Show Them the Money
[Sorry, the video for this story has expired, but you can still read the transcript below. ]
KWAME HOLMAN: President Clinton sounded upbeat on Monday, anxious to begin his sixth year in office.
PRESIDENT CLINTON: Happy New Year to all of you. I’m glad to be back at work, and I’m looking forward to 1998.
KWAME HOLMAN: The had good news to share. His budget advisers recently projected the annual federal deficit for this year would not be the $126 billions originally predicted but only $22 billion. Then on Thursday the Congressional Budget Office lowered the deficit estimate to only $5 billion. That means the government is close to the magical point of balance, spending only as much money as it takes in. The news allowed the President to make an historic announcement.
PRESIDENT CLINTON: The budget that I present to the Congress in February will be a balanced budget for 1999. Again, this will be the first time in 30 years we’ve had a balanced budget.
KWAME HOLMAN: A balanced budget in fiscal year 1999 would be three years ahead of the schedule set by last year’s budget agreement. It’s a goal the President wanted to be achieved when he first took office.
PRESIDENT CLINTON: Why must we take extraordinary action now? Well, this chart shows you why.
KWAME HOLMAN: In 1993, President Clinton went on national television to push his plan to raise taxes and reduce spending in hope of cutting into a record federal deficit of $290 billion. Congressional Republicans predicted the Clinton plan would do more harm than good.
REP. JOHN KASICH, (R) Ohio: (1993) We believe that this program of massive tax increases, devastating cuts in national security, no real cuts until the last two years of this program, no control of federal spending, a bigger federal government, what we’re concerned about is that prescription will wreck the economy.
KWAME HOLMAN: The President’s 1993 deficit reduction program narrowly passed Congress with just enough votes from Democrats and no Republican votes at all. Four years later, however, Republicans and Democrats stood shoulder to shoulder behind President Clinton as he signed the balanced budget agreement into law. What smooths the relationship between the President and the Republican Congress is the economy. In recent years it has outperformed even the most optimistic forecasts and, as a result, generated far more tax revenue than anticipated, enough revenue to give the President his priority spending programs, give Republicans the tax cuts they demanded, and still balance the budget. Now, a new debate has begun in Washington, what should be done if the strong economic performance continues and creates a budget surplus.
REP. NEWT GINGRICH, Speaker of the House: Can we set priorities? Can we re-think programs?
KWAME HOLMAN: Addressing a group at home in Georgia, House Speaker Newt Gingrich said he favors giving Americans a bigger tax cut.
REP. NEWT GINGRICH: USA Today has a headline “Tax Cuts Are Dangerous.” It just came out in one of the talk shows over the weekend, which is always a Washington motto; that is, if you actually give money back to the American people, who knows what they’ll do with it?
KWAME HOLMAN: On Capitol Hill Texas Sen. Phil Gramm suggested any budget surplus be used to firm up the Social Security system.
SEN. PHIL GRAMM, (R) Texas: If I had my wishes granted, I would like to take any budget surplus and commit it to funding a transition from our current debt-based Social Security system to an investment-based system that we could guarantee permanently and that would be good not only for our parents but for our children.
KWAME HOLMAN: In fact, members of Congress have been anticipating a budget surplus for months. In late October, the House Budget Committee invited several members of Congress to speculate what if. Texas Republican Bill Archer is chairman of the Ways & Means Committee.
REP. BILL ARCHER, Chairman, Ways & Means Committee: When the day of the surplus arrives–and I believe it will, thanks to this Republican Congress–I believe it should be used to reduce the tax burden on the American people and to pay down our national debt.
KWAME HOLMAN: The national debt, money borrowed to finance decades of annual budget deficits, now stands at $5 trillion. And most members of Congress have said they favor using some of a budget surplus to pay down that debt. California Democrat Pete Stark also said he would favor investing some of a surplus to protect the Medicare program, but he warned against providing more tax cuts.
REP. FORTNEY “PETE” STARK, (D) California: We would dribble away the surplus and then turn around and have to raise the taxes. That, to me, would be a cruel hoax, and I don’t think we should be tempted to do that.
KWAME HOLMAN: As for Pennsylvania Republican Bud Shuster, chairman of the House Transportation Committee, he wants to spend more money on roads and bridges.
REP. BUD SHUSTER, Chairman, Transportation Committee: America is growing, but our infrastructure is crumbling. We need to make–increase investment in infrastructure.
KWAME HOLMAN: But Minnesota Democrat Martin Sabo said Congress shouldn’t bank on spending any of the money just yet.
REP. MARTIN SABO, (D)Minnesota: Let’s not hurry and divide up the anticipated surplus before it’s here and we’ve actually seen it.
KWAME HOLMAN: And that’s the position President Clinton took when he was asked about a surplus on Monday.
