MARGARET WARNER: With me are two key players in this week's Senate debate, Republican Budget Committee Chairman Pete Domenici of New Mexico, who introduced the resolution being debated this week; and the committee's senior Democrat, whom you just saw, Kent Conrad of North Dakota, who is leading the floor fight against it. Welcome, gentlemen. Senator Domenici, it's been said of this debate that just started this week that this is no ordinary budget battle, that what is that is really about is it's the first decisive test of the Bush $1.6 trillion tax cut -- is that how you see it?
SEN. PETE DOMENICI: Oh, absolutely. Absolutely. And I want to compliment my opponent, the ranking member. I think we've had a very good debate. I think he's quite properly told everybody what the differences are. And I just want to say it's pretty clear that a compelling majority of the Republicans here want to give the president a chance to submit $1.6 trillion to the committees to see if they can write a tax bill that is bipartisan and that would meet with the approval of the Senate and U.S. House later on. So the big difference is we would like to take $1.6 trillion of this $5.6 trillion surplus, and we'd like to give that back to the people by way of a tax cut. The Democrats would like to offer less money to the taxpayer and they have their reasons for it. We think our reasons are just and sound also. We'll pay for every priority we think the American people need and the money left over will be $1.6 trillion, which will go to the taxpayers, who will get to spend it themselves.
MARGARET WARNER: Senator Conrad, do you agree with that, that that's how the public should see it? This is the first big test of the Bush tax cut.
SEN. KENT CONRAD: Oh, I think it is, absolutely. This budget is going to set the framework for the rest of the year, what the priorities are, how much do we dedicate to debt reduction, how much to a tax cut, how much to spending priorities, and really the biggest difference between us is we believe the tax cut should be about half as big and that we should do substantially more debt reduction and that we should also reserve somewhat more resources for improving education, strengthening our national defense, and providing a meaningful prescription drug benefit. I was pleased today that the Republicans acknowledged that we need to do about twice as much as for a prescription drug benefit as what the president has provided in his budget. So we did see movement; unfortunately they financed it by in part taking money from the Medicare Trust Fund, which we think will lead to serious double counting and create fiscal problems in the future.
SEN. PETE DOMENICI: Well, let me just say on that score, just 30 seconds, I don't believe that's the case. I think Chuck Grassley doesn't get animated too often but he did on this one. We expect there to be reform in the Medicare program, but we also expect there to be sufficient money to pay for a reasonable prescription drug plan, either the president's or the Finance Committee's plan. We say look at each one and then we'll decide how much to give them for that.
MARGARET WARNER: Senator Conrad, the other big element in this, in the president's budget, of course, other than the tax cut, is this 4 percent ceiling on the growth of other spending, of discretionary spending. What is it in the Democrats' view that would lose out there? In other words, what -- will it mean programs actually have to be cut or you heard the president say, that's plenty of growth given where we are now.
SEN. KENT CONRAD: Well, the problem is as we saw today, he doesn't have enough money in his budget for a meaningful prescription drug benefit. The Republicans joined us saying you need twice as much as the president has provided. He doesn't provide enough funding for national defense; he doesn't provide enough funding for improving education, and most of all - and we think most importantly he doesn't provide enough to pay down both our short-term and long-term national debt. That's where really the biggest difference lies between us. They want a much bigger tax cut about twice as big, we want much more deficit and debt reduction about twice as big as what they propose. So I think those are the key differences.
SEN. PETE DOMENICI: Let me suggest, we're going to pay down the debt by 2011 and they're going to pay it down by 2009. I'm not sure so anybody is going to get worked up over that. It will be the biggest debt reduction plan we've ever seen in man's history, and that's the president's plan, which is exactly the same as the plan that President Clinton had submitted. But I think the summary is they want to spend more, we want to give more back to the taxpayer. That's in summary.
MARGARET WARNER: But Senator Domenici, what about, do you agree that education, defense and prescription drugs will be short changed as the Democrats think?
SEN. PETE DOMENICI: No I don't think there is a chance that Medicare or prescription drugs will be short-changed. What we are saying rather than put a big chunk of money in and say that's for Medicare, we'd like to see them prepare the Medicare reform bill and then we'll fund it; that's what we say in this budget. In addition the 4 percent seems to us overall to be a pretty good increase in discretionary spending. You can go through and pick things you'd like to add more money for. Education is pretty, pretty heavy in the president's budget. He increased it very much.
MARGARET WARNER: Senator Conrad, let me ask you again, will any programs actually be cut?
