Projected budget surplus grows
Even without counting the Social Security surplus, the budget will be in balance in 2002 using new CBO projections released Wednesday.
The new figures foretell a much brighter fiscal future than was envisioned just five months ago. The projected surplus for this year is $63 billion, rising to $251 billion in 2008. The CBO predicts that the cumulative surplus for those years will be nearly $1.6 trillion.
If Social Security is excluded, the budget reaches balance in 2002, then returns to a deficit for two years before again going into surplus. The total surplus will be $169 billion for 1999-2008 if Social Security is ignored.
However, even the CBO could not explain most of the change from March's estimate of just $671 billion in surplus from 1999- 2008, a problem that concerns at least one Republican on the House Budget Committee.
"It's extremely worrisome. They can't say what could change to ruin that or increase [the surplus] even more," the member said. For FY98, an unexpected $45 billion increase in individual income tax revenue accounted for the difference.
Senate Budget Committee Chairman Pete Domenici, R-N.M., hailed the new figures and reiterated that the first priority must be "to protect and preserve the fiscal integrity of Social Security." That position has previously angered some conservative Republicans who want to use the money for a large tax cut.
But Domenici added in his statement that once there is a surplus without using Social Security, "we must also move to approve a significant tax cut that will send this money back to the American people."
That statement came several hours after House Budget Committee Chairman John Kasich, R-Ohio, presented Domenici's proposal for a bare-bones budget reconciliation measure with an uncertain tax cut to Republicans on his committee, and got a skeptical reception.
"I don't think there was anybody who liked what [Domenici] did. There were different levels of discomfort," said one member. The member added, however, that there is strong interest in reaching a compromise. And another GOP member of the panel called Domenici's plan "a starting point."
The most contentious issue remains the size of a tax cut. According to one member, Kasich said Domenici was willing to go up to $70 billion, but only if offsets could be found.
However, several sources questioned if any significant savings can be located that would garner a majority. "Everything that comes up [as a proposed offset] everybody is scared to death of," said Rep. Mike Parker, R-Miss., a Budget Committee member.
Parker added that it will be difficult to get a final tax cut number because "we lose as many guys if we go below $100 billion as if we go above."
Kasich has asked Domenici to meet with House Budget Committee Republicans to make his case to them himself, and hopes to schedule something today.
Meanwhile, House conservatives have called for a meeting with House Speaker Gingrich today to continue to press the case for a $101 billion tax cut.
The Conservative Action Team met Wednesday, after which the CATs chairman, Rep. David McIntosh, R-Ind., said the group is concerned the Ways and Means Committee will move legislation to extend certain tax breaks that expire this year before doing a reconciliation bill.
McIntosh said conservatives want the protection of reconciliation to ensure their tax cut priorities of ending the "marriage penalty" and lowering capital gains taxes are protected.
An aide to one conservative member said CATs are afraid that if Ways and Means does an extender bill first, it will take momentum away from a larger tax cut package.
But the aide added that leadership staff have assured the CATs that will not happen, and that the meeting with Gingrich was requested to clarify that point.
For his part, Gingrich declared Wednesday, "With a whopping $1.5 trillion surplus over 10 years, we can preserve, protect and strengthen Social Security while also passing significant tax relief for hardworking Americans."
But the White House said it stood by President Clinton's State of the Union address call to use surpluses to buttress Social Security.
"Whatever the size of the surplus, the president is committed to reserving the surplus until we determine how to get Social Security right for the next generation," an OMB spokeswoman told the Associated Press.