- The Washington Times - Monday, August 20, 2001

House Minority Leader Richard A. Gephardt said yesterday he is prepared to implement across-the-board spending cuts in domestic programs to ensure a balanced budget and avoid dipping into the Social Security trust fund.
"We need a new budget. We need to review our spending. We need to look at what we're doing because we've got a Social Security challenge and a Medicare challenge in front of us, and we need to deal with it," the Missouri Democrat said yesterday on NBC's "Meet the Press."
Asked to identify programs President Bush should reduce in fiscal 2002, Mr. Gephardt said: "You can make cuts in defense. You can make cuts in domestic programs."
Pressed for examples by host Tim Russert, Mr. Gephardt said, "You can go down the whole list: education, health care."
"Across the board?" Mr. Russert asked.
"You can go across the board. You can do it to specific programs," Mr. Gephardt replied.
The important thing, he said, is for the president to "come in with a new budget right now, this fall, to avoid this problem of going into the Social Security trust fund."
Startled by Mr. Gephardt's recommendations for cuts in programs long championed by Democrats, Mr. Russert asked the House minority leader if he would support Mr. Bush in an effort to set forward a proposed new budget that included reductions in defense, education, environmental spending and social programs.
Mr. Gephardt said: "You don't have to reduce that much in order to keep out of Social Security and Medicare. It would take minor adjustments in this budget. I would support him."
Mr. Bush's economic advisers, in appearances on yesterday's news talk shows, said the administration will not use the Social Security or Medicare parts of the budget surplus for spending increases or tax cuts.
"The president's committed to not touching the Social Security surplus, period," Lawrence Lindsey, the president's chief economist, said on "Meet the Press."
Mitchell E. Daniels Jr., director of the White House Office of Management and Budget, echoed that sentiment in interviews on "Fox News Sunday" and CNN's "Late Edition." He repeatedly stressed that there will be a $160 billion surplus at the end of the current fiscal year, the second-largest surplus in U.S. history.
But Mr. Gephardt and other Democrats countered that the combination of a slowing economy and Mr. Bush's 10-year, $1.35 trillion tax cut will make it necessary to dip into the Social Security and Medicare portions of the surplus. The Democrats say the tax cut has depleted too much of the surplus to meet government spending priorities.
"That surplus is all but evaporated, and now we are knocking on the door of raiding the Medicare and Social Security trust funds just to maintain the expenses of government," Sen. Richard J. Durbin, Illinois Democrat, said on CNN's "Late Edition."
Mr. Gephardt also blamed Mr. Bush's sweeping tax cut for the shrinking budget surplus: "We said at the time the tax cut passed that we thought it was too large and too unfocused, and it would cause us to go into Social Security and Medicare, and that's what's happening right now."
The House minority leader made it clear he is not calling for the president's tax cut to be repealed or delayed.
"No, I don't think you need to do that. I do think the economy can come back. I hope it does come back," Mr. Gephardt said.
But "maybe you could put a trigger" on the tax cut, "so that … we don't go back into this taking money out of Social Security," he added.
A trigger mechanism would block future tax reductions if the nation's economic growth does not meet the economic projections on which the Bush tax-cut bill is based. Mr. Gephardt pointed out that Sen. Olympia J. Snowe, Maine Republican, was among a bipartisan group of senators who had called for the Bush plan to be tied to a trigger mechanism because of concerns it might create a deficit.
Asked why he would not favor reducing or eliminating the president's tax cut to ensure the protection of spending priorities, the Missouri Democrat said, "I'm glad we have this tax cut going out, because it might help us get out of the slowdown that we're in."
Mr. Gephardt said no one should be surprised by his assessment. Democrats, he said, "advocated getting some of this tax cut out there this year," believing "as the administration does, that it might help get this economy moving again."
He recalled that Democrats supported a bigger tax cut this year — $60 billion — than the $40 billion stimulus that was approved in Mr. Bush's tax-cut package.
But Mr. Gephardt said Democrats had apprehensions about the overall size of the tax cut. "When you have this large of a tax cut, mainly going to people at the top of the income ladder, you cause higher interest rates long-term. And that, I think, is now causing some of our economic problems," he said.


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