Big budget surpluses could bring spending hikes

The Congressional Budget Office Thursday officially released its updated federal budget forecast, projecting a total budget surplus of $161 billion in fiscal 2000 and an on-budget-or non-Social Security-surplus of $14 billion, if discretionary spending does not exceed the statutory budget caps.

Over the next 10 years, the CBO projects a cumulative total surplus of $2.9 trillion and an on-budget surplus of $996 billion. The 10-year figures are more than $300 billion higher for the unified budget and more than $180 billion higher for the on-budget surplus than the CBO predicted in April.

These projections assume that, after the caps expire in 2002, discretionary spending will grow at the rate of inflation. In addition, the CBO assumes GDP growth will slow and inflation will rise next year, and that economic growth adjusted for inflation will average 2.4 percent annually.

While most congressional reaction has focused on using the on- budget surplus for tax cuts, that money also is available for higher discretionary spending. House Appropriations Committee Chairman Bill Young, R-Fla., said the leadership will make the final call on how to allocate the money, but "realistically they could certainly" direct some of it to appropriations.

Indicating how GOP leaders could say they did not bust the caps while increasing spending, Young said "the target is that the budget be balanced."

Budget member Christopher Shays, R-Conn., cautioned that, with such optimistic CBO projections, "There is a real danger that the President and members of Congress will want to spend the surplus."

Like many GOP moderates, Shays predicted that under the budget caps and the steep spending cuts they require, the appropriations process will end in "a train wreck in October and a near-disaster next year" unless the caps are raised. Shays said he "is not willing to spend less [than last year] on Labor-HHS or VA-HUD" appropriations, and that while he would be willing to take some money out of defense to increase those bills, the majority of his party would not.

Shays said, "I just want my leadership to come to grips with the fact that if we're not going to take the money from defense [to increase domestic spending], then we have to raise the caps." He said some of the on-budget surplus should go to raising the spending caps, which are in effect through FY2002, "as long as we can also give people a sizable tax cut."

In a shot across the bow, House Budget Committee Chairman John Kasich, R-Ohio, Thursday afternoon said House Republicans who want to spend more money need "a reality check," and later said, "The time has come for Republicans in the House to pull together and live up to the budget agreement they signed in 1997."

Meanwhile, House Appropriations ranking member David Obey, D-Wis., Thursday criticized the GOP leadership's handling of FY2000 appropriations, complaining that moves by Speaker Dennis Hastert, R-Ill., threaten to diminish the role of the Appropriations Committee. Obey said appropriators have been "plagued by a series of second- guessing" by the leadership.