BUSH meets with Hastert, Lott to discuss automatic spending cuts

Friday, September 7th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ President Bush is considering a Republican proposal that would trigger across-the-board budget cuts next year if spending starts eating into Social Security reserves, congressional and administration officials said Friday.

Hoping to shield himself and his party from political damage during worsening economic times, Bush was meeting Friday with House Speaker Dennis Hastert, R-Ill., and Senate Minority Leader Trent Lott, R-Miss., and stepping before cameras outside the Oval Office.

White House officials said Bush wanted to express sympathy with workers stung by the economy. He was urging Congress to adopt his budget without exceeding spending goals.

He did not plan to embrace the spending cut proposal Friday, aides said, though White House officials were discussing the idea with GOP aides on Capitol Hill. ``We said we woldn't dip into Social Security, and we want to make sure it happens,'' Hastert said as he headed to meet Bush.

Congressional and administration aides said the last-minute huddle was called after the Labor Department reported Friday morning that nation's unemployment rate soared to 4.9 percent in August, the biggest one-month jump in six years. The three men were looking for a way to reassure Americans that Republicans have a plan to revive the economy and work within a balanced budget that shelters the Social Security trust fund.

Bush was seriously considering the lawmakers' proposal to create a new mechanism in the law for triggering automatic across-the-board government spending cuts should a worsening economy force lawmakers to turn to Social Security surpluses to meet the general federal budget. Officials looking to blunt the unemployment news had hoped for an agreement to be announced Friday, but said details were still being worked out midday and an agreement was uncertain.

The officials spoke about the developing deal on condition of anonymity.

Historically, automatic, broadly applied spending cut proposals have received scant support from many Democrats and some Republicans who oppose the reductions that would result in many programs. Because the cuts affect so many areas of government, opponents have little problem organizing a wide range of outside groups to pressure lawmakers to oppose the proposals.

In the past, such plans have usually been riddled with exceptions. Sometimes they would only apply to discretionary spending _ for example, most automatically paid benefits are not trimmed. Sometimes, defense spending is exempted.

Earlier Friday, White House spokesman Ari Fleischer said Bush was open to the across-the-board spending cuts proposed by Hastert and other GOP lawmakers concerned about threats to Social Security.

Meanwhile, Rep. Dick Gephardt, D-Mo., emerged from a morning meeting with Bush pleased by the president's assurances.

The two met one day after Sen. Pete Domenici of New Mexico, the top Republican on the Senate Budget Committee for the past two decades, said that with the economy slowing and overall federal surpluses dipping, it might be time to use some of the Social Security funds to pay for other programs.

Gephardt told reporters after speaking with the president: ``I'm happy to note that he doesn't seem to agree with Mr. Domenici and (Rep.) Tom Davis, who today were quoted as saying they we needed to go in and start spending Social Security and Medicare trust funds.''

Gephardt, D-Mo., also disputed the White House formulation, spoken several times by Bush and his aides in recent days, that Democrats critical of his tax cut really mean to raise taxes.

``I don't know where he gets that. He's _ best I can figure out _ making it up,'' Gephardt said. ``I haven't said that, and I don't know of other Democrats who have said that. What we are for is a more balanced budget.''

Domenici, in remarks Thursday to the Senate budget panel, raised the prospect of spending some of the Social Security surplus. ``There is no reason in the world you should look at it for only one purpose, to pay the debt down. ... What's wrong with using it for education'' or other purposes, he asked.

He added that in conversations with at least 15 economists, ``None of them believe that is good economic policy for America to say we cannot touch those (funds) in time of declining growth.''

With both parties looking for ways to avoid tapping into the surplus, Fleischer took one option off the table and said the president was open to another.

Fleischer said Bush will not support spending increases, but did not rule out backing an across-the-board spending cut being considered by GOP lawmakers.

``Under our budget, it is not necessary, but as the president has made clear to Congress, the focus should be on spending,'' he said.

Analysts agree that using a small part of Social Security's surplus _ which is expected to exceed $170 billion next year _ would not damage the program's solvency or have any effect on its ability to pay benefits.

But to burnish their images as fiscally responsible decision-makers, politicians of both parties have repeatedly promised in recent years to use Social Security surpluses only to reduce the national debt.

The latest official projections are that for the next few years, almost all that remains of projected federal surpluses comes from Social Security. That has made many analysts doubtful that extra money for items both parties support can be found without dipping into Social Security's surpluses _ especially if the economy continues at a crawl.

Domenici told reporters he believes leaders will find a way to avoid siphoning the Social Security surplus for fiscal 2002, which begins Oct. 1.