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.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.