Despite huge budget surplus, agencies could go on fiscal diet

Senate Budget Committee Chairman Pete Domenici, R-N.M., said Tuesday he expects the Congressional Budget Office to estimate that the unified budget surplus over the next decade will total $5.7 trillion, more than $1 trillion higher than CBO forecast last summer.

Nevertheless, speaking to reporters after a White House meeting with President Bush, GOP congressional leaders and chairmen of the tax and budget committees, Domenici called on Congress to forgo the real spending increases of recent years and give federal agencies no more than a cost-of-living adjustment.

"I hope there will not be a real increase. I hope it will be just enough to meet inflation," Domenici said. "We've had three years in a row of 6 percent growth. We don't need that."

Calling for measures to boost the economy, which he said is in a recession, Domenici predicted Congress would pass "a significant marginal [rate] tax cut" and that Federal Reserve Chairman Alan Greenspan would slash interest rates by "50, not 25" basis points. The Federal Reserve is expected to decide Wednesday whether to cut interest rates.

Domenici did not specifically claim firsthand knowledge of the new surplus figure, but said the $5.7 trillion was the number he expected to hear when CBO officials briefed him Tuesday afternoon. CBO, which last July forecast a $4.561 trillion surplus, will release its new estimate Wednesday.

In Budget Committee sessions over the past 10 days, Domenici has talked about a $5.7 trillion surplus estimate, with an on-budget--or non-Social Security--surplus of $3.2 trillion by 2010. Domenici has repeatedly stressed that his numbers incorporate an inflated baseline to illustrate, that even assuming discretionary spending grows at the rate of inflation, the $3.2 trillion on-budget surplus could accommodate the entire $1.6 trillion Bush tax cut, with enough money left over for various priority spending initiatives such as the creation of a Medicare prescription drug benefit as well as higher defense and education spending.

House Speaker Dennis Hastert, R-Ill., said Tuesday's White House meeting focused on developing strategies for assembling and passing an FY2002 budget resolution, noting the importance of having a budget in place in order to move a tax cut under reconciliation protection in the Senate.

"We have to get the budget done before can move taxes in the Senate [under] reconciliation," Hastert said.

White House Press Secretary Ari Fleischer Tuesday indicated the administration would likely send an "economic blueprint"--an outline of spending without the details of a full budget--in late February.

At about the same time, Bush will appear before a joint session of Congress, although Fleischer cautioned the address should not be characterized as a State of the Union speech. The full budget could follow about two months later, Fleischer indicated.

Senate Majority Leader Trent Lott, R-Miss., said he hoped the Senate would pass a budget resolution by mid-April, get to "the major tax package" by May, and provide "significant tax relief for Americans before the Fourth of July recess." He added that there had been no decision on whether to make any tax cuts retroactive.