Much of federal surplus committed

Tax cut, debt reduction override officials' plans for pet programs


WASHINGTON - For the past three years, the federal budget surplus has been a sketch pad for the dreams of politicians, promising progress on an array of initiatives by both parties.

But substantial portions of the projected surplus have been set aside, first for reducing the national debt and then for the tax cut that Congress is sending to President Bush. When the price tags of all the additional programs planned by one party or the other or both are tallied, a funny thing turns out to have happened to the surplus: Before it materializes, it has been largely parceled out.

Doubt remains whether the windfall will appear as forecast, especially given the shaky state of the economy. But even if it does, it most likely will not cover everything that Democrats and Republicans have on their wish lists.

So, when Congress returns from its Memorial Day recess early next month to start working in earnest on spending bills for next year, it will be heading toward showdowns over how to divide the remainder.

With Democrats about to control the Senate, the partisan battle over priorities will only be more intense.

"Starting from the premise that it's all going to be there, it does seem to me that the surplus is overcommitted, at least rhetorically," said Robert L. Bixby, executive director of the Concord Coalition, a group that advocates balanced budgets.

"The tax cut is going to constrain the other choices," Bixby said.

With Bush vowing to hold down the growth in government spending, Democrats face a particularly difficult challenge in winning full financing for the programs they favor. But the arithmetic is daunting for both sides.

In some ways, the budget battles will be reminiscent of the days, not so long ago, when every decision about taxes and spending had to be considered against the desire not to deepen the budget deficit. Now, in a different fiscal climate, neither party wants to be blamed for dipping into Social Security or Medicare to pay for additional spending, a restriction that favors Republicans now that they have claimed their share for tax cuts.

The budget surplus during the next decade is projected by the White House and the Congressional Budget Office to be $5.6 trillion.

Between the tax cut and Medicare and Social Security money being set aside for debt reduction, the $5.6 trillion surplus has been reduced by $4.6 trillion, leaving about $1 trillion unallocated.

By conservative estimates, a handful of the major campaign promises and policy initiatives on prescription drugs, modernizing the military, taxes and education set out by the two parties during the past few years would bump right up against the $1 trillion.

Those estimates alone add up to $900 billion, or at least $1 trillion when the interest cost is included.

But the price tags on many of the programs could be considerably higher.

Democrats said something will have to give.

"There will not be any money available to do what people are promising in education once this tax cut goes through," said Sen. Hillary Rodham Clinton, a New York Democrat.

But the concern is not wholly partisan. Sen. John McCain, an Arizona Republican, said the tax cut could make it difficult for the administration to make good on its promise to provide more money to the Pentagon.

Other Republicans in Congress and administration officials say there is plenty of money, especially if the government re-examines whether the money it is spending is being put to good use.

"There's a trillion dollars in the next decade, uncommitted," said Mitchell E. Daniels Jr., the director of the White House's Office of Management and Budget. "That ought to be more than enough to meet the nation's legitimate needs over that time period. Someone intent on spending much more than that ought to examine the fairness of that view to Americans who are paying the highest income taxes in history."

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