- The Washington Times - Thursday, March 7, 2002

The Congressional Budget Office said yesterday that a better-than-expected economic recovery, partly the result of last year's tax rebate, has left the government with relatively small but politically huge surpluses in fiscal 2002 and 2003.
Those surpluses, calculated without including new spending President Bush proposed last month, were a change from January, when the CBO predicted small deficits both years. The turnaround has prompted budget-writers in both the House and Senate to say they now hope to produce a balanced budget this year.
"That is my goal," said Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, after CBO Director Dan L. Crippen presented the findings yesterday. In the House, meanwhile, Republicans say Budget Committee Chairman Jim Nussle, Iowa Republican, also is committed to a balanced budget.
In private talks during the past few weeks, Republicans have told Mr. Nussle that they want to pass a balanced budget and that they would vote against a spending plan that contains a deficit. They said the CBO numbers add to their determination.
"That's a big deal," said House committee member Patrick J. Toomey from Pennsylvania, a member of the conservative Republican Study Committee. "Shame on us if we can't stay out of the red going forward. I don't think you could pass a budget resolution that's not in balance for [fiscal] '03."
Citing the war and costs of homeland security as justification for a deficit, the president submitted a budget in February calling for an economic-stimulus package, large increases in military spending and small increases in domestic spending.
Counting those, Mr. Crippen said, the government would run a $90 billion deficit in 2002 and a $121 billion deficit in 2003.
Without those proposals, though, the federal government would run a surplus of $5 billion in fiscal 2002, which ends Sept. 31, and $6 billion in fiscal 2003. That is up from the CBO's January forecast of a $21 billion deficit in 2002 and a $14 billion deficit in 2003.
The CBO report said the economy "is currently rebounding in a remarkable fashion," and Mr. Crippen said part of the reason is the rebate checks from last year's $1.3 trillion tax cut and an increase in post-September 11 government spending for cleanup efforts and other projects.
"Our best guess is it certainly helped make the recession either shorter or shallower than it would otherwise have been because consumption was higher," Mr. Crippen said.
But Democrats said the tax cut over the long term will threaten the solvency of the Social Security and Medicare trust funds.
The president's budget proposal would dip into those trust funds every year for the next decade a cumulative total of about $1.8 trillion.
That, Mr. Conrad said, is close to the $1.7 trillion total size of the tax cut and the extra debt service payments attendant to the cut.
Mr. Conrad said he is committed to producing a balanced "unified budget," including trust fund revenue, this year, and to an "on-budget" balance within five years, meaning a budget that is balanced without having to spend revenue meant for Medicare and Social Security.
Still, the committee's top Republican, Sen. Pete V. Domenici from New Mexico, said Mr. Crippen's figures were good news compared with the early 1990s, when having a balanced budget at all much less excluding the trust fund money was only a dream.
The administration and CBO disagree on some numbers. Although the CBO says the president's budget would produce a $121 billion deficit in 2003, the administration says that figure would be only $80 billion. During the next decade, the CBO predicts the government will run a $681 billion surplus, while the administration foresees a surplus of $1 trillion.
Those differences outline another potential fight, which numbers Congress will use when writing the budget.
House Republicans have seemed inclined to use numbers from the administration's Office of Management and Budget, while Mr. Conrad yesterday said he hasn't made a decision and plans to produce a budget using both sets of numbers.

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