Thursday, September 6, 2001

Inouye: Soc Sec,
Medicare may fund
U.S. defense

He does not know yet whether
his plan will get Senate support

By Tony Capaccio
Bloomberg News

WASHINGTON >> Congress should use surplus Medicare or Social Security funds if needed to pay for the Bush administration's request for $18.4 billion in extra defense spending in fiscal 2002, Sen. Daniel Inouye said yesterday.

The Hawaii Democrat, who chairs the Senate Defense Appropriations subcommittee, said he will seek a vote on the Senate floor to waive a prohibition against spending Medicare funds on other programs.

The budget resolution allows this move; passage requires the votes of 60 senators, or three-fifths of the chamber. Most members of Congress have pledged not to use Medicare or Social Security funds for other purposes. Asked if he can muster the votes, Inouye said, "I have no idea."

"Many of our colleagues are going to be reluctant to cut into Social Security to pay for defense," he said. "Politically, they worry the voters will penalize them for raiding Social Security."

Inouye's comments frame the debate in Congress as committees begin to write details of the budget for the fiscal year that begins Oct. 1.

New projections show the federal budget surplus over the next 10 years will be about 40 percent less than estimated in May and will leave little this year to pay for the added funds the administration is asking for education, agriculture and defense.

Inouye's committee heard Defense Secretary Donald Rumsfeld plead yesterday that his department "needs every nickel" of its $329 billion request.

"The statistics indicate we will have to spend the surplus of Medicare to have the additional funding, and that is considered against the budget resolution," Inouye said. "I will seek a waiver to those provisions."

Rumsfeld did not endorse that move. "That is a presidential decision," he said. President Bush has promised not to raid these reserves; his budget director, Mitch Daniels, has said repeatedly -- and as recently as yesterday before the Senate Budget Committee -- that it will not be necessary.

Senate Budget Committee Chairman Kent Conrad, D-N.D., and his House counterpart, James Nussle, R-Iowa, have said they are opposed to using Social Security or Medicare funds to pay for defense.

Two Republicans on Inouye's subcommittee, Sen. Arlen Specter of Pennsylvania and Sen. Thad Cochran of Mississippi, said after the hearing they were undecided about whether to support him.

The budget resolution allocated about $311 billion for defense in the fiscal 2002 budget but not the additional $18.4 billion amendment -- including $8 billion for missile defense -- the administration requested in late June.

At the time, it was assumed the supplement could be paid for from the non-Social Security and Medicare surplus.

The situation leaves Congress with "a few terrible options," Inouye told Rumsfeld. One is a general reduction that would hit defense readiness, procurement, research and operations. The other option is declaring a national emergency to justify the spending, "which I would consider a farce," Inouye said.

"The only way for us to live within this level would be to decimate your modernization request or gut your readiness funding and eliminate the pay raises and some force structure," Inouye said of the options short of tapping Medicare.

In his testimony, Rumsfeld declined to discuss how his request could be financed. Instead, he repeated an assertion he made last month that the Pentagon needed "every nickel" of the overall $343 billion request, which includes the Energy Department and military construction.

If enacted, the budget would represent the largest increase since the Reagan buildup in the early 1980s.

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