House leaders: Use surplus for tax cuts

Reversing course, key House Republicans today said new surplus figures are so positive that a portion of the surplus should be used to cut taxes.

House Speaker Newt Gingrich, R-Ga., today told the Cato Institute that he believes "significant" tax relief can be passed this year, given the newly estimated $1.5 trillion budget surplus over the next decade. Budget Chairman John Kasich, R-Ohio, echoed that call, telling reporters, "With all that money sitting here in Washington, we need to get it out of here."

Earlier this year, Gingrich and Kasich had said part of the surplus should be used for tax cuts. However, in recent weeks Gingrich indicated that Congressional Budget Office surplus estimates were so low that it would be difficult to use them to justify tax cuts, and Kasich had said part of the surplus should be used to transform Social Security by establishing individual retirement accounts.

However, the CBO reported Wednesday that the surplus will reach $251 billion by 2008 and that in 2002 the budget will be in surplus, not counting the Social Security trust fund. Based on those new figures, Gingrich called on the Clinton administration to work with congressional Republicans to phase out the so-called marriage penalty, cut the capital gains tax and eliminate estate taxes.

Kasich said he still hopes a portion of the surplus can be used for Social Security, but said he doubts a large overhaul of the program will be possible during the Clinton administration. Discussing the surplus, he said: "I get very concerned that we're going to spend it on more government. People ought to get their money back."

Kasich also said he still is pressing for additional cuts in federal spending, but conceded it "is very difficult to get the savings I want in light of the good news about the surplus." He declined to discuss a proposal by Senate Budget Chairman Pete Domenici, R-N.M., to pass a scaled-back version of a reconciliation bill, saying he wants Domenici to talk with House members before he discusses the plan. But he commented, "I can't at this point seem to have much hope that the Senate is interested in cutting much government."

Kasich said he realizes Domenici would have trouble passing a budget plan that would pay for tax cuts through discretionary spending, but called it a "sad, sad day" when additional cuts cannot be enacted.