BUDGET DEBATES

October 26, 1999
		House Majority Leader Dick Armey and President Clinton's National Economic Adviser Gene Sperling discuss the budget debate in the House.

Oct. 1, 1999: Congress welcomes the new fiscal year, but with many old problems. Sept. 23, 1999: Two Congressmen on the president's veto of the Republican budget. June 28, 1999: The White House budget director discusses the budget surplus. March 22, 1999: The Senate Budget Committee approves the Republican budget plan. March 9, 1999: From budget deficit to surplus. Feb. 16, 1999: Republicans announce a major tax cut proposal. Feb. 1, 1999: Details of the president's fiscal year 2000 budget proposal. Feb. 1, 1999: OMB director Jacob Lew and Sen. Pete Domenici on the president's 2000 budget proposal. Browse the NewsHour's coverage of the budget.     The White House Office of Management and Budget Senate Committee on the Budget	MARGARET WARNER: For more on the conflict over completing the year 2000 federal budget, we turn to two key players in the ongoing negotiations: Republican Congressman Dick Armey of Texas, the House Majority Leader; and Gene Sperling, President Clinton's national economic adviser. Congressman Armey, you're nearly a month into the new fiscal year and there's still no final budget. What is the hang-up? REP. RICHARD ARMEY: Well, actually this is an... this is a wonderful time for us, quite frankly. We have an opportunity of a lifetime to save every dime of Social Security, to use it for debt reduction, to prepare the stage to save the system and make it work for our children. None of us ever thought we'd get such an opportunity. We went to the White House. The President of the United States has finally accepted our priority here. He's agreed with us. We're not going to spend Social Security. It's tough to work out the bills when you have that kind of a hard barrier against spending increases. We've made a lot of tough trade-off decisions but we're getting there and we will complete the last bill this week and we will prove that we can, in fact, complete the entire budget for next year without spending a dime of Social Security for any purpose other than Social Security, and that quite frankly will be the first time in 30 years that Congress has done that.
	Head-to-head
	MARGARET WARNER: Gene Sperling, do you agree there's no real hang-up or difference here? You all agree on all the priorities? GENE SPERLING: (Laughing) Well, we are glad that after the President put forward his State of the Union that said we ought to pay down the debt, use Social Security surplus to pay down the debt and use the benefits for Social Security, Republicans have at least decided they want to mouth the same words the President has. Unfortunately, their actions don't quite match up to the rhetoric. They've really ended up, I think, Margaret, in the worst of all worlds budget. First of all they're saying that we ought to do an across-the-board cut that would have everything from education to nutrition to veterans to air traffic control, at the same time, at the same time they're raising their own pay and including unprecedented pork and earmark projects. That's one bad part. The second bad part, that doesn't even prevent them from going into the Social Security surplus. The Congressional Budget Office, their scorekeeper, shows that they pay or are spending about 18 to 20 billion from the Social Security surplus. Their across-the-board cut would only cover about a fourth of that. So what they've done is come up with a plan that is going to cut across the board at the same time they're raising their own pay and still probably spend $15 billion from the Social Security surplus. So I think that we need to do is start being willing to admit the truth, which is that their plan is going into the surplus. We need to make some tough choices -- maybe be willing to raise tobacco prices, make polluters pay for some of the Super Fund problems and do some of the tough choices so we can honestly say to people that we are protecting Social Security surplus and doing it without having to do these across-the-board cuts or not funding smaller class sizes or more cops on the street or a stronger environment. REP. RICHARD ARMEY: Well, gee, Margaret, let me just respond. I'm frankly amazed at Gene Sperling. It is only less accurate than it is less charitable. The fact of the matter is when the President proposed his budget it's a matter of record. He said he wanted to spend 40 percent of the Social Security, Margaret, on other things. He asked for.... GENE SPERLING: That is not so. REP. RICHARD ARMEY: I can show you the tape of the speech, Gene. GENE SPERLING: Margaret, I'd like to reply. MARGARET WARNER: Let's just let Congressman Armey finish, and then, Mr. Sperling, I'll get back to you. REP. RICHARD ARMEY: Gene, Margaret, first of all, I listened to Gene with a lot of patience although some amusement. The President wanted to spend 60 percent. His budget asked for $157 billion increase in budget. We, in fact, do save every dime for Social Security. Gene Sperling knows very well when he says the Congressional Budget Office says we're spending Social Security, he's referring to their response to a hypothetical letter, not their measurement of our plan. We have a letter and he knows full well we have a letter that says our plan does not cut Social Security. Now, here's the difference.... MARGARET WARNER: Congressman, congressman, let me ask you to clarify one thing though. Are you all determined to go ahead with this across-the-board spending cut that's been talked about but so far has not been introduced? REP. RICHARD ARMEY: All right. Let's go back. It's the across-the-board reduction in spending for administrative waste and inefficiencies over the discretionary part of the budget and, yes, indeed, Gene Sperling, it does apply to our own salaries. I mean, I cannot remember ever having heard one person in this town speak for such a limited amount of time with so much inaccuracy as I just heard from Gene Sperling. MARGARET WARNER: All right. Let's stay on the subject if we can. REP. RICHARD ARMEY: It's really disappointing because I know the President wants to work with us. He's eager to work with it, and he really needs better support from his staff than what he's getting from Gene Sperling tonight.
	One percent across the board?
