Bush targets budget deficits
CRAWFORD, Texas (AP) — As he weighs the pieces of what could become a new White House economic plan, President Bush emphasizes a new priority — reining in budget deficits and their political liability.
Bush used his weekly radio address Saturday to promote the no-deficits theme that emerged from the economic summit he convened this week near his ranch. That forum also yielded ideas for new tax cuts for small investors that he admitted had caught his eye.
"We cannot go down the path of soaring budget deficits. We must meet our defense and homeland security needs, and hold the line on other spending," Bush said in his broadcast.
Drawing parallels between the Vietnam era and today, he recalled how war spending in the 1960s was not balanced by cuts in the rest of government spending and, as a result, the 1970s saw deep unemployment, growing deficits and spiraling inflation.
"We must remember the lessons of the past," he said.
The focus on fiscal restraint comes as the president and his economic team weigh proposals for a new long-term plan to aid the struggling economy. He told reporters Friday that he was intrigued by several ideas that emerged during the forum he convened Tuesday at Baylor University in Waco, Texas.
Bush singled out four particularly "interesting ideas" — cutting taxes on dividends and capital gains, increasing the amount of stock-market losses that individuals can deduct from one year's taxable income (currently $3,000), and speeding up increases in the amounts people can contribute to their 401(k) retirement accounts.
"I am going to analyze and think about some of the suggestions so that when I announce them they'll be well thought out, they'll be a part of a long-term plan," he said.
White House advisers later cautioned that proposals arising out of the economic forum have yet to be sorted or summarized, so any decisions on a new economic plan are likely to be weeks away.
But Bush's top economic adviser, Lawrence Lindsey, suggested on CNN's Saturday edition of Novak, Hunt and Shields some of what the White House has in mind: "We need tax simplification and we need lower taxation of capital on all fronts."
Senate Republican leader Trent Lott was quick to embrace the notion of a new stimulus package. "Helping investors, protecting pensions and generating market confidence are top priorities for us," said Lott, R-Miss. "These market boosters should be front and center on the Senate agenda."
Democrats in recent weeks have focused their election-year criticism of the president on the return to federal budget deficits under his tenure and tax cuts. Bush had previously laughed off the resurrected deficit — projected to run $165 billion in the budget year ending Sept. 30, the first red ink in four years — by saying he had always maintained that deficit spending would be necessary only if there was a war, recession or national emergency.
His standard punchline then: "I didn't think we were going to get the trifecta."
Now, with Republicans headed into November balloting that will decide control of Congress and Democratic rivals positioning to challenge Bush in 2004, the message is entirely serious.
"For the good of our economy, for the good of the people who pay taxes, my administration will spend what is truly needed, and not a dollar more," Bush said in Saturday's broadcast.
On Tuesday, Bush scrapped $5.1 billion in emergency spending approved by Congress, saying much of it was unnecessary. That decision, too, carried a political price as veterans, firefighters, AIDS activists and Jewish groups accused him of abandoning their causes by depriving them of money.
"Every project sounds like it's needed, every proposal is one that's got to be funded, and my job is to set the priorities," the president replied Friday.
He also had fresh words of praise for Treasury Secretary Paul O'Neill, whose blunt off-the-cuff remarks have rattled markets and lawmakers. O'Neill is "doing a fine job," Bush said. "I find him to be refreshingly candid."
Bush also confronted, despite an accelerating debate outside his administration that includes some Republican lawmakers, the question of how to oust Iraq leader Saddam Hussein.
"I am aware that, you know, some very intelligent people are expressing their opinions about Saddam Hussein and Iraq," Bush told reporters. "America needs to know, I'll be making up my mind based upon the latest intelligence, and how best to protect our own country plus our friends and allies."
Bush planned to meet this weekend with national security adviser Condoleezza Rice and on Wednesday with Defense Secretary Donald H. Rumsfeld. Aides said the Rumsfeld meeting would focus on plans for missile defense and the Pentagon budget.
On another foreign policy matter, the president said he had spoken with Mexican President Vicente Fox, who canceled his scheduled Aug. 26 visit to Bush's ranch in protest after Texas executed Mexican Javier Suarez Medina for the murder of an undercover U.S. drug agent.
"I understand why (Fox) is not coming. He said that if the execution goes forward he's not going to come," Bush said. "And I said, 'Well, we have laws here in America. The state of Texas has got a law.'"
Bush said he had no doubt that relations between Mexico and the United States will remain strong.
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