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D.C. fingers wag over the economy

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WASHINGTON — A new batch of gloomy economic news set off a round of fingerpointing between the White House and Democrats on Capitol Hill Friday, as President Bush and Republican congressional leaders struggled to prevent the current year's federal budget from tapping Social Security funds.

In a meeting with House Republicans Friday morning, White House Budget Director Mitchell Daniels warned that falling corporate tax receipts because of the deteriorating economy made it possible that the fiscal-year 2001 budget would dip into the Social Security surplus by $9 billion to $12 billion. That was a more pessimistic scenario than Daniels had raised just last month, and it would involve violating a pledge made repeatedly by Bush and most members of Congress not to touch the Social Security surplus.

The deteriorating economic picture led alarmed GOP lawmakers to schedule an impromptu session with Bush in the Oval Office to discuss ways — including an across-the-board spending cut — to avert a non-Social Security budget shortfall in the fiscal year that ends this month. Congressional Republicans, in particular, are worried that breaking their Social Security vow could come back to haunt them in next year's mid-term elections.

Following the meeting, Bush, flanked by Vice President Dick Cheney, House Speaker Dennis Hastert, R-Ill., and Senate Minority Leader Trent Lott, R-Miss., read a statement on the White House lawn pinning blame on the previous, Democratic administration.

"The unemployment numbers today are evidence that I've seen firsthand as I travel the country, and that is too many people are losing their jobs as a result of a slowdown that began when Dick and I were campaigning across our country last summer," the president said. "This slowdown is real, and it's affecting too many lives and we're concerned about it."

The president, while arguing that he had the solution, pivoted to charge that Democrats want to raise taxes, a charge Democratic leaders vehemently denied. "There are some, it seems like, who are beginning to say, 'maybe we ought to raise taxes,' " Bush said. "But I can assure you, the four of us on this stage are not going to let anybody pick the pockets of the American taxpayer.

Democrats pounced on the grim economic news as evidence that Bush's economic policies are failing.

"We're looking now at budget numbers that indicate that we're going to spend Social Security and Medicare funds," House Minority Leader Dick Gephardt, D-Mo., said in the White House driveway after a meeting with Bush, putting the blame on the president. "There ought to be a rethinking of the budget we're operating on, and we're just asking the president to do that."

Senate Majority Leader Tom Daschle, D-S.D., told reporters the news amounted to a "reaffirmation of our worst fears of the impact that this budget is having on the economy and on working families all over this country."

The gloomier budget forecast by Daniels for the year that ends Sept. 30 puts the White House closer to the projection of the Congressional Budget Office, which said the government would tap about $9 billion of Social Security surplus this year. The White House had earlier said there would be a slim surplus of $1 billion outside of Social Security, but Daniels indicated that has since evaporated.

Even with the more pessimistic numbers, the government will be running an overall surplus for the year, including Social Security funds, of more than $150 billion in a federal budget of some $2 trillion.

While Bush and Democrats engage in a public blame game for the economy, Bush aides and GOP leaders say privately that they are well aware that they will be blamed for an economic downturn and credited for an economic recovery. As a result, they spent much of Friday considering further economic-stimulus measures, while also debating measures to keep the Social Security surplus intact.

In their session, Bush aides and GOP leaders debated a variety of proposals for curbing spending, including reducing Bush's proposed increase in defense spending or other priorities for next year, and an across-the-board cut in next year's spending, which could be credited to this year's budget.

Congressional Republicans also raised the possibility of a bookkeeping adjustment that would allow them to raise the amount of funds that could be spent before they officially dip into the Social Security money. With Bush aides urging restraint, the lawmakers agreed to "take a deep breath," as one participant put it, and delay a decision until next week on how to handle the potential operating shortfall in the current year and 2002.

White House aides said Bush's joint appearance with Lott and Hastert was designed to demonstrate that the party is "visibly united," as a senior aide described it, despite some signs of dissension this week.

The president, in his remarks, said he and his fellow Republicans have "a plan to get our economy moving so Americans can find work." Calling on Congress to enact his energy and trade agenda, he added: "I want the American people to know we're deeply concerned about the unemployment rates and we intend to do something about it."