Recent economic projections have shown that the size of the federal government’s budget surplus is smaller than was expected for this year. The current surplus remains the second in our nation’s history, however, and tax revenues coming into the federal government are at historic highs.
Nonetheless, the Senate Democratic leadership has started to ring panic alarms. In a time of surplus, they speak of deficits and suggest that Congress is dipping into a Social Security “trust fund” because of the tax cuts. Many even propose “rolling back” tax relief in order to “protect” Social Security.
Let’s first make one thing clear. The fluctuations in this year’s budget surplus have no impact on the Social Security benefits of any current retiree. In fact, Social Security revenues exceed its benefit obligations and will continue to do so for a number of years. Second, the Congress will not “raid” the Social Security “trust fund” to pay for tax cuts. They are already included in the budget – as is increased spending for prescription drug benefits and education.
Yes, the surplus has shrunk – but not because of tax relief. It is quite simply the downturn in the economy that is the cause of lower surplus projections. Our economic growth has slowed significantly over the last year and that means less revenue for the federal government. With the exception of tax rebates – which most Democrats supported – tax reductions haven’t even been implemented yet, so they have nothing to do with the current size of the surplus.
Yet on Sunday morning talk show, in the newspapers, in commercials, and on the floor of Congress, many Democratic leaders are making tax cuts enemy number one, and the cause for blame for a “vanishing” surplus. So what’s really going on here?
Regrettably, the most obvious possible answer is politics. Many in the new Democratic leadership never supported President Bush’s tax-relief plan (though 12 Democrats crossed party lines to support it in the Senate). Additionally, money given back to the taxpayers cannot be spent on new Washington programs that the leadership favors. Now that this money has been returned to the taxpayers, they are unable to expand government as much as they would like.
Making misleading statements and scaring seniors is not what the nation needs. Instead what Congress should really be spending its time discussing is how to best help the economy and expand our budget surplus. Instead of trying to take back tax reductions Washington owes to the American people as a result of decades of overcharging them, Congress and the President should pursue efforts to encourage economic growth and aid in our nation’s economic recovery.
Additionally, we must hold the line on reckless spending. As we have seen all too often, when given the choice many members of Congress would rather spend taxpayers dollars than give it back to the people – what former Senator Bob Dole once called spending money “on more programs that there are problems.”
Most economists now agree that this year’s income-tax rebates were timed perfectly, giving Americans more money to spend or pay off debt at just the right moment. We should build on the progress we have made, by making the tax reduction permanent and finding more ways to return money to the people who earned it.