Surplus Keeps Growing, Tax Cut Keeps Coming

  • Share
  • Read Later
The preparations for George W. Bush's $1.6 trillion tax cut are starting to look a lot like a red carpet.

First, Bush swore in his new treasury secretary and fiscal emissary to Congress, Paul O'Neill, with the usual rhetoric: "Because our government has a surplus does not mean that every American family has a surplus. Many families are feeling squeezed by high energy prices and credit-card debt. We need to give them their own money back."

Then the government backed him up. Late Tuesday, the Congressional Budget Office informed members of Congress that it expects the surplus to swell to $5.6 trillion over the next decade, $1 trillion higher than the budgeteers' July estimate and about $600 billion more than the Clinton administration's final projection last month.

White House press secretary Ari Fleischer was happy to add a few bangs to the tax-cut drum. "We are seeing a government that is awash in surplus money, even with an economy that is softening from where it used to be."

They're lining up

Awash? It won't seem that way around budget time this summer, when worthy programs start lining up for their piece of the pie — and the pork-seeking missiles known as members of Congress are fighting over the crust. But for now, there does seem to be plenty to go around.

Of the total projected surplus of $5.610 trillion, $2.488 trillion would come from the Social Security system, the Budget Office said, and, by agreement between the two parties (and Bush), will be off limits. The rest, $3.122 trillion over the next 10 years, is up for grabs, and setting half aside for tax cuts "for everybody who pays taxes," as Bush put it Tuesday (that would be a reaffirmation of his insistence on across-the-board cuts) is looking more and more reasonable.

"Taxes must fit into a budget, which they will," Bush assured reporters after a White House meeting with Hill Republicans. But as yet, the administration is still working on the details. That's because O'Neill not only wants to head off what he can of the expected Democratic resistance — the booming surplus and sagging economy has raised their counteroffer up to $800 billion, but they're still fighting for income cutoffs for the wealthy and more targeted cuts for the poor — but he's also looking for ways to speed the cut's impact on the economy, like a retroactive decrease in payroll deductions.

Now that he's in office, it's different

But the main reason is also why Bush is spending so much time meeting with fellow GOPers these days: The President is flooded with tax-cut requests from his side of the aisle, from Trent Lott and his capital-gains reduction to social conservatives who want a tax break for all married couples. Bush may have painted a pretty clear picture of his cut during the campaign, but now that he's in office, the old saw "the President proposes, the Congress disposes" is kicking in with a vengeance.

O'Neill will be the guy who walks Bush's final proposition up the Hill, and while he'll have areas on which Bush won't bend — and on which he and the Lotts and Hasterts have already agreed — the new man at Treasury will have his hands full getting a package past both parties in a neatly divided Congress in presidential time.

Because when the red carpet rolls out, everybody wants to join the party.