AP Online

February 15, 2002 Friday

SECTION: WASHINGTON DATELINE

Dems Prepare to Pounce on Bush

by ALAN FRAM; Associated Press Writer

DATELINE: WASHINGTON

Democrats are preparing to pounce on an election-year request by the Bush administration that Congress approve an additional $750 billion in federal borrowing.

Two months after lawmakers ignored an earlier appeal, Treasury Secretary Paul O'Neill asked Congress on Thursday to extend the government's power to borrow money to $6.7 trillion. O'Neill said that without action, the current $5.95 trillion debt limit will be breached by late March.

House and Senate leaders said they planned work on the legislation after Congress returns from a weeklong recess in late February. But with the war on terrorism showing signs of losing its all but exclusive grip on the public, Democrats view the debt limit request as a golden opportunity to refocus voters.

Their leaders are already developing plans to blame what will be the first debt limit increase since 1997 on President Bush's tax cut and to complain that his budget would erode Social Security surpluses for the next decade.

"You have an opportunity to make the point repeatedly about the fiscal mistakes being made here, that this country is being pushed deeper and deeper into debt," said Senate Budget Committee Chairman Kent Conrad, D-N.D.

Few lawmakers enjoy debt limit votes because their opponents often cite them as evidence of fiscal recklessness. But an extension of borrowing authority is usually considered must-pass, especially by the party that holds the White House because an unprecedented federal default otherwise would occur.

Though their strategy is evolving, Democrats say they might withhold support for the debt limit extension unless Bush offers a plan to ensure that within several years, no Social Security surpluses would be used to finance other federal programs. The projected return of federal deficits would make such a plan very difficult to achieve.

Republicans say Democrats have little chance of using debt limit legislation to their advantage. They say Bush will trump Democrats by arguing that with a war and a recession under way, this is no time for political games with the government's financial integrity.

"What do they want to shut down, the welfare system? Homeland security? This is a wartime situation," said Rep. Tom Davis, R-Va., who heads House GOP re-election efforts.

To blunt the Democratic attempt to turn the fight into one over Social Security, GOP leaders are considering attaching language to the debt limit extension that would make Social Security benefits more generous for women. Their payments are typically less than men's.

To round up votes from Republicans uneasy about approving more borrowing, top Republicans also are considering sweetening the debt limit measure by combining it with a bill to provide more money for this year's costs of the war in Afghanistan and domestic security.

Relentless growth of the accumulated national debt leveled off during the past four years of annual budget surpluses. But with deficits returning, and huge amounts of Treasury bills sitting in Social Security's trust funds, the debt is ballooning again.

O'Neill made his request before a subcommittee of the Senate Finance panel, which has jurisdiction over federal borrowing. "Any delay could create uncertainty that would raise the cost of borrowing for U.S. taxpayers," O'Neill said in a letter to lawmakers. "This is an unnecessary expense and, of course, any uncertainty added to the early stages of our economic recovery would be particularly unwelcome at this time."

The administration's $750 billion request, which would be one of the biggest debt limit increases ever, would probably cover federal borrowing until sometime in 2004, according to the budget Bush proposed this month.

Democrats are considering granting a smaller increase that would have to be extended anew this fall. That would give them a campaign-season podium for disparaging Bush's tax cut and the use of Social Security surpluses to pay for other federal programs.

On the Net: Bureau of the Public Debt: http://www.publicdebt.treas.gov/opd/opdpenny.htm