Newspaper article THE JOURNAL RECORD

Budget Battle Brews

Newspaper article THE JOURNAL RECORD

Budget Battle Brews

Article excerpt

WASHINGTON (AP) -- The sour economy and President Bush's tax cut will force the government to tap $9 billion in Social Security reserves this year, congressional analysts concluded in a report Monday, igniting a bitter political fight over the dwindling surplus.

"Houston, we've got a problem," said Rep. John Spratt, D-S.C., ranking Democrat on the House Budget Committee. He used the famous Apollo 13 line to underscore the pessimistic projections from the nonpartisan Congressional Budget Office. "What we've got here is the hard job of adjusting the budget to reflect reality."

The CBO report was scheduled for release today. It was obtained Monday by The Associated Press from congressional sources.

Democrats said the CBO update, coming less than a week after a sunnier White House budget forecast, would severely crimp the ability of the president and Congress to fund their priorities: increasing defense and education spending, providing a Medicare prescription drug benefit, paying for a new farm subsidy program and extending popular expiring tax breaks.

House Minority Leader Dick Gephardt, D-Mo., said the 10-year, $1.35 trillion tax cut is causing an "alarming fiscal crisis," draining away the surplus cushion just as the economic downturn is hitting home.

The CBO provides the budget numbers Congress is required to use.

"The numbers don't lie," Gephardt said.

The CBO now projects the total budget surplus for the fiscal year that ends Sept. 30 at $153 billion. That is down $122 billion from its May estimate but still an enormous amount.

The first installment of Bush's tax cut accounted for two-thirds of the reduction, with most of the rest due to dwindling tax revenues from the slowing economy, the congressional budget analysts said.

The CBO said the government will have to divert $9 billion in Social Security money to make ends meet this year, something Democrats and Republicans had pledged repeatedly not to do. …

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