Surplus? What Surplus?

There it goes. As President Bush’s whopping $1.3-trillion tax cut takes effect and the economy continues to stumble, the budget surplus is shrinking to the point of vanishing. Senate Democrats are hitting the panic button. The GOP, declared Sen. Kent Conrad (D-N.D.), has “been driving the car, grabbed the wheel and ... run it right into the ditch

This is hyperbole. Concern is in order, not alarm. For one thing, the argument is only over a surplus, not Armageddon. Beginning with the Vietnam era, the United States routinely ran budget deficits that culminated in the colossal red ink of the Reagan administration, which combined tax cuts with dramatically increased defense spending. Not until President Bill Clinton’s fiscally responsible spending, aided by a strong economy, did the government put its fiscal house in order.

Now the nation is confronted with a fundamental question about the surplus that first arose in last year’s campaign. Should government spend the money--or should voters get it back? An ironclad rule of Washington politics is that if the money is there, politicians will spend it. Bush’s approach is plainly intended to deny lawmakers that opportunity. As he put it when announcing the tax cut, “There’s a new philosophy in town now.”

Fine. Curbing legislators from wasting money is a worthy goal, and the Bush administration has gone after corporate pork such as shipbuilding subsidies. Secretary of Defense Donald H. Rumsfeld seems to be taking a hard look at unnecessary weapons programs. But it isn’t enough. The long-term problem with the Bush approach is that the administration wasn’t upfront about the effects of the tax cut--and it’s hard to see how it will stick to it.

Forget the absurdity of loading the bulk of the tax cuts toward 2010 or delaying full repeal of the estate tax until that time, then a year later reinstating the tax. The real troubles could start when the baby boomers retire and Social Security and Medicare costs kick in. As Nicholas Thompson notes in the July issue of Washington Monthly, the Bush administration “has tossed out a grenade with its pin pulled that will likely detonate when future administrations write their budgets.” That grenade is a proposed $900-billion “contingency fund” that is supposed to pay for a prescription-drug benefit program that alone could cost more than a trillion dollars; besides that, there’s Bush’s call for a prohibitively expensive missile defense system.

If the economy roars back, Bush may get these goodies. Otherwise, he may become a victim of his own tax cut.