PRESIDENT CLINTON: We don’t have a surplus. We can project a surplus, but we don’t have one. And we’ve waited 30 years for a balanced budget. Between 1981 and 1992, we projected all kinds of things, and went out and spent the money on tax cuts and spending, both. We spent the money. And we quadrupled the debt, drove up interest rates, put our country in a terrible hold. All I’m saying is that any policy we adopt must not–it cannot run any risk of returning to the failed policies of the past.
KWAME HOLMAN: Nonetheless, the President this week proposed major new domestic spending to expand Medicare and child care, both to be included in his latest budget recommendation to Congress. And the President is expected to call for more new spending in three weeks, when he delivers his State of the Union Address.
JIM LEHRER: Now, how this looks to our regional commentators, and to Phil Ponce.
PHIL PONCE: Joining us are NewsHour regulars Cynthia Tucker of the Atlanta Constitution; Mike Barnicle of the Boston Globe; Patrick McGuigan of the Daily Oklahoman; Lee Cullum of the Dallas Morning News; and Robert Kittle of the San Diego Union Tribune.
Welcome, all. Mike Barnicle, how would you spend a budget surplus if, in fact, a budget surplus comes about?
MIKE BARNICLE, Boston Globe: Well, my genetic disposition would be to go out and get a right-handed designator for the Red Sox.
PHIL PONCE: Short of that.
MIKE BARNICLE: Short of that, if the surplus were real and if it were legal, I think I would probably try and do something with children between the ages of 12 and 16 in this country who fill our streets of large cities and small towns each afternoon between the hours of 2 and 6 PM, when the most horrendous and horrific dangers occur to them, and among them. I would probably try to come up with some sort of a program where these kids would have someplace to go, someplace to work, whether it’s a school, a park, a playground, or a library, and this program would not set money aside per se but would give these children points that they could apply towards scholarships for prep schools or colleges in the future, and I’d try and make it cool to be smart for these kids. There are so many children in this country who don’t think it’s cool to be smart; it’s not cool to read; it’s not cool to think; and we could use a surplus to service these kids to make them realize the power of ideas and the power of their future.
PHIL PONCE: How about that, Lee Cullum, time to spend on social programs?
LEE CULLUM, Dallas Morning News: No. I don’t think so, Phil. I really think that this is the moment to do something about Social Security and Medicare, to face up to that problem. Now, if we can manage that problem, get it solved, and we’re satisfied with it, I can imagine down the road we might want to think about tax cuts and reward the American people for their good economic performance. Farther down the road, we might want to inaugurate a new progressive era, such as the one that Teddy Roosevelt launched at the dawn of this century, but not now. This is the time to be a hedge hog, not a fox. And we need to think about Social Security and Medicare and make them work again.
PHIL PONCE: Pat McGuigan, time to take care of those entitlement programs that Lee was talking about?
PATRICK McGUIGAN, Daily Oklahoman: I sympathize with Lee’s view on that, but in keeping with Mike’s kickoff, I’d say that there’s people in this part of the country that would want to spend at least some of the emerging surplus on getting a new coat for the Dallas Cowboys down in Lee’s part of the country. Seriously, I think, as Lee hinted, to maybe kind of come next, I’d like to see us maybe start with a discussion of rewarding the people whose hard work and industry has brought us to the verge of what many of us has hoped for for three decades, and that’s a return to a semblance of balance in the federal budget structure.
I’d like to look at that first. If that’s not politically doable, I think that what Mark Newman of Wisconsin, a member of Congress, has proposed is very insightful and consists of three basic parts: First of all, setting aside money for eventual tax cuts, but secondly, hitting those trust fund problems, not only Social Security, but some of the other trust funds that exist only on paper, and then finally addressing the debt, those three things: the ongoing federal debt, $5.5 trillion, and begin to pull that down. All the things Mike described I not only don’t oppose as public policy but I’d like to see them done at the local level, and through organizations that are already in place addressing these needs, Boys Club, Girls Club, the scouting programs. There are so many that are already doing these things, and they need more resources. And I don’t think that the federal government is the way to do it.
PHIL PONCE: Cynthia Tucker, Pat talked at the beginning of his statement about the desirability of tax cuts. As a taxpayer, yourself, do you find that appealing?
CYNTHIA TUCKER, Atlanta Constitution: Of course, I find it appealing, but, unfortunately, the American people, myself included, are already very deeply in debt. There is this $5.4 trillion debt we’ve already accumulated, services we’ve already used, and it would be irresponsible to do anything with any surplus that may come about, but pay down that debt. In fact, it’s a bit misleading to talk about that as a surplus. If I got a big raise and I’m already $100,000 in debt, I’m still in the red. I still have a negative net worth. And that’s the situation we’re in at the moment. There is enough debt for there to be $20,000 worth for every man, woman, and child. And if we don’t get that paid off now, we’re just postponing it for our children and our grandchildren. And as appealing as Mike Barnicle’s proposals were for children, we don’t want to turn down and just hand them our debt. So I don’t think we have any choice but to start paying off that debt with any surplus, should it materialize.
PHIL PONCE: Bob Kittle, is that a fairly persuasive argument for you?
