- The Washington Times - Monday, January 24, 2000

When the Congressional Budget Office releases its budget surplus estimates in a few weeks, the stunning new revenue numbers will have a dramatic impact on the presidential campaign's tax cut debate.

Republican congressional officials tell me that the new budget numbers show that the non-Social Security surpluses will be $1 trillion more over the next 10 years than previous predictions indicated it would be. This means that general revenue surpluses will total an astounding $2 trillion over the coming decade, twice what had been projected in 1999.

Moreover, the Social Security surplus, which is now about $2 trillion over the next decade, will be larger, too much larger. All told, we are talking about a combined surplus over the next 10 years of more than $4 trillion. And it is likely that in the coming years even these projections will be revised upward substantially.

With America's high-tech, Internet economy growing faster than anyone thought possible, CBO has finally reached the conclusion that the budget surpluses are going to be much bigger than they had forecast.

When the new numbers come out, it will be welcome news for George W. Bush, who has been taking a beating lately from John McCain over his $483 billion tax rate reduction plan. Mr. McCain says the Texas governor's tax cuts are too big and too risky because he does not believe the surpluses are going to be as big as they have been projected to be.

Mr. McCain's leftward Concord Coalition arguments, which he has swallowed hook, line and sinker, is that the economy is not going to grow much faster than the earlier 2.4 percent GDP forecast; that the surpluses will likely shrink in the future; and that most of the incoming general fund surpluses should be used to pay off the $3.7 trillion public debt rather than to lessen the income tax burden on lower-and middle-income taxpayers and to make the economy grow even larger.

This is the declinist rationale behind Mr. McCain's puny tax cut plan, half the size of Mr. Bush's, which does not cut a single tax rate in the IRS code.

Mr. Bush's argument on behalf of his plan is that there will be more than enough money to cut taxes, to continue paying down the debt step-by-step, and to reform Social Security and Medicare. And these much bigger surplus numbers will go a long way toward supporting his case and undermining Mr. McCain's.

"When the new numbers come out on the surpluses, it will make McCain's and the Democrats' charges about our plan look foolish," said Mr. Bush's chief economic adviser Larry Lindsey.

Certainly, Mr. Bush's five-year, $483 billion tax cut (which will cost about $1 trillion over 10 years) will seem a lot smaller, because he will have more than $1 trillion in surpluses left over after the tax cuts.

"This is very good news for the Bush people and those who support tax cuts to keep the economic expansion going. It's not very good news for those who argue that we can't afford a tax cut because of other spending priorities," a senior House GOP official told me.

Indeed, with an extra $4 trillion coming into the Treasury, it's going to be very difficult for Al Gore to argue this fall that we cannot afford the Bush tax cut plan because it will not leave enough money for other priorities, such as saving Medicare and Social Security. That argument will be rebutted by the new surplus projections.

Will these huge surpluses hold up in the coming years? If we make the right policy decisions, they will. Not only will they hold up, they will very likely be higher.

But this will mean enacting Mr. Bush's tax cuts to ensure that the economy keeps growing and investing and producing more tax revenue. It also means modestly applying the brakes on federal spending.

The surpluses are the result of increased economic growth, which began with President Reagan's tax cuts in the 1980s. But another contributing factor has been the fact that there have been no major new spending initiatives since the GOP took control of Congress in 1994.

We are entering a new political era of deficitless government that opens up golden opportunities to flatten the income tax rates, erase the public debt in 15 years, create personal investment Social Security retirement accounts for all Americans, and further expand our economy.

The coming tax cut debate is really a battle between two mighty forces: those who want return a sizable portion of the surplus to the American workers who earned the money in the first place, and those who want to spend most of it to enrich and enlarge the government.

CBO's revised surplus numbers are going to tell us that the government is getting a lot more money than it needs, and that some of it should be sent back to the people who know how to spend it much more wisely than the people here.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide