- The Washington Times - Thursday, July 12, 2001

All of Washington is wringing its hands over the alleged dwindling budget surplus. The Washington Post reported on Monday

that we may soon see a return to the politics of the "deficit-ridden years of the early- and mid-1990s." Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, moans that the shrinking surplus is due to "Bush's fiscal mismanagement," which has "driven us into a ditch." He predictably advises cancellation of the Bush tax cut passed last month.

The left is on the political war path armed with these new budget numbers. The strategy of Democratic Majority Leader Tom Daschle of South Dakota is to run spending through the roof (with the complicit aid of a lot of big spending congressional Republicans), then to blame George W. Bush for imperiling Social Security with his "giant tax cut."

The bad news is that this political tactic has Republicans tied in knots. But hold on here. How can the tax cut be blamed for slow economic growth and swerving us into a political ditch when we haven't even gotten a dime of tax cuts yet? This is like blaming rain on umbrellas.

Let's back up and get the facts straight. First, the tax surplus isn't really evaporating much. Even with the updated and less bullish budget estimates, we will still run at least a $150 billion surplus this year. A few years ago, a budget picture like that would have us all thinking we died and went to heaven.

Now it's true that virtually all the surplus this year will be the "Social Security surplus." We are raising about $150 billion a year more in payroll taxes than we are spending on Social Security checks. That's an imprudent amount of excess taxes for the government to be collecting in a flu-ridden economy. The solution here is to cut the 15 percent payroll tax rate right now to prevent Congress from using Social Security FICA taxes as a revenue source for other government spending.

Meanwhile, the operating budget surplus is in jeopardy of vanishing this year. But that isn't because of a shortage of tax revenues. We averaged 8 percent federal income tax revenue increases per year in 1998, 1999, and 2000. Since 1996, federal tax receipts have risen by $600 billion aided by a surge in capital-gains receipts after the 1997 rate cut. Over that time period, the federal tax burden has soared from 18 percent to 21 percent of GDP. This isn't a drought of federal revenues. It's the Niagara Falls. Even after the Bush tax cut takes effect, this federal tax bite will remain higher than at anytime since 1980.

There is, however, gluttony on the spending side of the budget ledger. In fact, over the past three years Congress has been on the most expensive shopping spree in Washington since Lyndon B. Johnson rode into the White House from Texas with his Great Society welfare state agenda. Last year, federal appropriations rocketed skyward by almost 9 percent. That stampede of spending prompted then Rep. David McIntosh to decry congressional efforts to restrain the budget as "anemic and an embarrassment."

Mr. McIntosh is lucky he's not still in Congress this year, or he would need to take Valium to keep his spirits up. This year, we're on pace for a 7 percent growth rate in spending. And this isn't even an election year.

Congress is about to pass the planet's first-ever $2 trillion budget, and I predict that will elicit howls of protests from left-leaning Democrats about unmet needs and our "government investment deficit."

The impulse to spend when the budget is in the black is proving politically unquenchable. Just since 1998 the total number of pork-barrel projects has more than doubled. It used to be that Congress spent $20 billion or $30 billion a year on parochial projects like skating rinks, convention centers, parking garages, dams, and grants for the hometown college on really critical issues like honey-bee mating behavior. This year, hold onto your hats, the total cost of requested pork projects has reached $280 billion. That comes to $3,800 this year for every family of four in America. And yet now we're told Congress can't afford to mail a $300 rebate check to taxpayers. Sorry, that new bronze statue of Robert C. Byrd in front of the court house building in Morgantown, W.Va., takes precedence.

It turns out that if Congress would just cut out the Jimmy Dean sausages from the budget, we could all get a rebate check with an extra zero tacked on.

Yes, Virginia, there is a budget emergency in Washington. It's called spending. Education funding is expected to double over the next five years. The energy budget will rise to its highest level since the Carter administration. The prescription drug benefit program that is sure to pass later this summer or fall carries with it a price tag of $300 billion over 10 years. Runaway entitlement spending created the budget crisis in the first place. Naturally, we're now into the game of adding new entitlements for seniors, no less, the wealthiest of all age groups.

The budget surplus is shrinking for two reasons: too much spending and too little economic growth. Tax cuts help solve both problems. Growth-oriented tax rate reductions tear down the obstacles to investment, capital formation, and prosperity. Tax cuts have another benefit. They deprive Congress of funds that would otherwise be spent. This is precisely why the left is so obsessed with scaling back the Bush tax cut.

And this is why America's fiscal health and Mr. Bush's re-election requires a parade of more tax cuts (especially a capital-gains reduction), and a solemn commitment to retain the one we just passed.

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