Budget plan appears to pick Medicare `lockbox'

Half of trillion dollar U.S. `contingency fund' would come from surplus

March 01, 2001|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - Just two weeks after the House voted almost unanimously to protect surplus Medicare funds in a "lockbox," President Bush has proposed to pick the lock and allow the money to go elsewhere.

As details of the president's budget proposal began to emerge yesterday, the administration acknowledged that half the $1 trillion "contingency fund" that Bush said would be available for "emergencies or additional spending needs" comes from a $526 billion surplus in the Medicare trust fund.

At the same time, the administration has not said what it plans to do with about one-fifth of the $2.6 trillion surplus that is expected to accrue in the Social Security trust fund over the next decade. Most of that surplus has been earmarked to pay down the federal debt, but $600 billion is left over.

That money might be used to help pay for Bush's proposal to create individual private investment accounts within the Social Security system. Or it might not.

"If this isn't fuzzy math, it's at least fuzzy rhetoric," said Robert Bixby of the Concord Coalition, a nonpartisan budget watchdog group. "Either the money is reserved for Medicare and Social Security or it's available for other purposes. He's trying to have it both ways."

Bush declared in his speech to Congress on Tuesday night that his budget protects "all $2.6 trillion of the Social Security surplus for Social Security and Social Security alone." His budget director said yesterday that Medicare actually has no surplus because it relies heavily on revenue from other sources that isn't offset by the trust fund money.

"We're in denial," Budget Director Mitch Daniels said of the arguments made by Republican and Democratic lawmakers that the Medicare program has excess cash on hand.

Even so, Bush's lack of precise accounting for funds belonging to two of the federal government's most popular programs has given his Democratic opponents a club to use against him in his campaign for tax cuts.

"We should not pass a tax cut that raids Social Security and Medicare and crowds out other priorities," Senate Minority Leader Tom Daschle said in one of several appearances by Democratic Party leaders to attack Bush's budget. "Unfortunately, that's precisely what this [proposal] does."

Bush's budget proposal also threatens to undermine a consensus that has developed in Congress in recent years that surpluses in the Social Security and Medicare trust funds should no longer be used to underwrite spending on other programs - as they were for more that two decades while the overall budget was in deficit.

The "lockbox" became the subject of television satire in last year's presidential campaign because Democrat Al Gore used the term so often to explain his promise to protect Medicare money. But a majority of House and Senate members have voted in the past two years to approve separate versions of proposals to erect procedural barriers that would make it difficult to divert Medicare or Social Security money to other purposes.

The proposal that was voted on by the House two weeks ago - sponsored by Republican Rep. Wally Herger of California - passed 407-2.

While many lawmakers privately concede that such measures are mostly symbolic, the politics they represent can be potent because both programs primarily serve older Americans, who are among the most faithful voters.

Senate Budget Committee Chairman Pete V. Domenici complained yesterday that whenever Democrats want to defeat a Republican proposal they "go get the seniors and get them riled up and get them frightened about Republicans."

Bush told voters during the presidential campaign that he intended to use part of the Social Security surplus to ease the transition to private accounts. Democrats oppose that idea, but it doesn't violate the "lockbox" concept.

The Medicare money appears more vulnerable because Bush has been vague about how he would pay for all the proposals he has offered. Daniels suggested yesterday that the contingency fund might be used to help pay for a missile defense system.

"All we can tell you is the president said it's not going to be used for anything but Medicare, and when we get finished that's what's going to happen to it," Domenici said. "Then we can look out to our seniors and say, `Another red herring.'"

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