After this background report by Kwame Holman, Margaret Warner talks with Mitch Daniels, director of the Office of Management and Budget. Then, Ray Suarez gets the Democratic perspective from North Dakota's Sen. Kent Conrad, ranking member of the budget committee about President Bush's proposed budget.
KWAME HOLMAN: Copies of President Bush's budget blueprint for the 2002 fiscal year arrived at a Capitol loading dock at 7:30 this morning. The details inside project government spending to reach $1.9 trillion, a 4% increase over current levels, with larger increases for education, medical research, and military pay; smaller increases for transportation and environmental protection and a cut in spending for agriculture. But there wasn't the customary crush of media anticipating delivery of next year's budget. Most of the recent focus has been on what the President plans for the next ten years: $1.6 trillion in tax cuts. It's a pledge the President repeated throughout last year's campaign, during the first weeks of his administration, and of course, last night before a joint session of Congress.
PRESIDENT GEORGE W. BUSH: See, the growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged, and on their behalf, I am here asking for a refund. (Cheers and applause)
KWAME HOLMAN: And this morning, the President embarked on a two-day tour of towns across the country in an effort to sell his tax cuts to the people. His first stop was Beaver, Pennsylvania, where he sat down with employees of a small electrical company.
PRESIDENT GEORGE W. BUSH: These good folks pay $4,400 in federal income taxes. Under the plan I proposed last night in the Congress-- which doubles the child credit from $500 to $1,000, reduces all rates for everybody who pays taxes, drops the top rate from 39% to 33%, reduces the bottom rate from 15% to 10%, reduces the effects of the marriage penalty, eliminates the death tax-- these good folks pay... will save $1,980. Now, for a lot of folks you know, they'll go... they'll yawn and say, "gosh, that's $1,980. That's really nothing." We disagree. We disagree. $1,980 a year can make a big difference to people who are raising two lovely children, to people who want to set aside money for savings. It is so important for members of the Congress to realize what the average citizen is going through today.
KWAME HOLMAN: In fact, back at the Capitol, Speaker of the House Dennis Hastert already had announced the President's tax cut plan would be put on a congressional fast track.
REP. DENNIS HASTERT: We feel that our job now has just begun. We have' we've laid out and listened to the programs, and it will be this week that we will move the across-the-board tax cut out of the Ways and Means Committee. And we expect to have that bill on the floor next week. And so we'll take the first piece of the President's program and get it out of the House and awaiting action in the Senate.
KWAME HOLMAN: If all goes as the President plans, the tax cuts will be carved from a ten-year projected budget surplus totaling $5.6 trillion. More than half of that surplus would be generated by the Social Security and Medicare trust funds; the rest expected from general tax revenues. The President would earmark roughly half of the overall surplus, $2.6 trillion, for debt reduction and to overhaul the Social Security system. $1.4 trillion would be used to reform Medicare and for emergency spending, with $1.6 trillion left for tax cuts. This afternoon, Treasury Secretary Paul O'Neill went before the Senate Finance Committee to tell members it's all doable.
PAUL O'NEILL: The President believes that if we're willing to discipline ourselves to a 4% increase in next year's spending and limit our appetite to another $5.2 trillion worth of spending over the next ten years on top of the base we've already got established, and put aside $1 trillion for contingencies, and set aside $2.6 billion... trillion, excuse me, for debt relief, that we've still got $1.6 trillion for a tax cut for the people.
KWAME HOLMAN: But while an overwhelming number of congressional Republicans support the President's ten-year tax cut, most Democrats aren't so sure.
SEN. MAX BAUCUS: After all, these ten-year projected surpluses may be less than meets the eye, and the projection of what will happen that far off in the future is very uncertain at best.
KWAME HOLMAN: And that's the point House Minority Leader Dick Gephardt tried to illustrate this afternoon at a news conference called to denounce the size of the Bush tax cuts.
REP. RICHARD GEPHARDT: Now, let's look at what if the projections are off. On the low side, what happens? Instead of the surplus going like that, which is what the President and we all would hope to believe, what if things don't go as well and we have bad weather in these next years? Let me show where the deficit actually goes. This is the range of difference, and you have a chart that shows this. This is the range of difference, depending on what actually happens. This chart is proof-positive that we need, as a country, to be skeptical, cautious, and prudent about budget numbers, just as we are about weather forecasts.
KWAME HOLMAN: This budget decides if we are not going to pay off the national debt, this budget decides not to honor our promise not to raid Social Security and Medicare. This budget decides - contrary to what the President said last night -- that education is going to take a back seat to tax cuts.
REP. BILL THOMAS: The question is do you listen to the President of the United States and the chairman of the Federal Reserve or do you listen to Dick Gephardt? I think the minority leader would be happy to discuss this issue all summer as the economy continues to go into the tank.
KWAME HOLMAN: The debate will continue tomorrow when the House Way and Means Committee begins work on that part of the Bush plan that cuts tax rates. It will write the legislative language, vote on it, and send it to the full House for an expected vote next week.