Knight Ridder/Tribune News Service

The Dallas Morning News

August 22, 2001, Wednesday

SECTION: DOMESTIC NEWS

Bush to Congress: Keep a rein on spending _ or else

By David Jackson

CRAWFORD, Texas _ President Bush and congressional Democrats are getting an early start on the fall budget battle. While Democrats use the August recess to argue that Bush-backed tax cuts have wiped out the budget surplus, Bush said Tuesday that congressional spending is a bigger threat to the economy.

"I believe there are some who resent tax relief because they wanted more of your money in Washington," the Republican president said at a Missouri high school named for a Democratic icon, President Harry Truman.

Truman's Democratic heirs said the revenue loss from the $1.35 trillion, 10-year tax cut will force the Bush administration to dip into trust funds reserved for Medicare and Social Security. "It's clear that the size of the tax cut has consumed all or nearly all of the available surplus," said Rep. Martin Frost, D-Texas, chairman of the House Democratic Caucus. "We're going to have a very big fight when we get back over the surplus."

Political analysts said they expect the White House and congressional Democrats to echo these arguments repeatedly as they try to work out 13 separate spending bills over the next few months _ and prepare for congressional elections next year.

"Both sides are aware there is much to be gained and lost here," said Jennifer Duffy, an analyst with a Washington-based political report.

Wrapping up a two-day trip before returning to his ranch in Crawford, Bush spoke on the eve of a mid-session review to be issued by his Office of Management and Budget. While the administration is expected to report that slow economic growth has reduced previously projected budget surpluses, Bush and his aides said that Medicare and Social Security remain protected.

"We have fully funded and will be able to fully fund our nation's priorities," Bush said during his speech in Independence, Mo., Truman's hometown.

Bush and his aides said they still project that this year's surplus will be the second-largest in history and that their budget would pay off more than $100 billion in government debt.

Democrats said the administration used new accounting rules and other "gimmicks" to avoid touching the Medicare and Social Security trust funds. They noted that the surplus projection includes excess Social Security and Medicare money that goes to those programs' trust funds. They predicted that a Congressional Budget Office report due out next week would show that without that money, the Bush budget could run into red ink.

As a result, Democrats plan to argue in a new television ad that Bush is a threat to the security of Medicare and Social Security.

"George W. Bush is in Harry Truman's hometown, explaining his budget," said the ad, produced by the Democratic National Committee and airing only in selected markets. "And he's got a lot of explaining to do, because the Bush budget violates one of Harry Truman's basic principles, protecting our seniors." Bush dismissed the ad as the product of "big spenders."

"They want the government to have the people's money," he told reporters after his speech. "They believe in bigger government. And all I do is rest my case with the people."

Bush also disclosed that he is now planning to return to Washington a week from Thursday, a day earlier than previously announced.

As the budget debate unfolds once the president and Congress return, Bush and his aides plan to use the bully pulpit of the presidency to argue that the tax cuts are essential to re-energizing the economy. They also say that surpluses exist because government has overcharged taxpayers.

"This tax relief has laid the foundation for expanding economic growth," Bush said in his Missouri speech. "And now we must resist the temptation of a bigger threat to growth, and that's excessive federal spending."

He also touted the benefits of the tax rebate checks Americans are receiving this summer, an idea initially proposed by Democrats but embraced by Republicans.

"One fellow said, 'I built a deck _ you need to come over and have a beer with me,' " Bush said. "I said, 'I quit drinking.' He said, 'How about root beer?' "

Political analysts said that both parties' fortunes in 2002 may depend on how closely voters associate the federal budget with their own finances. But right now, they added, most Americans seem less interested in politics than in wrapping up summer vacations and getting their kids ready for school.

"It depends on when, and if, they start tuning in again," said Karlyn Bowman, who analyzes polls for the American Enterprise Institute.

In light of the presidential visit to Independence, budget combatants invoked the ghost of President Truman.

House Minority Leader Dick Gephardt _ himself a Missouri Democrat _ said Bush's budget mocked Truman's commitment to education, defense, Social Security, and health care for the elderly.

"President Bush has supported these priorities with rhetoric, but not with his deeds," Gephardt said.

Bush quoted Truman as saying, "Washington is a very easy place to forget where you came from, and why you got there in the first place." Bush added: "I think one of the reasons I got there in the first place is to show the American people that it's possible to work together."

He devoted his 40-minute speech to a series of goals on his fall agenda, including completion of an education reform bill, patients' rights legislation and his plan to allow religious charities to receive more government funding.

He again pledged to "change the tone" in Washington but acknowledged that the budget will be a challenge on the civility front.

First calling it "one of the interesting battles," Bush quickly added, "I hope it's not a battle."

"Let me just say: one of the interesting opportunities to show America that we can work together _ to be the positive guy _ is the budget," Bush said to scattered laughter.

Democrats said they would battle what they perceive to be attacks on Social Security and Medicare. Mark Nevins, a spokesman for the Democratic Congressional Campaign Committee, said "fiscal responsibility" is important to voters.

"This issue is just warming up," Nevins said.

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