame game beginning because Democrats are saying part of the reason the country is in this mess right now is because of the president's more than 1 trillion dollar tax cut pushed earlier in the year. So, the blame game beginning, and the two sides still trying to negotiate over that economic package. Paula. ZAHN: Well, we'll be counting on you to keep us posted on how that debate fires on. Thanks Kelly.

WALLACE: We'll do our best.

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