Clinton, Congress consider using budget surplus

Extra funding for Kosovo could jeopardize effort to protect Social Security

April 21, 1999|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON -- President Clinton and Congress have been living with a budget surplus for only six months, but the money already seems to be burning a hole in their pockets.

Despite their promises to "lock" the surplus away for Social Security, Medicare and paying down the national debt, Clinton and the lawmakers are preparing an emergency military spending bill in response to the Kosovo crisis that could eat up perhaps one-fourth of the surplus this year -- and much more in years to come.

The momentum to spend some of this money demonstrates how vulnerable the surplus is to any goal that can be defended as urgent and how unlikely it is that any sizable sum of money can go unspent for long.

"I see it as a national security crisis," House Majority Leader Dick Armey said yesterday, referring to the shortage of U.S. military resources that he said has been illuminated by the Kosovo mission. "There's nothing more urgent and critical."

Senate Majority Leader Trent Lott echoed Armey's view, even as he announced the opening of debate on a proposal to place the budget surplus in a "lock box," where it could be spent only for Social Security unless three-fifths of the Senate voted otherwise. Defense spending, however, would be exempt from the restriction.

Emergency spending

"People are saying there's a trap door in the lock box, and if the Congress votes to spend this money on other things it will be coming from Social Security, that is the clear choice," Lott said. "But you have to allow some avenue to consider spending for emergencies."

The danger of spending Social Security surpluses is that sooner or later the program will go broke. The Social Security trust fund is now taking in more tax revenue than it is paying out to Social Security recipients. But with the vast generation of baby boomers beginning their retirements within 10 years or so, the trust fund is expected to run out of money in 2034.

Medicare is scheduled to go broke even sooner.

Battle-hardened deficit warriors such Sen. Pete V. Domenici, a New Mexico Republican, protest that dipping into the surplus for a defense emergency is hardly as irresponsible as the freer-spending policies of the past three decades.

Since the Vietnam War, money collected through the Social Security tax that exceeded the benefits paid out has been used with abandon to finance federal programs. Even so, the federal budget remained in the red until last fall.

Now, thanks to a booming economy -- and nearly 10 years of spending curbs and tax increases -- the budget is projected to move into the black, even without the Social Security money, by 2002. A total surplus of $2.6 trillion -- about two-thirds of it from Social Security tax revenue -- is expected over the next 10 years.

Republicans have proposed to direct the remaining one-third of the surplus toward a tax cut. Yet Domenici defended the Republican approach as far more prudent than the government's approach in prior years.

"For 18 to 20 years we didn't have any surplus, because we spent all the surplus," Domenici said.

If the extra money now is burning a hole in his colleagues' pockets, Domenici said, "we're going to make it very difficult for the hole to burn very easily."

"Kosovo is both a tragedy and an opportunity to get out from under spending caps that virtually every member of Congress agrees are too low," said Robert Reischauer, a former director of the Congressional Budget Office.

"They can use Kosovo as an excuse to say there is an emergency need for defense spending with a straight face, and they can also justify dipping into the Social Security surplus for this purpose," Reischauer added.

Promises of restraint

Both Clinton and the Republican leaders have promised in their proposed budgets to live within spending restraints approved in the 1997 Balanced Budget Act. At the same time, they would boost defense spending and wall off the Social Security surplus to pay down the debt, freeing up money to shore up Social Security and other programs.

But living within the spending caps this year would require enormous cuts elsewhere.

Clinton has requested $6 billion in emergency money -- translate: Social Security -- to finance the Kosovo effort. Republicans have countered that the sum should be much larger -- perhaps three times as high -- to address Pentagon downsizing that they say has stretched military resources dangerously thin.

This year's surplus ranges from $79 billion (by White House estimates) to $111 billion (according to the Congressional Budget Office).

Republican leaders are not ready to say how much extra spending they will add to Clinton's request -- for fear of triggering a protracted fight.

Senate Democratic leader Tom Daschle said he would prefer to deal as quickly as possible with the Kosovo money and debate further funding issues later.

"We have caps for a reason, and we have to accept and acknowledge those caps if we mean anything about our budget discipline," Daschle said.

But Daschle said he would not use a filibuster to block a spending bill he considers bloated.

"In the effort to move expeditiously, what we would probably do is simply encourage the president to veto a bad bill and bring it back again with another opportunity to pass something that is a lot more stripped-down," the Democratic leader said.

It seems unlikely, however, that Clinton would be eager to issue a wartime veto of a bill that promises to enhance the nation's military prowess -- especially if it carries no short-term price tag.

Many Democrats will probably stand with him.

Pub Date: 4/21/99

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