- The Washington Times - Wednesday, January 17, 2001

The incoming Bush administration yesterday dismissed the outgoing Clinton administration's "very rosy" economic assessment and warned liberals of a "sea change" in fiscal policy that will include a robust tax cut.
"Get used to it, Washington," declared White House Press Secretary-designate Ari Fleischer. "President-elect [George W.] Bush does not believe that all money belongs to the government, and the people get to keep what the government lets them.
"The government gets to keep what the people let the government receive," he added. "It's going to be a sea change, and he's proud to make it."
Mr. Fleischer's pronouncement was seen as a shot across the bow to liberal Democrats who believe they can dissuade the incoming president from an across-the-board tax cut.
Although the Bush team has tried to refrain from criticizing the outgoing administration, yesterday's missive signaled a heightened determination to stay the course on tax cuts.
Mr. Fleischer was responding to a White House report that predicted the federal budget surplus absent Social Security and Medicare will total $1.6 trillion over the next decade. Republicans called the report overly optimistic in the short term and overly pessimistic in the long term.
"Their projections of growth this year and next year are unusually high so high that the blue chip forecasters disagree with them," Mr. Fleischer said. "Their projections of growth in the out years are unusually low. The blue chip estimators disagree with them."
The numbers were contained in the Office of Management and Budget's fiscal 2002 outlook, which was released yesterday. The White House put together its forecasts in November to provide a budget starting point for the next administration.
Since November, however, private economists have dramatically cut their growth forecasts for 2001 to reflect the steep drop in economic activity with some warning of a growing risk of recession. Yesterday, Mr. Fleischer said the Bush tax plan anticipated just such a slowdown.
"He said at the time he announced his tax cut in November or early December of 1999 that it can be an insurance policy against any economic downturns," Mr. Fleischer said. "There certainly is some element of stimulus to it, but there are plenty of other good reasons to cut taxes, as well."
He added that a tax cut "means people have more money so they can pay down their credit card debt, more money to invest in education, more money to invest in child care.
"It's their money," he concluded. "They should be able to spend it as they see fit."
The White House acknowledged its assessment of the economy is not infallible.
"No economic forecast is accurate all the time, but the administration believes that it makes more sense to plan for middle-of-the-road conditions," the White House report said.
OMB warned that overestimating economic performance, as have previous administrations, could encourage excessive long-term commitments and lead to "spiraling uncontrolled deficits and debt."
The Bush camp, which has hinted that it believes the economy is already in recession, is planning a tax cut worth about $1.6 trillion.
Republicans insist growth over the long run will be higher than 2.9 percent and accused the White House of "low-balling" its estimate to minimize surplus projections.
Senate Budget Committee spokesman Bob Stevenson said: "The view of the Republican staff of the budget committee is that [the White House] is low-balling the revenue numbers to reduce projected surpluses to make it more difficult to cut taxes."
The White House projects real growth rates of 3.2 percent from 2001 through 2005, with growth settling to 2.9 percent by 2011.
By comparison, growth in the gross domestic product the total of the country's output of goods and services was 4.2 percent in 1992 and a blistering 5.2 percent in 2000.
Mr. Stevenson said the Congressional Budget Office will predict higher economic growth in later years and a surplus over the next decade of about $2.6 trillion, without counting the Social Security and Medicare trust funds.
Mr. Clinton's budget estimates are based upon a so-called current services baseline, the amount of money it would take to fund federal programs at their current level, taking into consideration inflation.
"They have hyped up spending to an unusual degree," Mr. Fleischer said. "They've inflated domestic discretionary spending every year."
Under White House spending assumptions, the federal budget surpluses would total about $5 trillion from 2002 through 2011. Minus short-term surpluses generated by Social Security and Medicare, the surplus shrinks to about $1.9 trillion over the decade.
Further reductions to OMB's baseline projections take into account "anomalies" in the rules of budget estimating. For example, tax breaks set to expire must be assumed to expire in the baseline. Such an assumption makes little sense when Congress rarely has let those provisions expire in the past.
"A more prudent approach would be to include these expiring provisions as part of the baseline before considering further policy changes," the OMB wrote.
"We will not be using these estimates," Mr. Fleischer told reporters. "We'll be using more updated, more accurate estimates."


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