Sunday, February 8, 1998

Clinton budget puts surplus on endangered list

At the very outset of his budget, President Clinton states his strong belief that "we should not spend a surplus that we don't yet have."

And then he lays the groundwork for doing just that.

Clinton's budget for fiscal 1999, the government spending year that starts next Oct.1, projects a $9.5 billion operating surplus, a modest number in the grand scheme of federal spending, but -- if it survives -- a noteworthy achievement.

The last surplus was in 1969, black ink that was mostly blue smoke; the last true surpluses were in the Eisenhower administration.

Uncertain developments

However, that surplus, and the surpluses the administration happily foresees increasing to $258 billion by 2008, depend on several developments, not all of them certain.

Foremost, the surplus depends on the current robust economic expansion, now in its 83rd month, setting new records, far surpassing the old mark of 106 months without a recession set in the 1960s, and on continued low rates of inflation and unemployment.

Mostly, the surplus depends on the White House and Congress, already chafing under the restrictions of the balanced budget agreement, not spending it, and here Clinton has endangered the surplus by getting a jump start in the race of the till.

He has proposed upwards of $90 billion in new spending and tax breaks over five years for expanded Medicare, child care, education, environment, etc., to be offset by a $24 billion tax increase, largely on corporations, and $65 billion in tobacco taxes. Any money left over should be reserved for Social Security.

(If the money owed to the Social Security trust fund is counted, as many economists believe it should, there is no surplus in fiscal 1999 but a $115 billion or so deficit.)

Clinton's math

According to Clinton's math, once his programs and Social Security are taken care of -- drat the luck -- there is nothing left for the Republicans to spend on their tax cuts and programs. The Republicans feel they have every bit as much right to that surplus as Clinton, and the race will be on.

The groundwork has been laid for a return to the familiar pattern of spending and tax cuts now with the promise that they will be paid for down the line by spending cuts that somehow never materialize.

The original balanced budget agreement, that put off the tough choices on future Congresses, is still in effect.

The White House boasts of "surpluses as far as the eye can see." The eye may not have seen any further than 1999.