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Gloves Are Off Over Surplus

Washington may still be enjoying the last lazy days of summer, but inside the Capitol, things are just heating up for a battle royale over the budget, reports CBS News' Diana Olick.

Terry McAuliffe, chairman of the Democratic National Committee, sent a shot across the Republican bow Sunday, saying, "The Bush White House has had to admit that they've blown the surplus, that they've raided Medicare, Social Security."

Democrats claim that in a mere eight months, President Bush, through tax reductions and refunds, has shrunk the surplus from trillions to billions, putting Social Security in line to be tapped.

Virginia Gov. Jim Gilmore, chairman of the Republican National Committee, countered that claim: "No benefits are being reduced, and those balances have not been reduced in the Social Security trust fund one dollar. So this is false and misleading."

OMB Surplus Projections
Click here to read the Office of Management and Budget's revised estimate of the budget surplus (.pdf format).
The midyear budget outlook released last week by the White House estimated that the 2001 surplus would be $158 billion, just $1 billion more than what is already committed to Social Security. The figures represent about $123 billion less than the last estimate in April.

According to the president's chief economic adviser, the lackluster economy is to blame for the shrinking surplus.

"We're seeing tax revenues come down very, very sharply as a result of the slowdown,", Lawrence Lindsey said on ABC's "This Week." "We've got to put a stop to that, and I think we have with the tax cut."

Democrats argue the 10-year, $1.35 trillion tax cut will eat into funding for promised government programs.

In a speech at a steelworkers picnic in West Mifflin, Penn., Mr. Bush was adamant that the tax reduction is the shot in the arm the economy needs.

Click here for a closer look at the Bush presidency.
Click here for a look at the 107th U.S. Congress.

"When the economy slows down it's time to understand how to get it started aain," said Mr. Bush. "And one way to help is to give people their own money back."

There will, undoubtedly, be plenty of criticism to go around this week, when the non-partisan Congressional Budget Office releases its latest figures. They're expected to show that a government once rolling in dough, may need to dip into Social Security just to stay afloat.

On Monday, Democrats will focus on the shrinking surplus and its effect on education budgets at 35 events in 25 states. The GOP will counter with a television advertising campaign and a new Web site.

Mr. Bush returns to Washington on Thursday and Congress comes back in the first week of September. The two branches of government will do battle over the budget and 13 spending bills that must be passed by lawmakers in the next two months to keep the country running.

© MMI Viacom Internet Services Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report

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