MONEY TROUBLES

	October 1 ,1999
	Congress starts a new year with some old money problems. Kwame Holman has the story.

KWAME HOLMAN: There was no times square- style celebration on Capitol Hill last night. The champagne didn't flow nor were there repeated choruses of Auld Lang Syne. However, the new fiscal year, the first of the new millennium, was ushered in at midnight with some fanfare. The Monocle Restaurant, just a short walk from the Senate side of the capitol, is where a small group of Congressional Republicans decided to ring out the old budget and ring in the new. Senate Budget Committee Chairman Pete Domenici provided the humor. He told the story of an architect, a social worker and the President's budget director shipwrecked on an island with only an apple to eat. SEN. PETE DOMENICI: The architect drew pictures, he drew pictures and designs in the sand, and said, "if we cut the apple in exactly this way as he drew it, we would have three equal parts." But the social worker said, "Wait a minute. Who really needs the apple most?" Where upon the OMB Director said, "Wait, let's assume there are three apples." (Laughs) I thought that was a pretty good one to show how we get throw things here on the Hill. KWAME HOLMAN: Some members were in the mood to celebrate, even though hasn't gotten its work done. Members have approved only five of the thirteen appropriations bills needed to keep the government operating in the new fiscal year, and no one here on Capitol Hill expects they'll complete the job anytime soon. SEN. BLANCHE LAMBERT-LINCOLN, (D) Arkansas: In nine months. We have had nine months. In the same amount of time I produced twins. It wasn't easy, but we did it. KWAME HOLMAN: On Tuesday both Houses of Congress hurriedly approved a three-week extension of government spending at 1999 levels. It's called a continuing resolution and Congress has come to rely on the device almost every year. Nonetheless, it didn't stop members on the minority side this week from blaming the party in charge. SEN. TOM DASCHLE: Mr. President, I have to say this is a disappointing day. Republican responsibility day is October 1st. SEN. KENT CONRAD, (D) North Dakota: Our Republican colleagues who are in charge here, in the House and in the Senate, bear responsibility for this failure to get the job done. SEN. CRAIG THOMAS, (R) Wyoming: I certainly wish we were further along. I think everybody does for various reasons. I have a few ideas as to why we are not. KWAME HOLMAN: During the Senate debate, only two Republicans took the floor to answer the Democrats' charges. In the House, there was only one, first-term Appropriations Chairman Bill Young. REP. BILL YOUNG, Chairman, Appropriations Committee: Continuing resolutions are not new to the Congress. We all complemented the gentleman from Wisconsin for the year that he chaired the committee and he did have his bills done on time without any continuing resolution. But that year he had a lot more money than they had the year before. It is easier when you have a lot of money. This year we have $17 billion less than we had the year before. KWAME HOLMAN: It's ironic that appropriators have less money this year than last. On Monday, at the White House, President Clinton announced the federal budget surplus figure for 1999 had reached... PRESIDENT CLINTON: At least $115 billion. This triple-digit surplus is larger than projected, larger than last year's, and larger, in fact, than any dollar surplus in the history of the United States. It is a landmark achievement for our economy. KWAME HOLMAN: It was just two years ago that the President and Congress were more concerned about budget deficits, and so they agreed to set and abide by strict annual spending caps into the next century. New Jersey's Frank Lautenberg is the ranking Democrat on the Senate Budget Committee. SEN. FRANK LAUTENBERG, (D) New Jersey: The caps made an enormous difference in the beginning, and we agreed to those caps with full knowledge and forethought. However, the situations changed, and with the surpluses that we've seen and with the demands that our society has by virtue of its growth, the number of children attending schools these days just burgeoning across the country; those who we want to educate at higher levels growing by enormous percentages. Well, we need more funding for it. KWAME HOLMAN: Georgia's Saxby Chambliss is a senior Republican on the House Budget Committee. REP. SAXBY CHAMBLISS, (R) Georgia: What we did in 1997 with the Balanced Budget Act was that we made the easy decisions up front. The easier places to reduce the size and scope of the federal government would take place in the early years. The tougher decisions would be in the out years. Now we're in the out years. Everybody has their own favorite area of the federal government that they particularly want to see funded, and I understand that fully because that's the politics of it. KWAME HOLMAN: In past years, Congress and the President simply dipped into the surplus created by Social Security taxes to pay for small amounts of federal spending. But in his January State of the Union Address, President Clinton proposed setting aside 60 percent of that surplus to extend the life of the trust fund's solvency. PRESIDENT CLINTON: We will save Social Security now. (Applause) KWAME HOLMAN: Congressional Republicans responded by proposing to set aside 100 percent of the Social Security surplus in a legislative lock box that would prevent the government from spending any of it on other federal programs. SEN. TRENT LOTT: If we set this money aside and say this is all going to be saved, the tax money and the interest, then it will be there for the reforms, and/or it