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"President Bush's 10-year, $674 billion economic growth package — coupled with a war with Iraq — would push the federal budget deficit well into record territory next year, and possibly as high as $350 billion, private-sector budget forecasters said yesterday." LINK

"[I]n sheer dollar terms, it would easily eclipse the $290 billion record set in 1992, the last year of George H.W. Bush's administration. It also would be a steep fall from the record $236 billion surplus of 2000."

"Moreover, the deficit's rapid rise is coming just a few years before the baby-boom generation begins to make itself felt on federal spending … "

In 2001, "when Bush proposed a 10-year, $1.6 trillion tax cut, lawmakers believed the cost would be easily covered by the $5.6 trillion budget surplus that forecasters were anticipating through the end of this decade. But those rosy predictions have evaporated. This time, the president's proposal is being offered in the teeth of rising deficits."

One expert suggested "the White House has understated its dividend tax proposal by as much as 50 percent, because administration forecasters have not sufficiently accounted for the cost of one obscure provision that effectively grants a capital gains tax cut when investors sell stock in companies that elect not to pay dividends."

"Treasury officials said their estimates are accurate."

We ask, in an objective journalistic sort of fashion: where is the Concord Coalition? Where is Ross Perot? Where is the demand for accountability over President's raiding the lockbox and running deficits?

The administration says the war and the recession necessitate these moves in the short term, but they don't seem to have lockstep support beyond the GOP-controlled House and some biz coalition members.

The potent Los Angeles Times duo of Chen and Hook write, "Bush's plan may suffer, at least initially, because many Republicans in Congress were taken by surprise by its magnitude and details. That left some bruised egos among the lawmakers, some Republicans say." LINK

"In a signal of the importance the White House attaches to Bush's stimulus plan, Vice President Dick Cheney is scheduled today to talk up the proposal before the U.S. Chamber of Commerce in Washington."

"Cheney rarely makes such high-profile appearances. And Bush himself plans to continue to tout his plan across the country."

The Vice President will address the US Chamber of Commerce this morning at 11:30 am.

Cheney is also doing a pre-taped CNBC interview with adviser/commentator Larry Kudlow at some point today, and/so could some helpful CNBC publicist please let us know if the networks can use excerpts from that for 6:30 p.m.?

Outgoing Bush economic adviser Larry Lindsey's New York Times op-ed is most interesting for its sheer existence — it's a good-soldier across-the-board defense of the president's economic plan. LINK

But you should know that it doesn't address the potential effects on the deficit one whit, and that it deals with the "who benefits?" question in terms of percentages, rather than macro absolute dollar figures.

The other not-so-hidden political undercurrent this weekend: how and where the politics of all of this are being fought out beyond Capitol Hill and the White House briefing room — i.e., for pretty much every weekned this year, in living rooms in Iowa, New Hampshire, and South Carolina, where some of your finer Democratic presidential wannabes will be visiting.

Rep. Dick Gephardt will be in South Carolina today; Senator John Kerry will be in New Hampshire today and tomorrow; and Senator John Edwards will be in California (where they have living rooms, too, and generally better Mexican food).

Vermont Gov. Howard Dean will accept his Wellstone Award in DC tonight. Senator Joe Lieberman will be down, preparing to announce his run for president on Monday.

Like the Los Angeles Times , the Wall Street Journal looks at those carping, mostly centrist GOP Senators who aren't in full rapture over the president's economic pitch, and suggests that, with the Democrats still mostly united against the plan, Mr. Bush is in some potential trouble.

A very adorable accompanying chart lists Chafee, Collins, McCain, and Voinovich, and their respective concerns.

Still, "Mr. Bush has one important ally in House Majority Leader Tom DeLay of Texas. Despite misgivings from the likes of Mr. Thomas, Rep. DeLay said the House Republican caucus ultimately will stake out a position to the right of Mr. Bush, setting the stage for a negotiated compromise with the Senate near the president's initial plan."

"Snow and Voinovich told White House Chief of Staff Andrew Card during a closed GOP meeting yesterday that they have problems with the stimulus package," reports the Daily News' Bazinet. LINK

"The GOP has a razor-thin 51-49 majority in the Senate, so five possible defections likely would doom Bush's plan. 'It's going to be dramatically changed,' a top GOP Senate source declared. 'What you see now is not what you're going to get.'

Former House Speaker Newt Gingrich and others are saying the deficit won't go away until health care is reformed. And the president does seem to be on the verge of trying to take that on.

