Bush will argue 'fiscal sanity' before Congress

Michigan Gov. John Engler and Bush chat Monday morning in the East Room. The president's tax cut "should be big, fast, across-the-board and right now," Engler said.     WEB EXCLUSIVE John King: Bush to address Congress joint session

WASHINGTON (CNN) -- President Bush, offering a glimpse into the budget address he will deliver to Congress on Tuesday night, said Monday he will plead the case for a brand of "fiscal sanity" that controls federal spending limits and returns much of the projected budget surplus to taxpayers.

Bush will reveal some details of his budget plan in a Tuesday prime-time speech before a joint session of Congress. The president is proposing a $1.6 trillion, 10-year tax cut as part of the plan.

"We are going to have a realistic budget that is going to enable our nation to meet its priorities, set aside money for contingencies and pay down the debt, but have enough money left over so our people can get a real and substantive tax relief package," Bush said just before going into his second full Cabinet meeting.

Bush told reporters he would "make the case tomorrow night" that all of his top priorities are within reach, including the massive tax cut package he pitched along the 2000 presidential campaign trail.

Bush said he would ask members of Congress to "give us a chance, and we will have fiscal sanity in our budget." The speech, he said, will last just long enough for his point to be made.

"I'm a person who tries to get to the point, to speak long enough so people will get where I'm coming from, but not too long for people to go to sleep," Bush said, smiling.

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Earlier Monday, Bush asked the nation's governors to back him up as he prepares to argue for his tax and budgeting priorities.

A former governor himself, the president is banking on the support of his gubernatorial brethren as he approaches a closely divided Congress.

In a morning meeting with members of the National Governors' Association, Bush said states that have passed income tax cuts have enjoyed the kind of prosperity the nation will benefit from if his tax relief proposals are implemented.

The president argued that more than half of the nation's 50 states have cut their income taxes in the past three years, and each has enjoyed some form of economic rebirth.

"The surging growth we have seen in the states that have reduced taxes gives an answer to those who say we cannot afford tax cuts. You've shown we can't afford not to cut taxes," Bush told his former colleagues.

"It has been tax relief that has pumped adrenaline into struggling economies," Bush said. "More than half of the states have reduced taxes in each and every one of the past three years."

The president was in good company Monday. Some 30 of the 50 governors are Republicans, although the NGA chairman this year is a Democrat, Maryland Gov. Parris Glendening, who expressed concerns about the size and scope of Bush's proposal.

"Some of us are very concerned that the tax cut proposed is too large and may not provide adequate funding for priorities like education and prescription drug coverage [for seniors]," Glendening said.

John Engler, the Republican governor of Michigan, NGA vice chairman and one of Bush's staunchest allies, countered, "Many of us have a perspective on the tax cut. It should be big, fast, across-the-board and right now." Engler's declaration was met with enthusiastic applause.

Corporate subsidies may be cut

Bush may be lining up a budget proposal that some in the corporate community may consider a bit unfriendly, according to the head of the White House budget office.

White House Budget Director Mitch Daniels made the rounds of the Sunday talk shows in advance of Bush's speech Tuesday night. Daniels pushed the tax cut by arguing that Bush would increase spending for education and Medicare, and would set in a place a trajectory for paying down the nation's publicly held debt.

But even with its reliance on projections of a $5.6 trillion federal budget surplus over the course of the next decade, Bush's budget team will have to come up with cuts within the federal government to keep across-the-board spending levels down.

Bush's people want to hold government-wide discretionary spending to a growth rate of 4 percent, allowing them to meet Democratic criticism with arguments that federal spending will increase, while salving the anxieties of conservatives who might like to see federal outlays reduced.

The Bush White House has been close-mouthed about where it would be inclined to cut spending, but Daniels hinted Sunday that a variety of corporate subsidies could be on the block. The news is certain not to sit will with some of the new president's most reliable corporate supporters.

"There will definitely be some restraint, and even cuts in terms of government's involvement and subsidy of corporations," Daniels said, adding that many subsidies could face trimming operations, but would not be eliminated.

Most of those cuts would come, he said, from programs deemed duplicative. These could include government research and investment programs, and some social aid endeavors.

"We have 50 programs for the homeless sprawling across eight departments of government," Daniels told CNN's "Late Edition."

"Those are not particularly the ones we're looking at here, but we have to be careful with duplication of that kind."

The Export-Import Bank, which provides loans to foreign concerns that use U.S. products and services, could be targeted, as could federal programs to provide low-cost telephone service to rural areas.

Democrats question Bush's economics

A number of prominent Democrats also took to the airwaves Sunday to advance their argument that Bush's tax-cut proposal could mean trouble for essential government programs.

Sen. John Kerry, D-Massachusetts, said on NBC's "Meet the Press" that the tax-cut plan would turn out to be Bush's "first significant mistake," and he predicted a long, drawn-out battle in the House and Senate.

Bush administration officials remained optimistic about passage of the budget. "We think the votes will be there, and there will be more votes there after people ... have seen our overall plan," Daniels said.

Kerry said Bush's tax-cut proposal would put a squeeze on various programs. Once funding for Social Security, Medicare and other non-negotiables have been subtracted from the $5.6 trillion surplus projected over the next decade, only $100 billion would be left "to do everything that you have to do for the rest of government," the senator said. "I can tell you, there is no way possible to do that."

Not so, said Sen. Pete Domenici, R-New Mexico, "The issue is, can we afford $1.6 trillion returned to the American people?" he said on NBC. "I've come to the conclusion that we can."

Federal Reserve Board Chairman Alan Greenspan has suggested that if projected surpluses don't materialize tax cuts should be postponed.

California's Gov. Gray Davis, a Democrat, agreed. "I believe you wait until the money is there before you give it back," he said on NBC.

But Daniels said Greenspan's proposal "is flawed conceptually and mechanically impossible."

CNN White House Correspondent Kelly Wallace, Ian Christopher McCaleb and The Associated Press contributed to this report.

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