will be paying down the debt. KWAME HOLMAN: That argument however has left Republican leaders in Congress in a bind, searching for new and innovative ways to pay for programs both members and their constituents agree are essential. SPOKESMAN: Welcome all of you here this morning. KWAME HOLMAN: Illinois Republican John Porter has struggled to fund many of those programs, such as job corps, medical research and college loans. Porter is chairman of the Appropriations Subcommittee for the Departments of Labor, Education, and Health and Human Services. All summer long, he watched as Republican leaders drained money from his bill to add to other appropriation bills. Suddenly last week, the leaders told Porter they had come up with the money he needed to move his bill along. REP. JOHN PORTER, Chairman, Labor/HHS Subcommittee: The bill when we are finished today should reflect the spending priorities of this subcommittee within the level we have to work with. KWAME HOLMAN: But Committee Democrats pounced on the Republicans' creative bookkeeping. REP. DAVID OBEY, (D) Wisconsin: The problem is that this bill through no fault of the chair, has come to epitomize how phony our legislative process has become, and how trivialized we have all become in the process. KWAME HOLMAN: To pay for Porter's programs, House Republican leaders announced they first would take back $3 billion in unspent welfare funds Congress had sent to the states. Maryland Democrat Steny Hoyer read the response of the nation's governors who warned the tactic... REP. STENY HOYER, (D) Maryland: Sets a dangerous precedent and signals to the governors that Congress is willing to break the strong historical federal-state partnership that is so crucial in providing health and human services. KWAME HOLMAN: Republicans also said they would tap more than $12 billion from next year's appropriations, a tactic known as "forward funding." REP. STENY HOYER: We're talking about a 25 percent to 30 percent hole in next year's bill that you are creating this year. KWAME HOLMAN: But Texas Republican Henry Bonilla reminded Democrats that the budget caps they, too, signed off on left Congress little choice. REP. HENRY BONILLA, (R) Texas: Yes, it's not the ideal way to go. Yes, it's going to be more difficult next year -- by the forward funding that's proposed in this mark. But I think for now, for today, unless someone is willing to stand up, someone in the administration or some of our friends on the other side of the aisle and say, "let's all stand up and make the first effort to break the budget caps," this is the best we can do. KWAME HOLMAN: On the Senate side, Republican appropriators said they also would use forward funding to stay within the budget caps. SEN. ARLEN SPECTER, (R) Pennsylvania: It all fits into a giant mosaic which is not yet finished because it has to take into account what will happen on defense. KWAME HOLMAN: And on defense, Senate Republicans planned to move $11 billion out of that spending bill and into the Labor, Health and Education Bill. They then would declare an $11 billion of defense spending an emergency, which means it would not count against the budget caps. Once again, Democrats objected. SEN. BARBARA BOXER, (D) California: They declare $11 billion in defense spending is an emergency. And that's their way of getting around the caps. There's only one problem: It comes out of the Social Security Trust Fund. All emergency spending comes out of the Social Security Trust Fund. KWAME HOLMAN: Indeed, a report from the Congressional Budget Office this week appears to support Democrat claims. It showed the Republican spending bills, when totaled, would use nearly $18 billion of the Social Security surplus. KWAME HOLMAN: Where is CBO wrong in their letter from yesterday? REP. SAXBY CHAMBLISS, (R) Georgia: CBO is not wrong in what they said. What's wrong is the assumptions that the minority in the House sent to CBO in saying that if this and this and this occurs, what will happen. CBO is correct in their statement. The problem is that the assumptions that they sent them are not facts; they're just assumptions. SEN. SLADE GORTON, (R) Washington : That criticism that we are raiding the Social Security Trust Fund, while it has no statistical validity, would at least have some degree of moral caution attached to it had we, during the course of the last weeks in debating appropriations bills, heard from a single member of the other side that we were spending too much. But we did, Mr. President, not hear that at all. KWAME HOLMAN: All week long most of the political rhetoric about spending wasn't so much over which programs to fund as it was about who would be the first to raid the Social Security surplus to pay for them. REP. TOM DELAY, Majority Whip: It's time to stop the Democrats and the President from raiding Social Security as they've done since 1967 to pay for more big government programs. PRESIDENT CLINTON: We don't have to do this. We don't have to get into an ad war where they accuse us of doing what they're doing, that their own Congressional Budget Office says they're doing. And they don't have to act like if they get caught doing it, they, in effect, have committed a felony. It doesn't have to be this way. We can work together. We can fashion a budget. KWAME HOLMAN: The President and the Republican majority in Congress could use this three-week extension in federal funding either as a cooling off period, while they work out more spending agreements, or as a time to heat up the rhetoric. What looms at the end of the three weeks is the possibility of a government shutdown. -- something neither side says they want but appear ready to blame the other if it happens.