Clinton again insists Congress not touch surplus

Congress must resist election year temptations to spend a budget surplus on tax cuts or any other popular programs until a plan is developed to save Social Security, President Clinton said Tuesday.

In releasing the mid-session budget review by the Office of Management and Budget, Clinton said the surplus will reach $39 billion this year--the largest dollar surplus in the nation's history. He said the federal government reached surplus by doing "what was right" for the economy and renewed his opposition to using any surplus funds until agreement is reached on how to save Social Security.

But Clinton also said he is concerned that in recent weeks, senior House Republicans have backed down from a pledge to devote any surplus for that purpose, adding that he will oppose any budget that spends the surplus on anything else. He said he would not oppose discussions about how to use any leftover surplus funds after a plan is developed to preserve Social Security, adding that he expects a rescue plan to be adopted by sometime next year.

House Speaker Gingrich has suggested that a part of the surplus could be used to pay for tax cuts. But last week he said the CBO was being so conservative about the size of the surplus that it would be difficult to direct any portion of it toward tax cuts.

In its mid-session review, OMB said the budget surplus could grow to $148 billion by 2002, and between 1999 and 2002 could total $495 billion. The projected $39 billion surplus for FY98 is lower than recent CBO projections, which set the surplus between $43 billion and $63 billion.

OMB said that revenue receipts have been much higher than anticipated, while federal spending has slowed somewhat. Current estimates of receipts for 1998 exceed the amount in the Clinton budget by $45.9 billion, the OMB reported. In addition, federal spending for the year is projected to be $3.1 billion lower than the estimate in the Clinton budget. The administration projected real gross domestic product to grow 2 percent over the next three years and 2.4 percent during the following six years. The Consumer Price Index is projected to rise 2.3 percent beginning in the year 2000.