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President Clinton Unveils Larger-Than-Expected Budget Surplus, Cancels Intended Trip to North Korea; Bush Nominates Rumsfeld for Defense

Aired December 28, 2000 - 2:32 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANDRIA HALL, CNN ANCHOR: A short time ago, we heard from the president-elect. But a little bit before that, we heard from the man who currently occupies the Oval Office unveil new budget numbers -- that's what Mr. Clinton did -- and a larger than expected surplus. Well, what do the new numbers mean.

Our White House correspondent Major Garrett joins us now with more on that.

Hi, Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Hi, Andria. Yes, while the president-elect was prepared to announce another member of his national security team, the current president of the United States was laying the groundwork for the coming Democratic argument against a big tax cut that that president-elect intends to send to Congress: some $1.3 trillion.

The president of the United States came to the briefing room here at the White House to talk about new numbers put together by the Office of Management and Budget that show that in the coming years, the United States could completely eliminate its federal debt by the year 2009. That's three years ahead of the current schedule -- the current projected schedule.

Now, the president was asked if he was not trying to send a signal to President-elect Bush and to Congress that they should concentrate on debt relief as opposed to tax cuts.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: Obviously it is for the incoming administration and the new Congress to decide exactly which priorities to address and in what manner. But these new projections mean that a fiscally responsible approach that includes new investments similar to the ones I described would still permit us to make America debt-free by the end of the decade.

(END VIDEO CLIP)

GARRETT: What are those priorities the president identified? Well, one would be a modest tax cut, something in the range of about $280 billion over 10 years, and a prescription drug benefit financed through Medicare to America's seniors. Now, the president said if those two priorities were put together, the country still could be debt-free by the year 2010. It would be debt-free for the first time since 1835. He said that would lower interest rates, and that would provide far more pocketbook benefits to most Americans than a big tax cut -- Andria.

HALL: Major Garrett reporting live from the White House. Thank you, Major.

Now to Lou.

LOU WATERS, CNN ANCHOR: Let's chat a bit with our CNN political analyst Bill Schneider, who is out in Los Angeles today.

First about the numbers that President Clinton was talking about today, Bill, implying that with the surpluses increasing, as he has implied before, there's still not enough there to justify the $1.3 trillion tax cut suggested by the Bush people, which prompted one reporter to suggest that the president perhaps was addressing not so much the public with all this, but addressing his remarks to the next administration. Was he?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Not directly, but indirectly. That's for us to conclude. He didn't want to be put in the position of telling George Bush what he should or should not do as president, and he said it's not appropriate to comment. But the implications of what the president said are clear.

There's a -- he said the surplus is very strong. Now, that sends two messages. One, all this talk about a likely recession may be overblown. President-elect Bush has said that the economy may be in trouble, there may be a down slide, and therefore we need a tax cut to boost the economy and make sure we don't go into a recession. President Clinton said the danger is not there. Second of all, he said that we can reduce the debt by the end of the decade if we continue on the same path we are on now, meaning that a tax cut, in his view, would be fiscally irresponsible. You can do it, and of course George Bush would claim that that big surplus makes it entirely feasible to give the money back to the taxpayers. But President Clinton said, if you do that, you're not going to pay down the debt.

WATERS: The other bit of news out of the White House today is that President Clinton has canceled his intended trip to North Korea. What do you make of that? And do you think it has anything to do with the incoming administration?

SCHNEIDER: Well, I think that -- what I make of it is the president would not make that trip unless he was certain that there would be a decision made about a nuclear weapons treaty with North Korea. And if it's not certain that there'll be something to sign and show for that trip, then it's not going to happen. And that apparently is the case.

WATERS: And we have just heard George W. Bush nominating Donald Rumsfeld to be his secretary of defense, filling out his national security team. We have more to go on here to assess what kind of an administration the Bush administration will be. What do you think?

SCHNEIDER: Well, it is a bit of a surprise. As you indicated earlier, a lot of people expected former Sen. Dan Coates of Indiana. Some foreign policy intellectuals were talking about Paul Wolfowitz, who is now at Johns Hopkins University, a conservative intellectual in the area of international affairs.

But he named Don Rumsfeld, which is really a name from the past. He was in the Nixon White House, a counselor to President Ford, a secretary of defense under President Ford, and did not hold high positions in the Reagan or the first Bush administration.

A bit of a surprise because he is associated with the Ford administration more than any other. The Ford administration, to a lot of conservatives, was not the model of foreign policy because they associate that with the Nixon-Ford policy of detente. On the other hand, Don Rumsfeld is impeccably professional, knowledgeable about the military, has been secretary of defense. My goodness, that was almost -- that was about 15 years ago...

WATERS: Yes.

SCHNEIDER: ... he was secretary of defense, widely known in Washington and trusted. So it's an interesting appointment, but not one that I think conservatives would find themselves tremendously enthusiastic about.

WATERS: More like 25 years ago.

SCHNEIDER: Twenty-five years ago. Is that right? Yes.

WATERS: George W. Bush also indicated that Rumsfeld's goal would be to, as he put it, "challenge the status quo" inside the Pentagon. What do you suppose that means?

SCHNEIDER: Well, every secretary of defense has to deal with the entrenched military interests and all the services and their leaders, and he apparently feels that Secretary Rumsfeld knows what's going on in the Pentagon, won't have a steep learning curve, and can hit the ground running because he knows where the bodies are buried. Even if it was 25 years ago, he knows how things work there. So he is in a position to challenge that status quo.

In particular, I think one of the main qualifications that got the appointment for Rumsfeld was the fact, as was indicated earlier by John King, that Rumsfeld spearheaded the investigation of a possible missile attack on the United States. And he is apparently an enthusiastic supporter of the most controversial proposal, besides the tax cut, that President-elect Bush has made, and that is for a national missile defense plan. That, I think, was very important in the designation of Don Rumsfeld to this position, and he is likely to make that his major policy priority.

WATERS: All right, Bill Schneider, our political analyst out in Los Angeles today, thanks. Have a good trip.

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