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Budget Blueprint

February 2, 2004 at 12:00 AM EDT
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MARGARET WARNER: Some reaction to the president’s new budget from two leading congressional players who will be working on this budget in the months ahead: Iowa Congressman Jim Nussle, chairman of the House Budget Committee, and Sen. Kent Conrad of North Dakota, the ranking member on the Senate Budget Committee.

Welcome to you both.

Senator Conrad, you had some very tough words for this budget today. You called it absolute fiction, and you said it will push us further off the cliff of fiscal irresponsibility. Let’s start with the first charge. What’s fictitious about it?

SEN. KENT CONRAD: What’s fictitious about it is when the president says he’s going to cut the deficit in half over the next five years. He is not. He’s not going to come close to cutting it in half. He gets that by just leaving out big things that he’s going to spend money on, like the continuing war on terror, he leaves out that he’s going to take every penny of Social Security surplus over the next decade, all that money is going to have to be paid back. He’s doing the same thing to the Medicare trust fund. And on and on it goes. He pays for the alternative minimum tax problem in the first year, but no year after that.

So the true deficit five years from now under the president’s plan is not going to be cut in half, it’s going to be over $600 billion added to the debt. In addition to that, we know that the budget that he’s put out there is not his real budget. Over the last three years, he’s added spending after he’s proposed his budgets of $250 billion, and his OMB director today acknowledged they’re going to do it again after this year’s election, they’re going to come in and ask for over $50 billion more. So this is a fiction in every way.

MARGARET WARNER: Chairman Nussle, your response, do you think this is an accurate portrayal of the president’s spending plans?

REP. JIM NUSSLE: Well, the president of the United States received when he took office a deficit with regard to job creation in this economy. We inherited a recession. He inherited a security deficit from the previous administration that had gutted homeland security and gutted national defense. And so as a result of those two items, the president’s job one was to protect the country and to get the economy back on its feet in order to create jobs. That was the hallmark of the president’s first three budgets.

Now that we have done that, now that the economy is starting to recover, we’re starting to see job creation, now that the country is protected, thank goodness, and needs to be protected even more, we can turn our focus toward dealing with the deficits. The president has a plan to cut the deficit in half in five years. It’s not a fiction to do that. What’s fictitious is an argument based on no plan whatsoever. The Democrats have never been able to put a plan on the table since President Bush took office, when Senator Conrad was the chairman briefly of the Budget Committee in the Senate, he couldn’t even produce a budget plan. So you have to have a plan to compare it to. You can’t just complain about thin air or you can’t just complain about what the president has proposed, which I think is very responsible.

MARGARET WARNER: But let me ask you about the central charge that Senator Conrad made, that actually these numbers don’t even add up. For instance –

REP. JIM NUSSLE: That’s simply not true.

MARGARET WARNER: — Josh Bolton did say today that in the FY 2005 budget year they are going to ask for another $50 billion, probably, for Iraq.

REP. JIM NUSSLE: Actually he didn’t say that. What he said was they may have to. It depends on how smoothly things go during this next year. It’s impossible to know exactly what the charge might be next year for the cost of continuing to prosecute the war or an occupation or it could be a very smooth transition. We don’t know.

What we don’t want is we don’t want built into the baseline what we saw from the Congressional Budget Office where they decided that for the next ten years we would prosecute a war against Iraq, it costing $87 billion compounded annually. We don’t want to do that. And so by preventing it to be put into the base of the budget, into the bottom line of the budget, it gives us the flexibility to not only be held accountable to cutting the deficit in half in five years, but to make sure we’re doing exactly what we need to do and not a penny more, not a penny less.

MARGARET WARNER: OK, now Senator Conrad let me ask you to respond to something Nussle said which is that the president had some big jobs to do here and I think both Democrats and Republicans agree, three quarters or more of the increases in the past three years have been related to 9/11. They have been military, they’ve been homeland security, and some foreign assistance related to the war on terror. Would you cut those programs? How would you approach this?

SEN. KENT CONRAD: No, I think my colleague has completely missed the point. The point is this: Yes, in terms of the increased spending over 90 percent of it has been for defense, homeland security and responding to the attacks of Sept. 11. And we all supported that. Where the deficit has absolutely exploded is on the revenue side. Revenue will be at its lowest level as a share of the Gross Domestic Product since 1950.

And, look, what the president’s answer is, spend more, and tax less, when you already have record budget deficits. And what he is doing is he’s trying to make people believe that he’s really doing something, says he’s going to cut the deficit in half, which he’s not, and that doesn’t even get to the depths of the problem because once you get past this five-year period, that’s when the cost of this tax cut explodes, that’s when the retirement of the baby boom generation occurs, and the cost to the government explodes. That’s when all of these other provisions, these spending provisions absolutely take off.

And the result is the deficits get a little bit better for the next few years, down from these record levels, and then they absolutely take off like a scalded cat and the president has no plan to deal with it, other than to make it all much worse.

MARGARET WARNER: Is that true, Chairman Nussle, that it explodes again after five years?

