Greenspan vs. the Money Tree

WASHINGTON: June O'Neill, outgoing director of the Congressional Budget Office, will bring the Senate Budget Committee just what it always wanted when she testifies Friday: money. The CBO's new projected budget surplus for fiscal 1999 is a whopping $107 billion, up from its previous forecast of $63 billion, and it gets better. Y2K will have a surplus of $131 billion, and the good times, by the CBO's count, should continue at least through 2009 for a total fiscal nest egg of $2.7 trillion. Save Social Security? Heck, with those numbers the national debt could be a memory in a decade or two. To a politician, that's a whole lot better than what Alan Greenspan brought the Senate yesterday -- a wet blanket.

Greenspan doesn't like the plan to invest Social Security Fund money in the markets. He warned that counting on the booming economy to keep on booming is a lousy way to plan for the future, and insisted that tax increases -- gasp! -- and benefit cuts -- double gasp! -- are the only responsible way to save the fund. This time, says TIME senior economics reporter Bernard Baumohl, the venerated Fed chairman will be politely ignored. "Greenspan's going to lose this one," he says. "There's no way that politicians can resist tapping the markets, because that leaves more surplus for them to play with. Republicans will want tax cuts, and Democrats will want more money for programs." As long as absolutely nothing goes wrong between now and 2009, there'll more than enough to go around.