But for now, the cost and "fairness" arguments do seem to extend at least a bit beyond the "liberal Democrats" who some White House spokespeople would have you believe are the only thing standing between Americans and freedom from paying taxes on (some) corporate dividends.

But the president has just begun to fight, and the man is not without allies. Rush Limbaugh said on his show yesterday that, after listening to the president's speech in Chicago on Tuesday, he has become convinced that George W. Bush is the closest the nation will ever get to having Limbaugh himself in the Oval Office. A good talking point for both sides.

John Podhoretz is "dazzled" by Mr. Bush's risk-taking derring do. LINK

But the vector direction of today's coverage is mostly negative about the plan's (current) prospects.

The Washington Post 's Milbank and Jenkins suggest, "Yesterday's remarks plunged Bush into a growing argument about who benefits from the tax-cut proposal he introduced this week. Administration officials have been rebutting what they call 'class warfare' accusations even before they released Bush's plan, although they acknowledged that the wealthiest Americans would receive the highest boost to their incomes from Bush's plan in both dollar and percentage terms." LINK

David Cay Johnston is to taxes what Dr. L.K. Altman is the health, and his New York Times story today on the alternative minimum tax says: " … (T)ax experts digging into the details of the plan said yesterday that the administration's plan actually provided for only minor and temporary relief from the tax, known as the alternative minimum tax. And those benefits will mainly go to those least affected by this separate tax originally intended to make sure that the rich cannot live tax free … ." LINK

"The Treasury Department's senior tax policy official, Pam Olson, said that the administration planed to propose a solution to the problem, but probably not until after Mr. Bush's first term had ended. The target date is the end of 2005, she said. 'We are working on it,' Ms. Olson said. 'It is a hard issue.'"

That's where we get into one of those "they haven't led, we will" thingies.

Many of the nation's other elected chief executives sounded distinctly unhappy about the plan yesterday.

USA Today 's Benedetto says, "President Bush risks losing the support of his former colleagues, the nation's governors." LINK

"White House spokesman Ari Fleischer brushed off suggestions that Bush forgot his statehouse roots in putting together the economic stimulus package and could pay a high price."

"Most Republican governors have refrained from criticizing Bush's plan. The White House assured them that states could expect federal money later on for needs such as homeland security and transportation."

The Democratic governors yesterday afternoon put forth their own $157 billion economic stimulus proposal. As Weisman notes in a separate story, the "proposal must compete with the president's 10-year, $674 billion growth plan and a host of smaller proposals from congressional Democrats." LINK

"Bush's proposal to end taxation of investment dividends would cost state governments $4 billion this year and $45 billion to $50 billion over the next decade … "

In another must-read of the day, USA Today 's Keen follows up on Dana Milbank's Thursday Washington Post smash with: "Bush is plowing ahead with an ambitious agenda that's generating surprise and some indignation, even among his allies. Although he took office after a disputed election, and his party controls Congress by a tiny margin, he does not act as if his mandate has limits." LINK

"White House officials say thinking big is the best way to get big things accomplished."

Here's where Keen gets off on an interesting road not taken yesterday:

"Bush's aggressive moves are reinforcing his critics' complaint that he views his power as absolute. His aides say he's demonstrating confidence and leadership. But some Washington insiders say his boldness is also an indication of cockiness that could backfire if other powerful people begin to feel disrespected and refuse to rally to his side in legislative battles."

"Senators, who are particularly protective of their power and privileges, are easily rankled by hints of White House interference. After Lott's ouster, a senior aide to a Senate Republican sarcastically dubbed Bush's top political adviser, Karl Rove, 'the 101st senator.'" (Note note: as if Senators have as much power as Karl!)

Some former Clinton aides' take: "Joe Lockhart, a former aide to Bill Clinton, believes Bush knows that his big tax-cut proposal is unlikely to pass without being whittled substantially. Then, if the economy doesn't improve, he says, Bush will have handy scapegoats: Democrats in Congress."

"Paul Begala, another former Clinton aide, admires Bush's 'riverboat gambling nature,' but warns, 'At some point it does cross the line into hubris, and hubris is the greatest occupational hazard of working in the White House.'"

"Bush aides try to avert complaints about arrogance by consulting with the Republican establishment and midlevel officials outside the White House. They regularly send issue updates by e-mail to hundreds of people, and top officials hold conference calls to make their allies feel like partners."

Pickering Redux/"Affirmative Access"

We've gotten a lot of unsolicited opinions and theories from a number of Democrats on the White House's rationale behind the Pickering renomination.

