White House, Dems entrenched in competing budget outlooks

By Manuel Perez-Rivas, CNN Washington Bureau

WASHINGTON (CNN) -- Congressional Democrats and the White House dug in their heels Thursday in the lengthening stalemate over the federal budget, continuing a conflict that has become all the more charged amid expressions of vastly differing views on how Social Security fits into the larger budget picture.

The issue has divided politicians largely on partisan lines, with Democrats placing the blame on the White House for the possibility that the nation's shrinking surplus might require the use of Social Security funds to pay for spending, and Republicans saying the Democrats are resorting to scare tactics.

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The sharpness of the debate was evident at a Senate Budget Committee hearing Thursday that offered Democrats -- who now control the chamber -- their first opportunity to question White House budget director Mitch Daniels since the White House and the Congressional Budget Office released their mid-session budget projections. The Democrats did not hold back. "Frankly, when you come before this committee and say that we can honor all the commitments for 2002, I tell you, I think it defies logic and defies truth," Sen. Kent Conrad, the Democratic committee chairman from North Dakota, told Daniels.

Conrad was referring to the White House position that the federal government can afford to pay for Bush's proposals to increase spending in such areas as defense and education without dipping into the Social Security surplus.

Both Bush and members of Congress from both parties had earlier pledged to use Social Security funds solely for paying down long-term federal debt, out of concern for the retirement program's long-term viability.

Concern over the future of Social Security played a prominent role in the 2000 presidential campaign, and it could re-emerge as a key factor in next year's congressional mid-term elections. Conrad and other Democrats have accused Bush of "over-promising" when he made his pledge to protect the funds.

Budget numbers released in August by the nonpartisan CBO project that the government will fall just short of using Social Security funds in fiscal 2002, Bush's first budget year. But that does not count spending increases put forth by the administration -- including $18.4 billion more for defense.

In addition, the CBO has estimated that Social Security money may be needed for other obligations in 2003 and 2004.

Domenici: Use Social Security

So far, Bush and most Republicans have said they do not believe that will need to be done. But Thursday, Sen. Pete Domenici of New Mexico, the senior Republican on the Budget Committee, suggested that using Social Security funds may not be a bad idea, considering the weak state of the economy.

Domenici, who carries significant influence within the GOP, said he has spoken with at least 15 economists about the policy of setting aside the Social Security surplus.

"None of them believe...that's good economic policy for America, to say we cannot touch those funds in an era of declining growth," he said.

"You do not have to use all of it to protect Social Security. You don't have to leave all of it there," he added.

Daniels, however, stuck to the position that the Bush budget will not touch Social Security, as long as no additional spending is added by Congress. And, he said, he would recommend that the president veto any bill that dips into the Social Security surplus as Congress completes work on its 13 annual appropriations measures this fall.

Bush, also Thursday, said he plans to stick to his pledge. "I have repeatedly said the only time to use Social Security money is in times of war, times of recession or times of severe emergency. And I mean that. I mean that," he told reporters.

But Daniels made sure to express his displeasure to Conrad over some of the language Democrats have used in recent weeks in their comments about the threat posed to the surplus by the Bush budget, suggesting Democrats were exaggerating the potential effects on Social Security.

"It's an appeal to the chairman to be much more careful about the use of words which are inaccurate. Virtually the rest of the world has come to understand how this all works. But phrases like 'coming out of trust fund,' 'raid,' 'taken from the trust fund,' over and over and over again -- this is not a matter of misinterpretation. This is a matter of fact. It's not true," Daniels said.

"No funds come out of trust funds. The trust funds are not one dollar, one quarter, one nickel smaller than they would have been."

Conrad responded: "I believe I've been precisely correct. It is true that, when Social Security money comes in, it gets credited to the trust fund, no matter how the dollars are used. But how the dollars are used really matters to the ultimate disposition of the promises that have been made."

Another Democrat who was highly skeptical of the Bush budget was Sen. Robert Byrd of West Virginia, who will play a key role in the upcoming appropriations process as the chairman of that committee.

"The president says we're not going to dip into that surplus. How do we do that?" Byrd said. "We can't continue to have it both ways."

But Byrd, one of the elder statesmen of the Democratic Party, took his comments a step further, criticizing Bush for some of the recent comments that he's made on the nation's budget situation. In particular, Byrd cited a recent comment by the president that the budget would be fine if Congress avoids going "hog wild" with spending.

"The president, as I understand it, won the election on two signature items. One, the tax cut. And, changing the tone in Washington. What I've been hearing out of the president is not a change in tone, but the same old finger pointing," Byrd said.