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Mitch Daniels: Under Bush, NASA budget up

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WASHINGTON (CNN) -- President Bush's proposed 2004 federal budget has been delivered to Capitol Hill and lawmakers are just starting to read the fine print.

The White House projects the $2.2 trillion spending plan would produce a record deficit of $307 billion next year. That's slightly more than the estimated deficit for this year.

The budget includes a $15 billion increase in military spending and $2.5 billion more for homeland security. But it does not include funding for a possible war with Iraq.

"Inside Politics" anchor Judy Woodruff taled about the numbers with White House budget director Mitch Daniels.

The following is an edited transcript.

JUDY WOODRUFF: Mr. Daniels, if it doesn't include the war and it's still a $300 some-odd billion deficit, how much does a war add to that?

MITCH DANIELS: Judy, first of all, let's all hope earnestly there won't be a war. Saddam Hussein can prevent one any day he chooses just by complying with the requests the world has made of him now for 11 years.

If there should be some decision by the president, we could move fairly quickly after he and our military leaders had told us what to expect in terms of the nature and duration of the conflict. We would then go to Congress quickly with a good faith estimate.

WOODRUFF: So you don't even have a ballpark figure that you're working with?

DANIELS: Well, we have a very wide range and that would depend, as I say, on decisions not yet made and decisions that we still hope won't have to be made.

WOODRUFF: Let's talk about the deficit. We're certainly hearing from Democrats, but we're also hearing from some Republicans in the Congress, including conservative Republicans like George Voinovich of Ohio, saying this deficit is -- there's as much red ink as the eye can see.

You're not so concerned about it, I gather. I listened to your briefing this morning and you said, relatively speaking, it's not a big deal.

DANIELS: It's true that, relative to deficits we've seen in the past, it's much smaller. Doesn't mean it's not a subject for concern, and the president shares that concern.

But the deficit is one priority among many. And those who would make it our top priority will have to step forward and say what they wouldn't do. Would they not prosecute the war on terror? Would they not build homeland security? Would they not act to try to generate more economic growth in this country and so forth?

Those are legitimate points of view, but the president has chosen to make it a high but not our highest priority.

WOODRUFF: Well, certainly, one of the things the Democrats are talking about is they wouldn't extend the tax cut package that the president is proposing. And even some Republicans are critical of that.

But let me ask you about something from Senator Kent Conrad, who's a ranking Democrat on the Senate Budget Committee. He says the Bush plan would burden us and our children with trillions of dollars in new debt, will drive up interest rates, retard economic growth, and create massive problems for the Baby Boom generation.

Let's just take the interest rate piece of that.

DANIELS: Let's do. We have the lowest interest rates in 40 years right now. And they have stayed low, even though we did move from surplus to deficit. A look at the history of interest rates shows no correlation between deficits or surpluses and their movement. This is not to say that it couldn't at some point, at some level, begin to have an affect. But we've not seen it, and there's no reason to expect to see it at the levels of the deficit we have now.

Particularly, as the budget suggests, we can begin moving it back in the right direction.

WOODRUFF: Mitch Daniels, in the wake of the Columbia tragedy, I want to ask you about the NASA budget.

You all are proposing a three percent increase overall for NASA. We know that after the Challenger disaster in 1986, the NASA budget went up something like 20 percent. Are you open to a much larger increase for NASA, given this terrible thing that's happened?

DANIELS: I'm sure the president will be open to new ideas. You know, it's important to note that under his administration, after, as many have noted, a decade of cuts, the NASA budget went up. The shuttle budget went up. And the shuttle's safety and maintenance budget, in particular, went up. And another increase is proposed for next year.

What this tells us, Judy, is that the somewhat tired -- and I'm tempted to say lazy -- Washington viewpoint that starts and stops with dollars just doesn't always tell us the story. What's really important is how well our program is being run.

WOODRUFF: Do you believe that funding could be an issue in the safety of the shuttle program. Could have been an issue in the safety of the shuttle program?

DANIELS: I'll leave that for the investigation. I'll just mention that the shuttle safety, maintenance, life-extension program got a very large increase in the president's first budget and has grown steadily since. So, again, sadly, dollars really don't tell the whole story and can't always head off trouble.

WOODRUFF: But you're still keeping an open mind, you said?

DANIELS: Well, of course.

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