Just to set the scene, in her analysis piece today, USA Today 's Keen writes, "Bush renominated Pickering, aides say, because he believes the Mississippian is qualified and was unfairly denied a vote in the last Congress. Bush knew the Pickering renomination would raise questions about his commitment to uniting the country, aides say." LINK

One senior Democratic Capitol Hill aide reminds us that the White House arguably never cared about Pickering, at least at the start, when he was viewed as a Trent Lott protégé; the aide, who is familiar with the whole array of Bush judicial nominees, argues that Pickering "doesn't fit the mold" like the others do.

So why are they sending him back for consideration? To draw attention away from Owen, who, the aide argues, IS a Karl Rove protégé and DOES fit the White House mold, and also away from their other judicial nominees. The theory being that Senate Democrats may only have the votes and the oomph to filibuster and kill one.

Here's another one the Hill aide had in mind: "With Republicans taking over control of the U.S. Senate, President Bush has re-nominated North Carolina Judge Terrence Boyle for a seat on the U.S. 4th Circuit Court of Appeals. Boyle, currently the chief judge on the U.S. District Court for the Eastern District of North Carolina, was offered up for the same post in May 2001. His nomination languished for a year and a half and expired when Congress went home last year." LINK

The aide also suggests that Bush had to send Pickering back or else he would have faced accusations from conservatives and from the media that he cuts and runs on his nominees.

EJ Dionne writes, "Politically, the renominations were shrewd. By sending Pickering up again, Bush signaled to his Southern backers that he was willing to stand up for a Mississippian against Senate liberals, despite Lott's defenestration. And the energy the Pickering and Owen battles will soak up may allow other ideological nominees to slip through." LINK

"The real issue here involves not the personal characteristics of nominees — there are plenty of smart conservatives on Bush's list — but a political struggle to create an increasingly activist conservative bench."

Yet another Democratic Hill aide familiar with the process protests how Republicans are pushing the fact that Pickering was not treated fairly last year, and that his renomination in a GOP-controlled Senate will afford him the respect and fairness he deserves.

Senator Schumer: could you please read the Wall Street Journal 's lead editorial about you, and shoot us an email letting us know what you think about the substance of it?

Today's Note contest: write a caption for the Doug Mills photo of Senator Lott on A18 of the New York Times and send it into us at politicalunit@abcnews.com

And if you don't like that one, you can enter our second caption-writing contest for the photo of Leona Helmsley and friends on page 3 of the New York Post . LINK

Top New York Post political reporter Cindy Adams writes: "Senator Bill Frist, the brand new Senate Majority Leader who benefitted from Trent's Lott, will make his very first major address on race. It will be — where else — New York. Sheraton ballroom, 52nd & Seventh. Monday, Jan. 20. Martin Luther King Day. The annual CORE dinner." LINK

"The White House yesterday denied that its hesitation to join a Supreme Court battle over affirmative action was connected to lingering raw feelings from last month's racial flap over Senator Trent Lott," reports the Washington Times upon responses from Ari Fleischer. LINK

"Mr. Bush has long endorsed admissions based on merit, regardless of race, which he calls 'affirmative access.' Yesterday, Mr. Fleischer declined to say whether that policy is consistent with the Michigan practice of awarding points based on skin color. 'That's what is exactly under review, among a number of other factors,' he said in response to questions from The Times . 'And we'll know when the review is complete.'"

"Liberals are expected to redouble their accusations of Republican racism if Mr. Bush sides with the white students in the Michigan case. The White House appeared mindful of political fallout from such a scenario."

The Economy

Lots of stories today about how the X-mas holiday shopping final numbers weren't too smashing.

And ABCNEWS' Schindelheim reports that the latest unemployment figure, showing that 80,000 Americans were added to the rolls of job-seekers in December, was higher than what most economists had expected.

Budget Politics

The Los Angeles Times ' Anderson looks at GOP moves to cut domestic spending and the enforced choices that will result. LINK

We love the CNBC full-page ad on A9 of the The Wall Street Journal touting their Cheney and Frist exclusives tonight, but we think they might have rewarded the kindness of the press staffs making their bosses available with some more flattering photos.

The Wall Street Journal leads the paper with a tour de force look at the California budget crisis.

California "Gov. Gray Davis will propose raising taxes today by $8.3 billion a year to balance the state budget, increasing the income tax rate on the wealthiest Californians and boosting the sales tax by 1 cent, administration officials familiar with the budget said Thursday." LINK

"Davis is also poised to propose billions of dollars in spending cuts today when he presents his budget to the Legislature. He must offer a balanced budget."

