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Lower estimated surplus stirs up budget debate

WASHINGTON (CNN) -- Democrats and Republicans sparred Saturday over projections for this year's expected surplus, arguing whether the lowered estimates announced this week threaten government programs and weaken the budget.

The White House said Wednesday the surplus estimate for fiscal year 2001, which ends September 30, had shrunk to about $158 billion. That is more than 40 percent lower than the $281 billion projected by the Office of Management and Budget (OMB) in April.

President Bush, in his weekly radio address, blamed the smaller estimate on a weaker economy but said the federal budget remains "strong, healthy, and in balance."

He said the 2002 budget surplus will be the second-biggest in U.S. history, a testament to the country's growing economy.

But Democrats blame Bush's fiscal policies for whittling down the surplus. Rep. John Spratt, D-South Carolina, in the Democrats' weekly radio address, said the nation's budget is in a "straightjacket" because too much of the surplus went to the president's tax plan.

"The president blames the disappearance of the surplus on excessive spending, but all of the extra spending since he came to office is spending that he either initiated or approved," Spratt said.

Budget officials said the decrease was due to the ongoing economic slowdown and the income tax cut passed earlier this year, and administration officials maintained the president's tax cut and spending plans will leave both Social Security and Medicare trust funds intact.

"This is a great achievement," Bush said, "and it happened because Congress worked with me this spring to agree to a responsible total level of spending."

Concerns over the shrinking surplus have heated up the debate over the budget in recent days, with Democrats charging that the Social Security surplus remains intact only because of a change in accounting practices announced by the OMB last week.

Spratt said Congress' progress in improving budget projections over the last eight years is now being erased.

"Last year, when we passed the budget President Bush inherited, it was in surplus by more than $90 billion. Now, for the first time in eight years, the budget will get worse, not better," he said.

The president sought to shift the responsibility to Congress, repeating a warning to lawmakers that "spending too much" poses the greatest threat to the budget outlook.

Because both President Bush and Congress have committed not to use the Social Security surplus to pay for government spending, White House officials caution there is little wiggle room left in the budget, even though the current overall surplus is still the second-largest in history.

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