REP. JIM NUSSLE: All I know us that I watched the United States Senate for the last four months prevent the final appropriations bill from coming to the floor of the United States Senate because senators wanted to spend more money. It was not a debate about whether we were fiscally responsible. It was not a debate about what were important programs that we could reform or that we could work on together in a bipartisan way, such as Medicare, to provide a better drug benefit for seniors. It was holding it up for political purposes and so they could spend more money.

The Democrats just want to spend more. We prevented $900 billion of excess spending from the Democrats alone this past year. They need to put a plan on the table. It’s easy to complain, I understand that. I have some complaints about this president’s budget. I’d like to spend even less than what he’s proposed. But I will put a plan on the table. The difference is, is that thus far, the Democrats complain a lot, but they refuse to put a plan on the table –

MARGARET WARNER: All right. Let’s hear Senator Conrad on that point.

SEN. KENT CONRAD: You know, just because you state a fiction and repeat it doesn’t make it true, Mr. Chairman.

REP. JIM NUSSLE: Where’s your plan?

SEN. KENT CONRAD: Those are false statements, and you know it.

REP. JIM NUSSLE: Where’s your plan?

SEN. KENT CONRAD: We have presented a budget each and every year, each and every year, we’ve presented an alternative. And this talk about you prevented $900 billion of spending, that’s a total fiction and fraud, and you know it, and you ought to be embarrassed to even make the claim to say those things.

REP. JIM NUSSLE: Well, you can say those things but I can prove –

SEN. KENT CONRAD: No you can’t, you can’t — because it’s all, no it did not, it’s all a fiction no – no – no. That’s not true, you and I both know — (All talking)

REP. JIM NUSSLE: You’re attacking the president –

SEN. KENT CONRAD: Chairman Nussle…

MARGARET WARNER: Gentlemen, no one can hear you, none of our viewers can hear you. Let me ask you a question that perhaps you might agree on. Let’s take the cuts or the restrain in spending that the president is proposing basically half of 1 percent for most domestic programs. Senator Conrad, give us an idea of what Americans will see in programs they’re accustomed to getting from their federal government that they won’t or that will see cuts. And then I’ll ask Chairman Nussle to do the same.

REP. JIM NUSSLE: Well, it will be in a broad array of things, but look, to me it misses the point. Domestic spending is a very, very small part of federal spending. And it’s not where the problem is, that’s not where the spending has been increasing. And in fact if you look at spending, spending as a share of Gross Domestic Product is even after these increases for defense and homeland security, lower than the spending in the ’70s, ’80s and ’90s.

The problem has been on the revenue side of the equation, that’s what’s collapsed: the lowest level since 1950. And when Senator — Congressman Nussle talks about Democratic spending, you know, they talked about the same thing in the Senate floor. It was an absolute fiction. And what we found is, compared to the Democratic budget which we offered, which did not pass because it required a supermajority, required 60 votes, we could only get 59 votes. You know, it’s interesting, you go back and look at what the Republican-controlled Congress spent, they spent $2 billion more than Democrats proposed.

So this old canard that Democrats are spending more is just a fiction to hide the fact that the deficits they’re in charge of, they control the White House, they control the Senate, they control the House, they’re running up the biggest deficits in the history of the country, and we ain’t seen nothing yet.

MARGARET WARNER: All right, let me ask Congressman Nussle. You said you’d like to see further cuts and do you have many conservative Republicans who are upset about this level of deficits. How are you going to manage all that, and are you going to try to put in even greater cuts than the president is proposing on the domestic side?

REP. JIM NUSSLE: Sure, well, we will have a real plan and it won’t just be rhetoric. And what we will try and do is go not only through the discretionary side but also through what we call the mandatory side and look for better ways to deliver the product for people who are in need.

MARGARET WARNER: Social Security and Medicare, and Medicaid?

REP. JIM NUSSLE: Medicare we actually dealt with this last year in a very responsible way to provide a voluntary drug benefit to seniors for the first time since the program was put into place. And we also saved Medicare from its eventual bankruptcy as a result of not being able to pay the bills and having too many lawsuits and a number of other cost issues that have been driving up Medicare.

But Senator Conrad mentioned that this is a revenue issue and I just have to respond to that. The revenue I’m concerned about is the revenue that is coming into the checkbooks of families in Iowa and North Dakota and California and across the country. Those are the families who are having revenue problems right now.

We wring our hands as politicians in Washington about the poor government not having enough of your money. It’s you that has had a difficult time with your job or a difficult time being able to make ends meet, and making sure you can keep more of those tax dollars is job one to get this economy going again, and I’m proud of that fact — not only have we coupled that with getting the economy going, but protecting America, and that was worth running a deficit for a short period of time. Now we will get about the business of making sure we control spending so that we not only can cut it in half in five years but get us back to a balanced budget.

MARGARET WARNER: Senator Conrad, brief ten-second response?

SEN. KENT CONRAD: Well, all I can say is I’m concerned about the pocketbooks of North Dakotans and Iowans and the rest Americans, too. The problem with this Republican budget is by 2009, they’re going to have $35,000 of debt beside the name of each and every American, every man, woman and child in this country, because of the fiscal irresponsibility of this administration.

MARGARET WARNER: OK, we have to leave it there. Thank you both very much.