And in Massachusetts, in "what could be his first major confrontation on the state budget, Governor Mitt Romney is expected to deliver sobering news today to the leaders of the state's cities and towns, including a warning that the state's $5.5 billion local aid budget may have to be significantly cut in the current fiscal year." Romney will address the Massachusetts Municipal Association. LINK

Governors have begun to take their case directly to President Bush, writing letters to argue that his tax cut plan might exacerbate their deficit problems by shifting the investment climate. With a dividend tax cut, municipal bonds might become less attractive, for example.

In Ohio, the situation is dire, according to the Cleveland Plain-Dealer. Gov. Bob Taft, a Republican, is not happy with the White House.

"Senator George Voinovich, Taft's predecessor as governor, said he is concerned about fallout from the Bush proposal." LINK

"'If we are trying to stimulate the economy here [in Washington] and we have the states increasing taxes, it is counterproductive,' the Ohio Republican senator said."

ABC 2004: The Invisible Primary

The Democratic National Committee's winter meeting, from February 20-22 in DC, will be a presidential cattle call. The candidates will be assigned speaking slots over the three-day period according to a lottery system. You gotta play to win.

And Rep. Dick Gephardt is now confirmed for the January 18 Linn County, IA Sustaining Banquet, along with Gov. Howard Dean and Senator John Kerry.

Iowa's first big mini-cattle call (bovine trumpet?) of the year takes place next Saturday night in Marion, IA. Linn County Democratic Chair Joel Miller and Prof. David Loebsack have organized this year's Sustaining Dinner.

Live C-SPAN coverage: 9:00 p.m. EDT.

The South Carolina state party convention is scheduled for May 3. They're trying to get all the presidential prospects to 1) appear at the convention and speak, and/or 2) convince them to purchase tables at the Jefferson-Jackson which will take place the night before. As of right now, the state party doesn't want any of the wannabes to address the J-J; Senators Edwards and Kerry hit this weekend event last year.

As soon as we heard about the Kerry campaign's Iowa news, that they had signed up respected longtime state politico John Norris to serve as their state campaign manager, we asked the Kerry folks: just as importantly, are you getting equally respected former Gore Iowa operative Jackie Norris, too? As we asked here in this space yesterday.

Thanks to Ms. Norris for answering herself: yes indeed, Jackie Norris is "wholeheartedly supporting Kerry's campaign in Iowa and look forward to working closely with his campaign team." She's currently teaching government to Perry High School students (many of whom, yes, are old enough to vote).

The AP wraps up where we stand for this fleeting moment in what is, as its lead says, a fast-moving build-up by all the serious Democratic presidential campaigns. The keyest graph, aside from the who's who of staffers at the bottom: "'We're starting to get a pretty good sense of what the field is going to look like,' said Steve Rosenthal, outgoing political director at the AFL-CIO. Organized labor, he said, will be 'interested to hear what they're going to be talking about. Democrats seemed to be missing in action in 2002."' LINK

John Lapp and John Norris will wake up this morning to this headline on their Des Moines Register , snap their fingers, and begin to write a memo. "Iowa 50th in elder advocacy." LINK

Former Senator Gary Hart compared himself to Winston Churchill yesterday. "'I would love to be president,' he told reporters. 'I'd have been a very good president. In many ways I'd be a better one now.' LINK

"Why now, he was asked? 'Why did Winston Churchill come back after 10 years out of office? Times change,' he replied."

David Lightman writes that his remarks were "politely received" by a Capitol Hill crowd yesterday, but pointed out the lack of enthusiasm from most every Democratic quarter for a Hart redux.

Hart has a January 22 Iowa visit scheduled.

"Iowa supporters of one-time Democratic presidential candidate Gary Hart will meet with the former Colorado senator this month in Des Moines to gauge interest in a 2004 comeback. Organizers of the Jan. 22 reception, timed to coincide with his speech at Iowa State University's Memorial Union that night, said Hart had hoped to downplay public talk of his interest in running for president." LINK

"But Iowa Democratic sources and insiders who helped run his campaigns in the 1980s say the gathering prior to the 8 p.m. speech is intended to reconnect Hart with supporters who might be interested in a Hart campaign for next year's caucuses."

