Democrats introduce rival budget, urge caution

Daschle unveils the Democratic budget plan Thursday, saying if Republicans give it a look, "we think they'll like what they see."

By Ian Christopher McCaleb
CNN.com/AllPolitics Writer

WASHINGTON (CNN) -- Congressional Democrats on Thursday rolled out their own proposals for tax cuts and national debt repayment, saying their plan was mindful that long-term surplus projections may not hold up.

The Democratic plan offers an alternative to the 207-page outline for the 2002 fiscal year budget the Bush administration sent to Capitol Hill on Wednesday, following the president's first speech to Congress on Tuesday night.

Senate Minority Leader Tom Daschle, D-South Dakota, said the plan contains "a hedge" against the possibility that estimates by the nonpartisan Congressional Budget Office may not come to pass that the government will control a surplus of $5.6 trillion by 2011.

VIDEO CNN's Major Garrett reports on Bush's tour to gain support for his proposed budget Play video (QuickTime, Real or Windows Media) U.S. President George W. Bush explains his proposed budget to Congress (QuickTime, Real or Windows Media) Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Democrats Tom Daschle and Richard Gephardt respond to President Bush's budget proposal (QuickTime, Real or Windows Media) Part 1 Part 2     DOCUMENT President Bush's tax proposal Documents in PDF format require Adobe Acrobat Reader for viewing.     RESOURCE Whitehouse.gov: President Bush's budget blueprint     INTERACTIVE How will Bush's proposal affect your tax bracket? Compare: 2001 budget vs. Bush's proposed 2002 budget     IN-DEPTH CNNfn: Tax Time     MESSAGE BOARD Taxing and spending   YOU SAID IT From: Taxing and spending

That safety valve, Daschle said in a joint appearance with House Minority Leader Richard Gephardt, D-Missouri, requires a set-aside worth approximately one-third of the budget surplus for pressing priorities such as education, defense and an eventual prescription drug coverage regimen for Medicare beneficiaries.

"Our tax cut has to fit in within a responsible budget," Daschle said, pointing out that one-third of budget surplus would be dedicated to about $900 billion in tax cuts, in contrast to the president's proposed $1.6 trillion in cuts.

Another third of the surplus, the Democratic leaders said, would go toward an immediate reduction in the national debt, with the remaining third designated for education programs and the like.

"We hope our Republican colleagues will look at our plan," Daschle said. "If they do, we think they'll like what they see."

Bush's budget blueprint is a relatively light document compared to the regularly encyclopedic budget proposal routinely produced by the White House.

The administration has said it will likely produce a full budget proposal sometime in April. But by that time, the tax and budget battle in Congress will already be under way.

The first battleground may be the House Ways and Means Committee, where Chairman Bill Thomas, R-California, would like to produce an early tax bill based on the Bush plan to change the tax code's bracket structure.

Daschle, Gephardt and Ways and Means ranking Democrat Charlie Rangel, D-New York, protested Thomas' quick move Thursday morning, questioning the wisdom of the committee majority's plan to address the brackets, but not other portions of Bush's tax plan, including his planned phase-out of the marriage penalty and estate tax.

"They are rushing," Gephardt said. "I suppose because they are worried about the facts getting out, they are worried about this budget being examined."

Bush's $1.96 trillion 2002 federal budget would set the government on a path toward directing the largest portion of the projected surplus -- $2.6 trillion drawn from Social Security -- toward paying off about $2 trillion in mature government debt, leaving the government about $1.2 trillion in the red by 2011.

Additionally, Bush would use $1.6 trillion for his tax cut, $842 billion for extra spending or debt reduction to be determined later; $417 billion for the added federal interest costs of tax cuts and spending; and $153 billion to overhaul Medicare, including a prescription drug benefit.

The Democratic plan differs from Bush's in that it includes an alteration of only one of the current five tax brackets, reducing the 15 percent bracket to 12 percent.

Gephardt argued that Bush's claim that a waitress earning $25,000 per year would see a significant reduction in her taxes under the Republican plan was misleading, because someone earning that sort of money pays mostly payroll taxes, rather than income taxes.

The Democratic plan, he said, expands the Earned Income Tax Credit to benefit people in that earning range.

"Forty-three percent of their tax benefits go to people earning an average of $900,000," Daschle said. "We want to provide a cut for families that pay only payroll taxes, who would not be helped under the president's plan."

Speaking on the second day of his post-speech budget tour, Bush told a North Little Rock, Arkansas, school assembly that the Democrats were intent on "targeting people in and targeting people out" of tax relief.

"If you pay taxes, you should get tax relief," he said. "I agree with my critics, however, that those on the bottom end should get the most help."

The president insisted his plan will help those people, and two of his surrogates, Budget Director Mitch Daniels and Treasury Secretary Paul O'Neill, were to appear before the House and Senate Budget Committees respectively Thursday to drive that argument home to a closely divided legislative branch.

Democrats continued Thursday to caution their Republican counterparts not to rely on surplus estimates, saying that such long-range projections rarely hold true.

"The whole point of what we're saying today is be cautious, be conservative, be skeptical," Gephardt said.

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Bush prepares budget speech for Congress
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Bush, Democrats outline budget differences
February 24, 2001
Bush to highlight waste, call for new budget priorities
February 23, 2001
Bush unveils 'fiscally responsible' budget
February 22, 2001
Bush moves to increase federal spending on education
February 21, 2001

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