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GOP Struggles to Reconcile Hopes, Fears on Budget

The Budget

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  • Social Security Special Report

  • By George Hager
    Washington Post Staff Writer
    Thursday, March 4, 1999; Page A10

    Caught between tax cuts they want and their fear of being criticized for raiding Social Security, Republican budget negotiators debated internally yesterday just how strong they want to make the "lockbox" that would put vast Social Security funds off-limits to GOP tax-cutters.

    Republican leaders said after a closed-door session yesterday that they hope to resolve this and other issues by the end of the week so that House and Senate budget committees can produce budgets by the middle of this month.

    House negotiators had hoped to find money for tax cuts in the $127 billion in interest the federal government will pay the Social Security trust funds in 2000 and 2001. But facing staunch resistance from the Senate and fear in House ranks over Democratic Social Security attacks, negotiators have begun discussing alternatives.

    To produce a revenue boost, sources said, negotiators were considering speeding up excise tax collections or tinkering with the tax code, perhaps lowering the capital gains rate, which usually is projected to produce a revenue surge as stockholders sell off assets at the new, lower rate.

    Senate negotiators had insisted on a way to put all Social Security money off-limits, and members in both chambers warned that dipping into Social Security interest was a non-starter.

    "That ain't going to happen," said Sen. Phil Gramm (R-Tex.). "We're not going to spend a penny of the Social Security surplus and we're not going to use a penny of it to cut taxes." Echoed Senate Majority Whip Don Nickles (R-Okla.), "My guess is that's where the consensus is going to be."

    Rep. Jim Nussle (R-Iowa), a member of both the House Budget Committee and the tax-writing Ways and Means Committee, said a significant minority of House Republicans will insist that the party not touch Social Security money to fund tax cuts. Based on his private count, Nussle said a "critical mass" of 30 to 35 House Republicans agree with him that the money should be inviolate.

    The issue lies at the heart of the GOP's intense struggle to draft a budget that sharply differs from President Clinton's.

    Ideally, Republicans want tax cuts that would take effect next year, before the crucial 2000 elections. But projections show that the non-Social Security budget surpluses that Republicans consider fair game for tax cuts and other priorities do not begin to materialize in any significant way until 2002.

    While tapping Social Security interest payments would produce plenty of money to offset tax cuts in 2000 and 2001, a GOP House source close to the budget talks said negotiators were now looking for "ways of avoiding that pitfall," since it would be sure to provoke Democratic attacks that GOP tax-cutters were raiding Social Security.

    In the meantime, though, Congressional Budget Office Director Dan L. Crippen told the Senate Budget Committee yesterday that CBO figures showed that the administration's budget would divert more than $50 billion of the Social Security surplus in 2000, chiefly through higher-than-projected spending, money for the president's USA savings accounts and trust fund money the president proposes to invest in the stock market.

    The administration has disputed CBO's critique of its budget, insisting that much of the discrepancies come from traditional accounting differences between CBO and the White House.

    © Copyright 1999 The Washington Post Company

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