Surplus leaps, but agencies unlikely to see the money

Revised budget surplus estimates issued by the Congressional Budget Office (CBO) Tuesday are so much larger than figures prepared in March that GOP leaders are searching for ways to keep the surplus from being spent-even as the White House issues veto threats against most of the fiscal 2001 appropriations bills for underfunding the President's priorities.

CBO's mid-session review projected a fiscal 2000 on-budget surplus of $84 billion and unified budget surplus of $232 billion. For fiscal 2001, CBO projects an on-budget surplus of $102 billion and unified surplus of $268 billion.

Over five years, the on-budget surplus now is expected to add up to $695 billion and the unified surplus to $1.7 trillion, while over 10 years, CBO projects an on-budget surplus of $2.2 trillion and a total surplus of $4.6 trillion.

These estimates assume that discretionary spending will grow at the rate of inflation and that the real gross domestic product, the traditional measure of economic growth, will be 4.9 percent in the current fiscal year, and 2.7 percent over the 10-year window.

By comparison, CBO estimated as recently as March that the fiscal 2000 on-budget surplus would amount to $26 billion, and the unified surplus would total $179 billion. For fiscal 2001, CBO's March estimates pegged the on-budget surplus at $15 billion and the unified surplus at $181 billion. The 10-year projections CBO released in March forecast an on-budget surplus of $893 billion and unified surplus of $3.2 trillion.

Although the numbers released Tuesday represent a huge jump from CBO's March figures, there is no shortage of policy proposals that would claim a piece of the larger pie. These include: cutting taxes for married couples, estate tax relief, abolishing the Spanish-American War-era telephone tax, establishing a Medicare prescription drug benefit, reducing the minimum wage, establishing an urban renewal tax credit, creating a "lock box" to wall off the Medicare trust fund surplus, restoring some of the deepest cuts to Medicare providers mandated by the Balanced Budget Act of 1997, buying down more of the nation's publicly held debt and increasing fiscal 2001 discretionary spending.

With the fate of many GOP tax cut proposals in doubt, fiscal conservatives among the Republican leadership of both chambers want to devote as much of the projected on-budget surplus as possible to reducing the publicly held debt-in large part to keep those funds from being used for more discretionary spending, according to several GOP leadership sources.

Rep. Jim Nussle, R-Iowa, a senior member of both the House Budget and Ways and Means committees, said that for him, "as much as possible, I would pay down the national debt."

And a spokesman for House Speaker Dennis Hastert, R-Ill., said that while Republican leaders have not determined how much of the projected on-budget surplus to dedicate to paying down the debt held by the public, it will be a "significant" amount-potentially more than half of the total on-budget surplus projection, including the portion generated by surplus Medicare tax revenues.