Now that fiscal 1998 has ended, fiscal 1999 has begun, and Congress and the Clinton Administration are in what appears to be the final stages of this year's appropriations debate, it is time to make Robert Ripley proud by asking the federal budget equivalent of his famous question.
A Surplus? And It's Not Spent?
I won't insult Budget Battles readers by asking them whether they believe that there really was a budget surplus in fiscal 1998. On a unified basis there was a surplus-$71 billion or so if the Congressional Budget Office's just-released monthly report for September is correct.
But the question is whether you can believe that in an election year, Congress and the White House were able to resist doing anything with that surplus. Almost anyone who has worked on federal budget issues for the past two decades has assumed that a surplus would be far too attractive for most members of Congress and the administration, and would burn a big hole in everyone's fiscal pocket. I have been telling audiences for years that using a surplus to reduce the national debt would be the third choice, well down the priority list from spending increases and tax cuts.
What most of my budget analyst colleagues and I did not anticipate was that anyone's first choice would not be everyone's first choice-and therefore, that there would not be a majority in favor of doing anything. The result has been the default put in place by the budget process-reduce the national debt.
A Surplus Two Years In A Row?
Even with the current economic and stock market gyrations, it is looking increasingly likely that the fiscal 1998 surplus will be followed by another in fiscal 1999. It also looks like the 1999 surplus could approach or exceed $100 billion. If that happens, the overall budget surplus may equal or exceed the surplus in the Social Security trust fund eight or nine years earlier than the official forecasts said it would happen.
If there are two surpluses in a row it will be the first time since fiscal 1956 and 1957 that it will have happened. Did anyone dare predict back then that it would be 42 years before it happened again?
We still do not know how much so-called "emergency spending" will be enacted for fiscal 1999, and that could certainly cut into the projected surplus. But we also do not know how many people either already have or will be selling stocks and bonds that they had not expected to sell, and therefore owe capital gains taxes they had not expected to have to pay. It is possible that the total amount of emergency spending will be close to the additional capital gains revenues, making the overall change in the surplus projection minimal.
How About A $200 Billion Surplus In Fiscal 1999?
The preliminary final numbers for fiscal 1998 reported by CBO show that year-over-year overall federal spending rose by only 3.2 percent while revenues grew by 9.0 percent. If that astounding performance continued in 1999 the surplus would be $176 billion. Few budget forecasters are predicting a surplus of this size. Then again, few thought it would reach $70 billion or more this year.
Did A Member Really Say This On The House Floor?
If there was any doubt about how little the current budget process means to many members these days consider what Rep. Harold Rogers, R-Ky., said last Friday during the debate on the extension of the continuing resolution. He said "Whether or not we have a budget resolution is irrelevant" and ". . . whether or not there is a budget resolution, it makes not a hill of beans' difference."
To be fair, Rogers was talking about how this year's overall spending levels would not be affected by a budget resolution even if one had been adopted, because Congress had decided to stick with the fiscal 1999 caps agreed to in the 1997 budget deal. Still, the fact that Rogers could make the statement and not be struck down by political lightning is the best indication yet that Congress will not adopt a fiscal 1999 budget resolution conference report, even just so members can say they complied with the law.
Question Of The Week
Last Week's Question. Much to everyone's surprise, as of press time it was still unclear how many of the fiscal 1999 appropriations would be enacted as separate bills (instead of being included in either a continuing resolution or omnibus appropriation) by the time Congress recessed. As a result, this week's winner of an " I Won A Budget Battle" T-shirt will not be revealed until next week. At least I hope we will know by next week.
This Week's Question. We may have to wait two weeks to get a winner for this one as well, but it will be worth it. Want your own "I Won A Budget Battle" T-shirt to wear while raking leaves? Just be the first with the correct answer to the following: CBO says that the fiscal 1998 surplus will be $71 billion. When the Treasury releases the official numbers later this month, what will it say was the 1998 surplus? Send your response to scollender@njdc.com.
NEXT STORY: Forest plan shows limits of cooperative approach