... and Hide the Key

With the federal government about to go into deficit, the stage is set for a prolonged struggle over who popped the lock on the Social Security lockbox. No one’s talking government shutdown yet, but the blame game has already started. The Democrats say, with some justice, that President Bush’s sweeping $1.3-trillion tax cuts, which have only begun to kick in, are responsible for a possible looming sea of red ink. The Republicans respond, not unreasonably, that an economy headed for recession could use a little stimulus, while gliding over the fact that the real problems are the backloaded tax cuts over the next 10 years. Democrats and Republicans both pretend to agree on one thing: The Social Security surplus should remain inviolate.

But the Congressional Budget Office has reported that the government will need to tap Social Security funds this year in order to cover its bills. Meanwhile, Bush administration officials such as Mitchell E. Daniels Jr., the director of the Office of Management and Budget, claim that all is well--as long as Congress sticks to the Bush budget. But despite Daniels’ sugary words, the fact is that the Bush proposals include a budget-busting $18.3 billion for the Pentagon. True to form, the House Republicans are, by pushing for cutting the capital gains tax further to 15%, acting even more irresponsibly than House Majority Leader Dick Armey. Even President Bush has murmured his dissent.

The question is who will blink first. Will Bush cave in on increasing defense spending by $33 billion? Or will the Democrats, in order to hike domestic spending, be the first to dip into the so-called lockbox? It runs against Democratic orthodoxy, after all, to preach fiscal conservatism. Indeed, Bush’s hope has been to create what he called a budgetary “straitjacket” that prevents the Democrats from spending on domestic programs.

Both political parties will, of course, be looking for ways to dip into Social Security. They shouldn’t. That would be a recipe for a return to the fiscal indiscipline from which the U.S. only recently emerged. President Bush may not be heading for Ronald Reagan-style deficits, but the similarities are all too reminiscent--tax cuts and higher military spending. Congress will need to keep a tight rein on the Pentagon. The lockbox should stay locked.