The Congressional Budget Office says the U.S. government will have to borrow from a nationwide retirement account to balance its budget this year. Democrats are blaming President Bush for spending a record surplus.
The non-partisan Congressional Budget Office says the government will need about $9 billion from the Social Security trust fund to balance its budget. That conflicts with White House predictions that there is enough money to meet spending without borrowing from retirement and health care.
It is a difference over the health of the economy. The Bush administration predicts growth of 3.2 percent next year while the Budget Office says the economy will grow at a rate of only 2.6 percent. That means lower revenue at a time when the government surplus has fallen 45 percent in the last four months.
The Budget Office report says the shrinking surplus is a result of a sluggish economy and the President's $1.3 trillion tax cut.
Democratic Senator Kent Conrad of North Dakota says President Bush is to blame for the disappearing surplus because he failed to reconcile a series of campaign promises with the economic reality of running the country. "This President made a series of promises that he has now broken," says Sen. Conrad. "He said clearly and repeatedly during the campaign that he had an economic plan that would allow us to have a massive tax cut, that would permit a significant build-up in national defense, that would provide more money for education, that would allow the maximum pay-down of the national debt and that would protect Social Security and Medicare. He was wrong. And he was wrong not just by a small amount. He was wrong by massive amounts."
Democrats say the Bush administration will have to borrow more than $500 billion from health care and retirement accounts over the next 11 years. President Bush has vowed not to touch Social Security unless the country goes into recession or war.
Using Social Security funds would not affect payments to retirees. It means the surplus would not go toward paying off the national debt.
Republican Jim Nussle of Iowa is Chairman of the House Budget Committee. He says the President has done the right thing in giving part of the surplus back to the taxpayers who he believes will spend the money more wisely than Washington. "The budget is tight, that's for sure. A little tighter than we wanted it to be," he says. "That's in part based on the fact that the economy has turned down, but it's also in part because we wanted it to be tight. We need it to be tight. When the economy is soft, you've got to get that money in the pocket of individuals and families so that they can spend that money."
Democrats say they are willing to work with the President to come up with a budget that balances without borrowing from Social Security. Senator Conrad says Mr. Bush must first admit there is a problem and stop insisting that he is operating at a period of strong economic growth. "I believe it is time for the President to stop denying that we have a problem, to stop minimizing the problem that he has created, and to stand-up and provide us with a new plan that avoids invading the Medicare and Social Security trust funds at a time of strong economic growth," he says.
Senator Conrad says he will not agree to any additional spending that is not paid for in this budget. He specifically targeted the President's request for an increase in defense spending, saying there is no money for it without raiding Social Security and walking away from a commitment to pay down outstanding debt.
Representative Nussle agrees that controlled spending is crucial to balancing this equation, but he rejects Democratic demands for a whole new budget, saying the current spending package will work. "The real key for the future for all of these is making sure that we restrain the growth of spending," he says. "President Bush has put forward a budget. It was adopted by the Congress to restrain spending. We need to stick to that budget. It is very tight, but it is one that we can manage and it can ensure the fact that we can continue on our road to maximum debt repayment in ten years."
The Congressional Budget Office report says the U.S. economy should "narrowly avoid recession" and gradually recover through next year. The current fiscal year ends September 30. Congress has not yet approved a budget to continue spending beyond October 1.