	MARGARET WARNER: Gene Sperling, what is wrong -- now let me just ask you this. What is wrong with a 1 percent or 1.4 percent across-the-board spending cut as a way to resolve this situation? GENE SPERLING: Margaret, there's two things wrong. First of all, it perpetrates a fraud that all they need to do is do a 1 percent across the board to not have to spend Social Security surplus. This isn't just us. Margaret, I'm going to show this. I'll cover my face with it. It says the GOP spending bill taps Social Security surplus. You can find headlines like this in every major paper in the country. This is what the Congressional Budget Office shows, Margaret. And so it's really terrible that the leader comes on and suggests that when we are saying what the New York Times, the Washington Post, the Wall Street Journal have all reported, that's wrong. Now, a 1 percent across-the-board cut would cover about four or five billion. You have right there the Washington Post showing that the Republicans are spending $18 billion. So, first of all, it's not going to prevent them from spending the Social Security surplus. Second of all, it's a failure in governing and priorities. Let's think about it. We think that they would need a 9 percent across-the-board cut to not go into Social Security. They say 1.4 percent. Let's take one example, Title 1. That gives extra reading and science and extra help to children in high poverty schools. Under our estimate, a million less children would get that help. If you take their 1.4 percent, Margaret, it would be about 160,000. Whether you buy theirs or ours, what kind of governing is it to do an across-the-board cut that will hurt education for hundreds of thousands of children when they're giving themselves a pay increase when we could go through a budget in an intelligent way and take out projects we don't need like an LDH-88, amphibious ship, that happens to be in the State of Mississippi that costs $500 million and is not requested this year by any part of our military. MARGARET WARNER: Congressman Armey, could you take it out of what the President is calling pork barrel spending - in effect, Senator John McCain said this weekend that he thought there was $20 billion in the defense budget of pork that, you know, could be pulled out and you wouldn't have this problem. REP. RICHARD ARMEY: Well let me just say first of all, we worked very hard on these bills. The fact of the matter is, again, I'll say this is 1 percent reduction in administrative budgets of the different agencies. The agencies are not going to shut down programs of personnel. Certainly the President wouldn't allow that. The fact is the President's political advisor here, Gene Sperling, just made an interesting political discussion here. But we will prove when we complete this work that the CBO will score this as not touching Social Security. The President has pledged to work with us. I hope we can get his staff to support him in that effort. This is a wonderful opportunity, and I really I guess it's kind of a shame to see Mr. Sperling on national TV raining on a parade that's going to result in so much good for the American people and will be the result of so much hard, decent, honest work by so many people to, for him to just sit there and mischaracterize and disparage motives as he's done as been a real disappointment for me. I really quite frankly expected better from somebody in the White House in light of the President's commitment to work with us to complete this job. GENE SPERLING: You know, Margaret.... MARGARET WARNER: Mr. Sperling, let me ask you something… GENE SPERLING: That's ludicrous for the following reasons. MARGARET WARNER: Mr. Sperling, explain this to us: Why - GENE SPERLING: After the leadership - MARGARET WARNER: Mr. Sperling. GENE SPERLING: The only person who broke the pledge to not start doing Social Security was Congressman Armey. He went up with a little credit card. You know it's really terrible that you can be the third-ranking member and come on TV and try to suggest these types of things. Your own Congressional Budget Office in every major paper has suggested this. John McCain, a Republican member of congress, Senator, candidate for President, said yesterday how can you possibly cut everything across the board including Meals on Wheels and not do something -- more intelligent form of cutting? Margaret, why would we want to make tough choices? Why would we want to stand up to environmental polluters the tobacco industry? Those aren't easy. The reason we want to do those things is that we are trying to be constructive in finding real resources so that we don't have to tap into Social Security surplus. Why would we want to make all those tough choices if we didn't honestly believe that that was the credible way to present a balanced budget that doesn't spend Social Security surplus?
	A surplus toward the national debt?
	MARGARET WARNER: Congressman, if in the minute-and-a-half we have left we could avoid ancient history let me ask one bottom-line question: Is it the case, however, that really the differences between you two aren't that huge and that however you resolve this particular dispute, there is going to be about $100 billion extra surplus that will not be spent and will go toward the national debt? REP. RICHARD ARMEY: Absolutely. We have it from the Congressional Budget Office. We'll have about $137 billion worth of real debt reduction. We did a hundred and ten last year; we did about fifty the year before. This is something that the American people waited for decades to see. I'm excited about it. I'm enthusiastic. I'm encouraged by the work at the White House and we're going to get this job done. And what does that mean? It means to me that we have an opportunity as a generation of legislators to honor our children's payment of their Social Security taxes on behalf of the retirement security of their grandparents, what a wonderful opportunity we have. And we're going to get it done. And I have to tell you it's very, very exciting; and I hope the White House will learn to really enjoy and share in this enthusiasm that we have going for this opportunity we have before us. MARGARET WARNER: Gene Sperling, do you agree with that conclusion, that however you work out this current altercation, you are going to put away at least $100 billion -- if not more -- toward the national debt? GENE SPERLING: Margaret, because in the 1998 State of the Union the President said hold it, let's save Social Security first, let's save the surplus first, because the President's leadership we have that commitment in this town to save Social Security surplus to pay down the debt - because the reason we're in the situation we are is quite simple. The President did not allow a large and exploding tax cut to be passed that would have drained these surpluses. Because he did, because he both stood up to those who wanted to use the surplus for the highway bill and those who wanted to use the surplus for large, exploding tax cuts, we are now going to be able to probably pay down about $140 billion in debt over two years. That's a remarkable achievement. And it is due, and let me say one thing, it is due in part to the 1997 balanced budget agreement that was done in a bipartisan way between the administration, the Congress. It was largely due to the 1993 debt reduction plan that this President and Democratic members had. MARGARET WARNER: Thanks, Mr. Sperling. All right. Thank you, gentlemen, we'll leave it there.