SEN. KENT CONRAD: Well, certainly. Unfortunately, we're not going to know that until we see the actual president's budget and we're not going to see it until the budget resolution has been voted on in both the House and the Senate. It's a very curious set of affairs. Not only have we not seen his budget; we haven't even seen sufficient detail for there to be an objective, independent analysis of the cost of his tax cut, and that's part of problem that's occurring here. We're really not going to know the details or specifics of the president's budget before we act and we again won't have an objective independent analysis of the true cost of this tax cut before we've take action.
SEN. PETE DOMENICI: Let me just say, you have some very intelligent listeners, so they know -- when a new Democrat president was elected, they had a budget resolution, went to conference with the House, produced a total budget resolution, ready to go for the new president and we didn't have his budget in detail; we had a vision just like we do from President Bush, so it's about the same thing we did for President Clinton; we're doing that for President Bush also.
SEN. KENT CONRAD: But the difference is, just if I can say, the difference is we had sufficient detail from the previous president, for there to be an independent analysis of the cost his programs. We don't have sufficient detail from this president to have that analysis from the Congressional Budget Office so in a way we're flying in the blind here.
MARGARET WARNER: All right. Let's go to the politics of this before we end. Senator Domenici, today it took Vice President Cheney to break the tie and vote for the Grassley substitute essentially. Is that what will take in this divided Senate to get this through?
SEN. PETE DOMENICI: I don't know. I hope not. But I think that the way the Democrat plan is evolving and what they tell us they want to do, it seems to me that there will be a whole series of votes which will be to add more spending and to take that away that away from the taxpayers - that we plan to give back to the taxpayers -- if that's the case, it may be very partisan, or it may have to have the Vice President there very often because those are very, very difficult issues and we're split 50/50.
MARGARET WARNER: All right. And Senator Conrad, is that your game plan, to continue to propose amendments on popular programs and take the money out of the tax cut?
SEN. KENT CONRAD: Well, I think the most important thing for listeners and viewers to understand is that we're going to be proposing first of all to reduce the tax cut so that we have more money to pay down the short-term and long-term debt of the American people. You know, the president is fond of saying this is the people's money, we ought to give it back to them. We agree with them absolutely that it's the people's money, but it's also the people's debt and we believe most of this projected surplus and remember it's just a projection, over ten years, it's highly unlikely to come true just as it has been forecast. And so we're saying look, let's be cautious and use most of this money to dump the debt to, pay down our short-term and long term debt and the other side said more of this money ought to be used for a tax cut and in addition we say there are certain high priority domestic areas especially improving education and strengthening national defense and providing for a meaningful prescription drug benefit that means more money than the president's proposed. We're glad the Republicans today agreed with us at least on prescription drugs.
SEN. PETE DOMENICI: We didn't agree with them. You know, that's just what he'd like to say because we one upped him today but we didn't agree with him, so let's make that understood.
MARGARET WARNER: All right. Senator Conrad, you have enumerated things popular with Republicans including paying down the debt but the majority leader said yesterday this is essentially a test of party loyalty to the president. Do you think you can peel off any Republicans, the Republicans you need to actually even amend this plan, much less defeat it?
SEN. KENT CONRAD: I don't know. I hope so, but let me just say this: I don't think that the appropriate test is loyalty to the president of whichever party. I think that the appropriate test is what is the wisest course for our nation? What is the best set of choices that we can make to strengthen our economy and our country for the long term? I think that really ought to be the test. And if that's the test, I believe that our proposal will prevail because it's a better set of priorities. It reduces more deficit and debt than the president's plan. And it does provide for these high priority domestic needs of improving education and strengthening national defense and prescription drug benefit -- may not have agreed with us today on how it fund it but they did agree on the amount of money necessary to provide a prescription drug benefit. But we would go along with --
SEN. PETE DOMENICI: I know you're going to run out of time but let me say they don't have any trouble adding $7 hundred billion in new spending and interest. They're using projections but they can spend it; we just can't give it back to the public on those same projections.
MARGARET WARNER: And Senator Domenici, is loyalty to the president an important arrow in your quiver in terms of getting this passed?
SEN. PETE DOMENICI: Well, it's very important but it's not exclusive. We think the president is right. I mean, almost every Republican around wants to give a substantial portion of this bonanza that is paid for by extra taxes the American people are paying -- we want to give it back to the people who brought the money up here, give it back to them so we never have to take it and use it up here. The president happened to be on that side. He increased spending 4 percent. I don't know how much the Democrats would increase that spending. But I think the issue is substantially more spending or substantially more tax cuts for the American people.
MARGARET WARNER: All right. Senators, thank you both. To be continued. Thanks very much.
SEN. PETE DOMENICI: Thank you.
SEN. KENT CONRAD: Thank you.