Democrats Say GOP Will Use Medicare Trust Fund

"Seizing on" new budget figures that show that the federal government will need to spend Medicare payroll taxes in order to pay for defense, Democrats this week plan to "launch an assault" on President Bush's budget and tax policies, the Washington Post reports. The Bush administration is expected to announce Wednesday a projected FY 2001 budget surplus of about $158 billion. Excluding Social Security receipts, the surplus is $1 billion, down from the $125 billion projected earlier this year. Democrats this week will run town hall meetings, protests and "attack" ads, hoping to "make it appear that [President Bush] is breaking a pledge" that his budget would protect Medicare (Kessler, Washington Post, 8/19). "[The] surplus is all but evaporated, and now we are knocking on the door of raiding the Medicare and Social Security trust funds," Sen. Richard Durbin (D-Ill.) said on CNN's "Late Edition" Sunday. House Minority Leader Dick Gephardt (D-Mo.) said on NBC's "Meet the Press" Sunday, "We said at the time the tax cut passed that ... it would cause us to go into Social Security and Medicare, and that's what's happening right now." Gephardt said he could support reducing spending for domestic programs, including health care, in order to "keep out of Social Security and Medicare" (Price, Washington Times, 8/20).

Bush administration officials "insisted" that the president would not use Medicare Part A or Social Security trust funds for spending increases or tax cuts (Holland, AP/Dallas Morning News, 8/19). Republicans "dismiss" the Democrats' charges as "scare tactic[s]." White House Budget Director Mitch Daniels called Democrats' criticism "all nonsense" (Washington Post, 8/20). On "Meet the Press" Sunday, Larry Lindsey, assistant to the president for economic policy, said that Bush's budget would "spen[d] every penny" of Medicare funds this year -- $175 billion in "mostly" payroll taxes and $22 billion in premiums -- in addition to $45 billion from the rest of the budget, in order to "keep the Medicare guarantee." He added, "I think that's a terrific tribute to the viability of the Medicare system" (NBC, "Meet the Press," 8/19). However, Republicans "privately concede they are nervous" about the public's response to news that the budget surplus "has plunged so quickly," the Post reports (Washington Post, 8/19).