The White House says the federal budget surplus is dwindling. New figures by the administration's own economists predict lower tax revenues will slash the projected surplus for 2001, from $281 billion predicted in April to $158 billion now. Democrats are responding with attacks on the president's fiscal policies. The debate is likely to dominate Washington politics for some time to come.
The White House budget director says even though the surplus is declining, the government's finances remain in good shape. Mitch Daniels portrays the new figures in a positive light. He notes the surplus for 2001 will not be nearly as high as originally projected, but the numbers are still sound.
"The nation has entered an era of solid surpluses," said Mr. Daniels. "Surpluses on the order of $160 billion, despite an economy that has been weak now for over a year and in decline for that time. This is the second largest surplus in American history, in the face of that weak economy, a phenomenon that should strike all Americans as very positive."
The declining surplus has rekindled the political fight over President Bush's tax policies. Democrats say his tax cut plan is making a bad situation even worse.
For South Carolina Congressman John Spratt, the top Democrat on the House Budget Committee, Mr. Bush squandered the large surplus left by the Clinton administration. "It was just eight months ago when President Bush was inaugurated," he said. "We presented him with a dowry that no President in recent times has enjoyed: a budget in surplus this year of $90 billion, excluding Social Security surplus, excluding the Medicare surplus."
Social Security and Medicare are two of the largest and most popular government programs. Medicare subsidizes health care for the elderly. Social Security provides pensions. Both are funded through special payroll taxes, and their reserve funds are included in the overall surplus figures. Democrats stress if you take the revised White House budget numbers and remove the Social Security trust fund from the surplus there is almost nothing left.
Party leaders plan to focus on the dwindling surplus and the fate of Social Security in the months ahead. White House Spokesman Ari Fleischer dismisses the charges from the Democrats as politics as usual. Speaking to reporters covering the president's Texas vacation, he said Democrats want a bigger surplus so they can fund pet projects. "Whatever the surplus is, there are people in Washington who are going to try to spend it down to zero," he said.
On a trip Tuesday to the state of Missouri, President Bush strongly defended his economic policies. He said his tax cuts are needed to reverse the slowdown, and the biggest threat to America's economic well being is congressional overspending.