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Take 5's Terry Neal: The budget and other news this week

The Take 5 Panel  

Terry Neal is a panelist on CNN's Take 5

CNN Moderator: How might the postponing of the vote until Tuesday affect the budget resolution?

Terry Neal: That's a good question. I'm not anticipating any major changes. One thing that is apparently going on right now is continued haggling over the exact number for the rate of growth in the budget. And perhaps I'm hearing that the number will be closer to what Bush wants for a four percent rate of growth. I'm not sure that there's going to be any further major changes.

CNN Moderator: What are the main complaints of critics Bush's plan to privatize part of the Social Security system?


Terry Neal: Another good question. The main complaints of Democratic critics in particular continue to be over the volatility and unpredictability of the stock market. The argument is that even given over long periods of time the stock market is too unpredictable to risk something as important as retirement dollars. Also, Bush opposes raising the payroll tax. Meaning that they would work from existing dollars rather than new dollars. Even moderate Democrats who favor some version of this believe that the payroll should be increased and that private investment should come from those dollars instead of existing dollars.

Question from chat room: Privatization isn't security. Deregulation in Energy got California blackouts, didn't it?

Terry Neal: While I understand the point, I'm not sure the two things are specifically comparable. What we're talking about with Social Security reform first of all is not privatization or deregulation. The government would continue to have a major role. Bush merely wants the public to be allowed to invest a portion of those dollars in private accounts.

Question from chat room: What if market crashes the year you retire?

Terry Neal: Bush and other supporters of the privatization model make the argument that over the long period of time that people would be investing, they would be almost assured a rate of growth beyond what Social Security offers even given inevitable downturns in the market. So, even if the market crashed the year you retired the overall rate of growth, Bush and his allies offer, would be greater than that what you would get with Social Security. They point to analysis that they say confirms that the rate of growth over decades in the stock market has moved steadily upward even given the occasional downturn.

Question from chat room: Do you think the U.S. should be concerned about how other countries react to the missile defense system?

Terry Neal: Absolutely. Great question. I think one of the problems that Bush has had is making these statements about issues such as missile defense without putting in the appropriate diplomatic work ahead of time. He made his initial mistake more than a year and half ago during the campaign when he announced during a speech in South Carolina that he would abrogate the 1972 ABM Treaty if he could not get Russian and European approval to amend it to allow for the Unites States to build such a missile system. That statement and action ever since has cause great anger among the United States' allies.

CNN Moderator: Is the playing of audiotapes of executions in the media affecting opinion of the McVeigh execution?

Terry Neal: I'm not sure whether that's the case. But, I do know that several polls taken in recent months have shown that while a majority of Americans still support the death penalty, that number has started to erode. I think that has little to do with Timothy McVeigh and more to do with stories like those out of Illinois about death penalty convictions being overturned, and growing concern that innocent people could perhaps be put to death.

Question from chat room: What is the point of a "non-binding" budget resolution. Does that not say "this is what we are saying, not what we are doing"?

Terry Neal: I'm not an expert on the history of congressional budgeting, but generally speaking the idea is to get early consensus on a framework and to be able to work from there. This year a budget resolution was important because leaders from both sides of the aisle felt it important to agree on a number from Bush's tax cut and rate of growth for government spending. But there remains much to argue over, such as specifically how they will structure the tax cut.

CNN Moderator: What is the main controversy surrounding the issue of vouchers in the Bush education plan?

Terry Neal: The main issue is whether students should have the right to take public money and use that to help them finance private education. The democrats remain staunchly opposed to that idea and told Bush so at a meeting recently at the White House. But it appears there will be some sort of compromise that allows students at failing schools to use public dollars to hire private tutors. And it appears that there will be some measure that would allow students at failing schools to transfer to other public schools or charter schools.

Question from chat room: Democrats are saying the Bush numbers do not add up, that defense and tax cut numbers are only preliminary. How do we know if this budget is a deficit maker?

Terry Neal: No one knows the answer to that question. Long-term budget planning always involves a great deal of speculation and traditionally the parties have speculated in a way that benefits them politically. But this has been an issue since early in the campaign when Bush and Gore could not even agree the cost of Bush's proposed tax cut. The democrats are now suggesting that with the economy slowing that it throws off Bush's original economic growth predictions making his long-term budget figures obsolete.

CNN Moderator: Do you have any final thoughts to share with us?

Terry Neal: Thank you for taking the time to chat with me this afternoon.

CNN Moderator: Thank you for joining us today.

Terry Neal joined the chat room via telephone from Washington, DC and provided a typist. The above is an edited transcript of the interview on Friday, May 04, 2001 at 1 p.m. EDT.

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