ROBERT KITTLE, San Diego Union Tribune: Well, I think it is, and, in fact, Phil, we should bear in mind that we really and truly are nowhere close to a balanced budget. That’s really a lot of political baloney inside the beltway. And I say that because the way the federal government calculates the deficit is a sham. It’s a sham because it conveniently overlooks the tens of billions of dollars a year that the federal government loots from the Social Security trust fund, and it takes that money, and it spends it on everything from food stamps to frigates, but it doesn’t count it as part of the deficit.
So when the President says he’s going to submit a balanced budget for next year in February, the budget will be balanced on paper only because he’s not telling you that he’s actually taking more than $100 billion a year from the Social Security trust fund in order to mask the deficit, in order to come up with this political appealing number of zero for the deficit. So if we’re going to do anything with this surge in revenues, which we are having and which, frankly, is a very temporary thing–it may last a year or two but it’s not going to last forever–we should perhaps begin by taking a little less money from the Social Security trust fund and being a little more honest with the American people that we still are racking up debt on top of the $5 1/2 trillion national debt that we have, which, of course, is the accumulated deficits of the last 30 years.
PHIL PONCE: So, Bob, just to make sure I understand you, you’re saying not only are we not close to balancing the budget, but the possibility of a real surplus is just an illusion?
ROBERT KITTLE: No. That’s right. I mean, it’s as though the federal government, if you and your family said, well, we’ve stopped bouncing checks and, therefore, we’re out of debt, even though we’re still borrowing a thousand dollars a month from, you know, from my brother-in-law, that’s the way it works in Washington. And only in Washington would that be called a balanced budget.
PHIL PONCE: Cynthia Tucker, going on that family analogy, do you think people have gotten accustomed to having a deficit every year and having this massive national debt in the same way that maybe people are accustomed to having a big mortgage?
CYNTHIA TUCKER: I don’t think the American people clearly understand because of the hype in Washington that Bob Kittle just talked about that, in fact, we have this huge accumulation of debt we still have to deal with. Now, the USA Today/CNN Poll that came out today showed something very interesting. It showed that only a small majority of Americans–about 22 percent according to this poll–want to see taxes cut. 43 percent, I believe, wanted new spending, and 30 percent, only 30 percent wanted the debt to be paid down. I think that’s because most people still don’t understand this debt we’re facing, and again I think most responsible Americans attending to their own family budgets, if they were deeply in debt, as I am, going into 1998, I’ve made some purchases I’m very happy about, but, guess what, I won’t be spending any money in 1998. I’ve got to pay off the debt I’ve already accumulated. And I don’t think that the American people fully understand the difference between deficit, the annual occurrence of a deficit, and the accumulated debt which is 30 years’ worth of deficit. And because of that, we’re facing this enormous debt, and I don’t think we have talked about that yet in very realistic terms.
PHIL PONCE: How about that, Pat McGuigan, are you persuaded at all by that evidence that people really don’t want a tax cut?
PATRICK McGUIGAN: Oh, I don’t know. I think it sometimes depends on how the question is asked. And to be honest, I haven’t looked at the poll that Cynthia referenced. It is intriguing. Cynthia sounds a little bit almost like–and I say this in a friendly way–almost like a conservative Republican, a traditional conservative Republican in terms of the concern about that debt issue, and I agree that is not a meaningless question. I think we need to be looking at that. And the beauty of Mark Newman’s plan–and by the way–Newman was one of the first people to anticipate an emerging surplus–and I carefully use that word because all the points Bob made are right. We still have that huge accumulated debt, national debt that’s just sitting there, and the beauty of Newman’s plan, which he conceived over a couple of years, is that as that emerges, we apply it to all these different needs. It’s really kind of remarkable how little money you need to apply, for example, to the Social Security problem in order to buy time down the road, if we would plow at least some of this emerging surplus into the Social Security problem to name just one, we buy a year, two years, three years from the crunch time that comes in the first or second decade of the next century.
PHIL PONCE: Lee, how much concern or worry is there about the deficit, about the debt in Texas?
LEE CULLUM: Now, the Dallas Morning News had an editorial this morning, Phil, suggesting that we might pay down the debt, and that certainly is a good idea. I do want to remind all of us, however, that these securities, these Treasury securities or debt instruments that are very popular with American investors. I don’t think that we need to be debt free. We have an enormous economy that can support a certain amount of debt, but certainly less is better than more, I agree with that. And I would imagine that people in my part of the country would feel that way also.
PHIL PONCE: Mike, final word.
MIKE BARNICLE: Well, the talk about Social Security and economics and I have to tell you the truth–it makes my hair hurt–I think one of the things that we’ve avoided talking about is human nature in terms of whether people are interested, or concerned about the deficit. Most people see what they see, and they want what they want. They want the new Jeep Cherokee. They want the best sneakers for their kids. They’re not interested in hearing a lot of talk about the deficit. And that’s the ultimate problem, isn’t it?
PHIL PONCE: Mike, and ladies and gentlemen, have a good weekend. Thank you all.