Budget battles

Budget battles
Dwindling surplus threatens politicians' plans

August 9, 2001

With Congress adjourned and the president out of town, the Washington political scene appears calm. That, however, will not last long. And, with budget projections showing the surplus declining from earlier estimates, it is easy to see where the battle lines will be drawn.

According to The Associated Press, this year’s budget surplus will be the second biggest on record, $160 billion. (Last year’s was $237 billion.) For fiscal year 2002, private economists predict the surplus to be $220 billion. Even by the standards of the federal government, that is a big bunch of money.

It is not, however, nearly as much as was predicted even earlier this year. And, in the time-honored tradition of Congress and children anticipating Christmas, a lot of plans were made on the basis of those earlier, rosier predictions.

What has happened, of course, is that the economy has taken a downturn. At the same time federal spending continued unabated and the president won his tax cut. That the bulk of the cut has yet to take effect is part of what has many in Washington worried.

But even before Bush’s tax cut takes hold, the spending options open to Congress and the president are becoming constrained. That frustrates players on both sides of the aisle.

Much of the surplus consists of money from Medicare and Social Security taxes, and there is broad consensus that those funds should not be used to pay for other programs. If lawmakers honor that commitment, however, there is little left for new spending — and more spending is what everybody wants.

Ronald Reagan made a mantra of knocking Democrats for taxing and spending, and to an extent he was right. But taxing and spending is much of what governments do — all governments. The differences between the parties, which both present as deep and profound, often boil down to little more than preferences for one kind of spending over another, or a determination to grant preferential tax treatment to one group or another.

President Bush wants to increase spending on defense — particularly for his missile defense program. Democrats want more money for the environment and education. Members of both parties are looking at prescription drug benefits, and every member of Congress has something urgently needed back home.

Something has to give. What that will be is uncertain, but consider this: Social Security is about tomorrow; pork-barrel spending is a dollar today.