Bush pushes for tax cut

George Bush must persuade a divided Congress

The battle over the nation's budget is the centrepiece of nearly every American presidency. And as BBC News Online's North America business reporter David Schepp explains, the battle this year pits a new president and his tax-cut plan against a Congress steeped in eight years of fiscal responsibility.

When newly sworn-in US President George W Bush addresses a joint session of Congress on Tuesday evening to explain his budget, he will borrow a page from his predecessor Bill Clinton as well as push his own cost-cutting agenda.

In making his speech, which will be televised by the major US television networks, Mr Bush will include the cornerstone of his presidential campaign, a $1.6 trillion, 10-year tax cut, which his Democrat opponents have sworn to scale back.

Mr Bush will argue that the tax cut is vital to help keep the economy out of recession.

But Mr Bush will also take a page from his forerunner, Bill Clinton, who called on Congress in his 1998 State of the Union address, to "save Social Security first."

Mr Bush's 100-page blueprint to Congress includes a plan that protects Social Security, the US national retirement plan, by locking away every penny of the $2.6 trillion surplus the scheme generated in the booming 1990's economy, the White House says.

But he plans to ensure that most of the remaining $2.5 trillion budget surplus is returned to the public in tax cuts, rather than used to increase government spending.

The president's $1.95 trillion proposed budget is being called "a blueprint for new beginnings".

The budget battle may launch the first of many battles the new president may face with Democrats over far-ranging issues, including education and health care to Social Security and Medicare, the nation's health plan for America's elderly.

'Zero' national debt?

In perhaps what may be the most controversial part of his speech, Mr Bush, a Republican, will unveil his plan to pay off $2 trillion of the nation's national debt, leaving approximately $1.2 trillion unpaid by 2011.

It differs from Mr Clinton's (and former Vice President Al Gore's) plan to pay off the national debt in its entirety by 2008.

Mr Bush's plan to leave the country in debt may be a hard sell to many fiscally conservative congressmen, who have demanded to pare the debt to zero.

Paying off the debt, too, has proven to be a popular theme with American voters, who have called on the government to eliminate the debt, fearing interest payments on the balance will erode their children's future.

Much of the debate over leaving some of the national debt in play is technical. Putting it plainly, Mr Bush's spokesmen have said that paying off the remaining $1.2 trillion in debt would cost more than it is worth.

Education a priority

The plan President Bush is to present to Congress on Tuesday evening is merely an outline of his stated goals. A full budget proposal for fiscal year 2002, which begins on 1 October, will be submitted in the spring.

Other parts of that proposal include an 11.5%, or $4.6 billion, increase in education spending.

Education has been a major theme for Mr Bush, who hopes to push through Congress a reform bill that will permit parents with children in failing schools to use $1,500 education vouchers to help buy private education for their children.

But a 6.5% increase in funding for the US's historically black colleges and predominately Hispanic universities is viewed primarily as a political ploy. It is part of a plan by Mr Bush to woo minority voters, who in large numbers voted for Al Gore in November's presidential election.

Democrats defensive

But it is Mr Bush's $1.6 trillion tax-cut plan that has Democrats ready to do battle. They have called the plan irresponsible, saying it would return far too much money to the rich and leave social programs wanting.

They have also criticised the president's school voucher program, which they say will pull money from the school systems in most need.

Democrats would rather see the money go directly to the schools.

In making his speech, Mr Bush will call for fiscal sanity to prevail. His budget plan calls for lower increases in spending for many departments of the government spending than seen in recent years.

With Democrats waiting in the wings, ready to pounce on the president's $1.6 trillion tax cut and cuts in social programs, it may very well be spring before the dust settles.