Bush, Gore plans carve into surplus

Presidential hopefuls' proposals outstrip revenue projections

$893 billion available

Campaigns constrained by vow not to touch

Social Security taxes

April 30, 2000|By Jonathan Weisman | Jonathan Weisman,SUN NATIONAL STAFF

WASHINGTON -- As they loudly accuse each other of fiscal recklessness, Al Gore and George W. Bush are frantically juggling their tax-and-spending proposals to hide a basic fact: Both presidential candidates may have already spent all the money likely to be available to them.

Stewardship of the nation's economy emerged last week as the latest issue in Campaign 2000, as Vice President Gore charged Texas Governor Bush with practicing "casino economics" while Bush said Gore would revive the era of "big government."

Rhetoric soared as both campaigns struggled to shoehorn their budgets into the surplus that is projected to be generated from federal tax sources other than Social Security taxes.

When all tax revenue is combined, federal budget projections foresee surpluses vast enough to accommodate virtually any spending proposal or tax cut, $3.2 trillion in all over the next 10 years.

But for political reasons, both Democrat Gore and Republican Bush have vowed not to touch any of the Social Security surplus, leaving behind a relatively paltry sum to work with-- about $893 billion for the decade -- if current federal spending is allowed to rise with inflation.

That self-imposed limit has proved to be surprisingly constricting to both camps, especially for Bush.

Even by his calculations, the Texas governor's mammoth tax cut proposal would cost the government $1.3 trillion over 10 years, far more money than congressional and White House budget forecasters predict will materialize in the non-Social Security surplus.

Add to that Bush's proposed increases in defense spending, health care, education and housing, and the governor appears to exceed the projected non-Social Security surplus by nearly $580 billion, according to Congressional Budget Office projections and Bush's own spending figures.

ka15 But Gore might have more at stake in the battle over budget numbers, since he has made economic stewardship the central theme of his White House bid. Though Gore's promised tax cut is a fraction of Bush's, his proposals for Medicare, education, health insurance coverage and Social Security are more generous.

ka0 All told, the vice president has outlined more than $1.1 trillion in new spending and debt reduction efforts, more than $200 billion above the most conservative congressional budget forecasts.

Each campaign accuses the other of spending far more money than either of these forecasts and insists its budgets is balanced.

"I feel completely comfortable that we will have plenty of money to make this work," said Elaine Kamarck, the Gore campaign's chief domestic policy adviser.

But to make his numbers work, Gore now says spending that was once supposed to come from the surplus will fit into expenditure forecasts already issued by the White House.

Many of Gore's campaign promises -- such as steady defense spending increases and an expansion of the earned income tax credit for the working poor -- were adopted by President Clinton in his 2001 budget and balanced by cuts elsewhere.

But, Gore advisers acknowledge, most of the vice president's $115 billion increase in education spending and $9 billion in cancer research would have to be offset by cuts they have yet to reveal.

"At some point, we might have to put out a more detailed budget," conceded a Gore budget adviser.

na Gore is also relying on $66 billion in new tobacco taxes and $50 billion from tax loophole closures, measures that President Clinton has long championed but Congress has ignored.

And Gore, despite his earlier pledge, would take $100 billion from the projected Social Security surplus to increase retirement benefits for elderly women even as he accuses Bush of dipping into the Social Security surplus.

"The person who has been making the charges against Governor Bush has been guilty of even worse profligate spending," said a Bush adviser.

Gore's assumptions appear to rely on more traditional accounting methods than Bush's.

Where Gore accepts surplus predictions laid out by the Congressional Budget Office and White House Office of Management and Budget, Bush has had to jettison those forecasts in favor of his own.

After successive days of promising new spending on everything from community health clinics to low-income homebuilding subsidies, Bush was tagged by skeptics this month as a "tax-cut-and-spend Republican," a play on the tax-and-spend liberal label that has dogged Democrats for two decades.

Even Bush campaign officials concede that the cost of the governor's tax cut has been somewhat understated.

Accumulating interest

The $1.3 trillion, 10-year cost estimate does not take into account the additional interest the government would have to pay on a federal debt that would be considerably larger than without the tax cut. Bush spokesman Ari Fleischer put that additional debt servicing cost at $60 billion over five years.

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