Spooked by the Surplus

What happens when conservatives die and go to heaven, and discover they may not like it there after all? Surely this moment in American history is as close to paradise as conservatives could ever have dreamed. The budget is not just balanced; it is running a surplus so big that it could total $6 trillion over the next 15 years. A Democratic President travels to the poorest corners of the country, such a convert to the miracles of private enterprise that he brings with him not a bushel of federal promises but a bunch of business leaders whom he has deputized to solve the problems of the poor, with maybe a tax break or two as a sweetener. Lawmakers are talking about spending more on both defense and education while cutting taxes, fixing Medicare and paying down the national debt at the same time.

So why are conservatives so spooked?

Because as they look back on how they got here and at what lies ahead, some crusaders realize they may have missed the chance of a lifetime. By making a balanced budget the Holy Grail, conservatives never got around to the conversation they really care about: What size budget should be balanced? One trillion? Two? Half a trillion? How much of the nation's wealth should remain in private hands, and how much controlled by the federal Treasury? Hardly anyone imagined the day would come when the brakes came off, the deficit vanished and it would be possible to balance the budget while spending even more, not less. "It was a little like winning the cold war," says Heritage Foundation vice president Stuart Butler, "and wondering, What do we do now?"

The mighty surplus takes away the conservatives' most powerful weapon. In the campaign to roll back the welfare-state programs they hated, the deficit was an all-purpose weed whacker. Year after year, Republicans lived without big new tax cuts in return for the Democrats' giving up any hope of new spending. In that climate of discipline, the surplus took root. But it is much harder to keep those restraints in place when the Treasury seems awash in money. And those crowd-pleasing tax cuts? Though Republicans last week proposed a new capital-gains-tax reduction, it turns out the dreamy economy has left voters' pockets so full that polls show about 60% would rather spend the money on education, health care and other programs.

In the carnival of surplus politics, it is harder to argue that Medicare and Social Security require big structural changes, like privatization, means testing or raising the age of eligibility--even though, back in 1935, when it was set at 65, the average life expectancy was 61. Conservatives now see the fruits of restraint bearing the seeds of future deficits, if Congress approves all kinds of new spending this summer that can't be cut back whether the surplus actually materializes or not.

To make matters worse, Clinton got everywhere first, grabbed all the good seats. He embraced the Republican plan to lock the future Social Security surpluses away to pay down the debt, while also talking tax cuts and the largest expansion ever in Medicare. He has proposed a $156 billion "Children and Education Trust Fund" as well as new retirement-savings accounts. It's almost enough to make the budget hawks wish for recession.

Then there is the lack of discipline in the G.O.P. When Republican revolutionaries were running back in 1994, they stood before the voters and said, in essence, "If you want another wheat-research facility in this district, vote for the other guy. We don't need it, and our grandchildren will have to pay for it, and I won't do it." Voters approved and conservatives cheered, but once in office the rebels seemed to forget the gospel they ran on--forgot their promise to serve only three terms, or to fight pork-barrel spending, or to forswear the politics of redistribution, in which you take money away from the folks who didn't vote for you just to hand it over to the ones who did.

Now the test will be whether any discipline at all can survive the headlines about the extra $1,000,000,000,000 the government expects to find under the mattress. So much depends on the projections' being right, when the happiest news of the year has been how wrong they turned out to be. Five years ago, the deficit for 1999 was projected at $207 billion. Last February the budget office announced instead we would run a $79 billion surplus; just four months later, it was $99 billion.

The budget fight in the weeks to come will be a character test, more so than in the days when there wasn't enough money to do anything. Both sides have a long habit of spending money now that won't arrive until later, and promising that they'll cut something without saying exactly what. The fear is that Congress will get too drunk on prosperity to drive the budget home safely--and that's why conservatives aren't so keen about the party in the first place.