Phantom Surplus

The Great American Budget Battle, Washington's answer to professional wrestling, has officially begun, all roars and growls and theatrical blows to the head. This week Congress will send the President a $792 billion tax-cut bill; he has promised to stomp on it. Clinton has pushed a $300 billion spending program, including a new prescription-drug program for Medicare; congressional fists are already clenched. There is talk of grand ideological warfare, of reckless spendthrift Democrats and reckless plutocrat-loving Republicans fighting over how to divvy up the glorious $3 trillion surplus. In this season's budget politics, much of the fight is phony. But that doesn't mean no one's going to get hurt.

The nastiest battles, where real blood may spill, are occurring in the committees of Congress that have to pass 13 spending bills by the end of the month to keep the government running. So far, only two have been sent to Clinton to sign; he has threatened to veto others if they gouge spending too deeply. But, if a $3 trillion surplus is expected over the next 10 years, why would lawmakers be forced to gut programs like air-traffic control and food inspection and counterterrorism? Because two years ago, they promised they would. The problem is the famous 1997 Balanced Budget Act, which balanced the budget only because Congress and the President agreed to cut the total amount of discretionary spending in future years, without having to say exactly what would be cut. Congress, like Wimpy, will gladly pay you Tuesday for a hamburger today.

Well, the future is now, and the caps are giving everyone a blinding headache. If military spending merely keeps up with inflation, then every other government program will have to be cut 20% in the next two years. This would require, for instance, slicing $16 billion this year from the huge, $315 billion bill that covers health and education. Increasing Pentagon outlays, as both sides have promised to do, could require 50% cuts elsewhere. That's not going to happen. But the minute the lawmakers bust the caps, the surplus starts disappearing.

That's because when the bean counters counted the beans and predicted there would be an extra $1 trillion in 10 years, not counting Social Security revenues, it was assumed that lawmakers would obey the laws they had written and slash future spending by billions of dollars. If lawmakers bail, then there's less extra money to pay down the debt. Republican proposals so far, rather than cutting spending, would increase it next year about $25 billion, which more than wipes out next year's projected $14 billion surplus. The only place to find that money is to raise taxes (the White House still loves a tobacco tax) or raid Social Security, as lawmakers have routinely done for years.

But this time around, both sides have promised not to touch the Social Security surplus, which will run about $147 billion next year. Republican leaders don't want to take the blame for scooping out an extra $14 billion just to keep the government running--especially after conservatives got so angry with them when they did it in 1998. "This year, if spending means so much to him, the President will have to justify dipping into the Social Security trust fund," says John Czwartacki, spokesman for Senate majority leader Trent Lott.