The Forward writes about how many Orthodox Jews are angry with Senator Joe Lieberman for supporting the creation of a Palestinian state. LINK

Cindy Adams interviews Rudy Giuliani and seems pretty sure he is in line to keynote the 2004 convention. LINK

This weekend on "Here's the Point," Mark Halperin talks to recovered politico Cristyne Nicholas, president of NYC & Company, about how Gotham City snagged the 2004 Republican National Convention; how the city got those hoteliers to discount their rooms; where her favorite slice of pizza in the whole city is; and her inability to name her favorite New York City political reporter.

Check this link on Sunday: LINK

Her haunting "Go Jets!" at the end of the show will stay with you for quite some time.

Rep. Robin Hayes (R) seems to be making inquiries into a run for the US Senate — presumably against Edwards. LINK

Politics

Reminder: New Mexico Gov. Bill Richardson, among his other duties these days, is scheduled to deliver the Democratic response to the president's radio address this weekend.

On Tuesday, the DSCC will hold a campaign finance forum for Democratic consultants, headed up by executive director Andy Grossman and the party's legal wunderkind Bob Bauer.

Hey Andy, how about a CFR forum for the press … ?

The Washington Wire, subject as it is to the capital's most self-serving leakers and tipsters, has an item about how Steve Moore wants to entice Congressman Flake to primary John McCain.

This morning from 8:15 am till 11:00 am, National Journal is hosting a breakfast seminar: "The Political Landscape for 2003-2004." Space is limited so if you're just learning about it, you may be out of luck. But if you manage to get over there in time, you just might be able to catch Charlie Cook and Chuck Todd analyzing the results of the November elections and discussing what it means for those who work with Congress, as well as their outlook for White House 2004. In the University Room at the Watergate.

Massachusetts got itself a DLC. LINK

In their sparkling F Street office street yesterday, the NFIB, probably the most listened-to business lobby in the corridors of Capitol Hill, listed tax relief, a permanent estate/death tax repeal, tort reform and association health care plans as their top legislative priorities for 2003.

NFIB CEO Jack Faris predictably praised the president's proposal to raise small business expensing limits and his desire to accelerate income tax rate reductions.

Faris tried to be agnostic on the idea of a temporary payroll tax cut; he suggested that a one-year holiday, as proposed by some Democrats, would essentially be a zero-sum game for his small business constituents because of high compliance costs: they'd have to change their payroll processing software. (If the government were to somehow pick up the compliance costs? — well, we didn't have time to ask.) Faris said he'd prefer a permanent reduction.

Asked by the Wall Street Journal 's Tom Hamburger why opposition to a "patient's bill of rights" wasn't on this year's priority list, NFIB chief lobbyist Dan Danner said the proposal was essentially moot, though he admitted that it might come up in slices and may well be part of a compromise that includes caps on medical malpractice non-compensatory damages.

And Danner, one of Washington's most powerful influencers of opinion, suggested that the legislative climate was very favorable for medical malpractice reform, and hinted at traction sooner rather than later.

Not to forcefully massage the carcass of a supine equus, but the NFIB also calls for a permanent repeal of the alternative minimum tax, which it realizes might well effect millions more taxpayers by 2004.

Business ain't monolithic: the US Chamber of Commerce said its priorities for the year include reasonable enforcement of the Sarbanes-Oxley corporate reform bill, along with legislation to "correct" some of "its technical inaccuracies."

Health care costs, the need for a comprehensive energy strategy and "performance" and science-based enforcement of environmental regulations rounded out the list. The Chamber also called for more federal funding for transportation infrastructure, welfare reform reauthorization with clear guidelines for employers.

Common to both groups: tort reform, health care costs, and tax relief.

Bush Administration Strategy/Personality

EPA Administrator Christine Todd Whitman "said yesterday that the Bush administration will press industries this year to sharply reduce air pollutants, setting up a possible confrontation with the new Senate Republican leadership, which has said such efforts can wait until next year," the Washington Post 's Pianin writes. LINK

"As for speculation that she might leave her post out of frustration with the administration's environmental policies, Whitman declared: 'I'm not a quitter. . . . I'm here, and I'm going to stay.'"

A candid Senator Pete Domenici, Republican of New Mexico, told Imus this morning that the administration's Iraq policies were based, essentially, on Israel and oil. (Domenici supports the policies.)

Imus asked why the White House wouldn't "just say that?"

Domenici said he didn't know.

"Yeah. I don't talk to the president very often. I do my own thing," he said.

"Thanks for leveling with us," Imus said later.

Domenici is now the chairman of the Energy Committee; no national energy strategy will reach the president's desk without his imprimatur.