And Now, Tackle the Debt

Zero. Think of it: a balanced budget without a deficit. In fact, President Clinton’s fiscal 1999 federal budget projects a surplus of $9.5 billion. And in the future? More balanced budgets with growing surpluses. The fiscal good news is dazzling.

This is a remarkable achievement, one that many Americans thought they would never see again. It is the result of commendable efforts by both the president and Congress and a conjunction of a buoyant economy and the end of the Cold War.

But Washington should not rush to spend those future budget surpluses. As of now, they exist only on paper and will occur only if the economy continues to perform at an exceptional pace. Even the $9.5 billion that Clinton projects for next year is based on some iffy assumptions, including the prospect of a $65.5-billion tobacco industry settlement over five years.

Republicans are eager to use the surplus to finance a broad-based tax cut or to restructure the tax system. Clinton scored a political coup last week by declaring that the money should be pumped into Social Security.

Both are political ploys. Republicans cannot agree on what sort of tax reduction or reform they want. And Clinton should not become wedded to the idea of diverting the money into Social Security.

There’s no harm in studying tax reform. The present system is overwhelmingly complex and inefficient. But any significant reform will require the development of a strong bipartisan coalition behind a plan before it goes to Congress.

And there’s certainly nothing wrong with diverting part of a surplus to Social Security pending a postelection study of reforms that will secure its fiscal future. Clinton’s promise of “Social Security first” for any budget surplus is a nice gesture, but the system is forecast to have a surplus of its own well into the next century.

The president could make another gesture that might have an even greater impact on the public’s political psyche and Wall Street: seek to use some of the surplus to begin paying down the federal debt. After all, just because a family paid this month’s minimum credit card payment--the equivalent of balancing the federal budget in any one year--that does not mean the debt goes away. It’s still there, with interest costs accumulating.

The federal debt is still there too, a massive drain on the economy, a giant shadow lurking just behind all the good budget news coming from the White House on Monday. The debt grew from $1 trillion when Ronald Reagan entered the White House to $5.4 trillion today. The annual interest payment is one of the largest single items in the new federal budget. At $242 billion, the interest cost is just shy of the nation’s entire defense budget next year. Some might ask: What’s the point of trying? Well, many people had found a projected balanced budget unimaginable. There’s only one way our astronomical debt can be dealt with--a dollar at a time. Let’s start in 1999.