Surplus goes poof just before budget time

Bush: In a snap, record surplus vanishes, thanks to president's tax cut and a slumping economy.

September 06, 2001

GEORGE W. BUSH based his campaign for president on a promise to give Americans a huge tax cut. Well, he got his wish, and now he's faced with the unpleasant consequences -- a fast-disappearing surplus that could crimp his spending plans.

In just four months, Washington's overall budget surplus has shrunk from $275 billion to $153 billion, according to the Congressional Budget Office. When Social Security receipts are subtracted, the nation's budget surplus stands at just $2 billion.

That imperils the billions more Mr. Bush wants for education and defense, not to mention needed money for farm aid and disaster relief.

The bad news could continue, though. The nation's economy shows new signs of weakness almost daily. Even if the economy has reached the bottom of this downturn, there's no telling how long it will take for things to improve.

That virtually wipes out the chances of passing a prescription-drug bill to help seniors. Congress had set aside $300 billion over 10 years in its long-range budgeting, but that money evaporated with the shrinking surplus.

The president's desire to privatize a portion of an earner's Social Security contributions also has been severely undermined. Mr. Bush had been counting on some of that enormous surplus to make this proposal viable. Only by reducing Social Security benefits could such a shift now take place.

Then there's the highly charged political question of preserving the Social Security system. Much of that diminishing surplus was supposed to be used to lower the national debt, thereby freeing up federal money later when retiring baby boomers strain Social Security reserves.

Hard decisions may have to be made by Mr. Bush if the federal budget picture continues to darken. Congress, too, must reduce frivolous spending. Some Bush tax cuts that help mainly the rich may have to be reconsidered.

Earlier forecasts of giant surpluses for years to come were a mirage prompted by an economic boom that couldn't last forever.

Now that the bubble is starting to burst, the nation needs to re-think its priorities.

Are tax cuts more important than a military buildup? Is education more important than wiping out the estate tax? How badly do we want a prescription-drug program?

The vanishing surplus forces a much-needed reality-check.

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