OMB to Congress: Curb Spending or Social Security Will Be Tapped

foxnews.com ^ | Saturday, September 08, 2001 | Carl Cameron

[Patriot of Washington State]

WASHINGTON — The White House has begun telling lawmakers that by the administration's own estimates, the Social Security surplus could be tapped by as much as $12 billion to $15 billion next year unless spending is curbed dramatically, Fox News has learned.

GOP lawmakers say Office of Management and Budget director Mitch Daniels showed Republican leaders charts Friday based on what Congress is on track to spend.

Daniels also said this year's spending could dip into the Social Security surplus by as much as $10 billion. This year's spending, however, is directed by ex-president Clinton's budget.

Another prominent Republican is willing to consider using Social Security surpluses for federal spending, Fox News has also learned. Republican whip Don Nickles — the assistant GOP leader in the Senate — has made it clear he is not against tapping Social Security surpluses.

The Nickles revelation came a day after Sen. Pete Domenici of New Mexico, the ranking Budget Committee member, said he was in favor of using surplus funds for current spending projects such as education.

Nickles is not pushing the idea, but a major shift is underway and other Republicans are expected to say similar things in the weeks ahead.

[marajade]

"Nickles is not pushing the idea, but a major shift is underway and other Republicans are expected to say similar things in the weeks ahead."

Mistake if you ask me. Here's their chance to submit a budget with less spending to a President who would be willing to sign it, and they want to spend Social Security money instead. How sad.

[MUDDOG]

using surplus funds for current spending projects such as education.

Let's see, the annual SS surplus is around $155 billion.

So if the gov't tapped $15 billion, that'd still leave $140 billion to reduce the publicly-held debt. Not bad.

But don't spend the $15 billion on "education." That's a rathole if there ever was one.

[ConsistentLibertarian]

"by the administration's own estimates, the Social Security surplus could be tapped by as much as $12 billion to $15 billion next year" What happened to the Laffer curve: as you cut tax rates federal tax revenues are supposed to go up, not down. At least that's what Reagan said. That was the bedrock principle of his fiscal policy.

[AntiScumbag]

as you cut tax rates

the laffer curve is about marginal rates and incentives to work, produce and invest

any tiny positive revenue effect due to the tiny 1% reduction in the highest marginal rate for 2001 won't be seen until 2002 and isn't going to amount to a hill of beans

the entire tax "cut" is paltry and back-loaded over ten years and has no hope of having any significant near-term effect and won't have much long-term effect

that said, any cut is better than none, but none is close to what we got, and gwb is dreaming if he thinks it will save him and the economy from recession

[Hidy]

It isn't congressional spending that is causing Bush to break his solemn campaign promise: "I will not take money from that program, Social Security."
It's the mammoth tax cut. No tax cut, no need to raid Social Security.

So the choice now facing Bush is between persisting in his goal of making his wealthy friends even wealthier, or keeping the earnest and sincere promise he made to America's seniors. What's a decent, Christian, compassionate conservative to do in such a moral dilema?

Well, that's a no-brainer, ain't it?

We went from surpluses "as far as the eye can see" to, "Sorry, old folks, we're taking your money for our fatcat tax cut" in just eight months.

The only thing left to do now is to blame the president who gave us the surplus in the first place -- the guy who specifically warned Bush not to do what he went right ahead and did... what was his name again -- you know - the liar?

[ConsistentLibertarian]

So Reagan was a fool who based his entire fiscal policy on a false premise: namely that a cut in the tax rate increase tax revenue? And his folly has been exposed twice over? First by Clinton, who raised the marginal tax rates in '93 which led to a huge increase in tax revenues and let us eliminate the deficit and start paying down the debt, and then again by Bush, who cut the marginal tax rate this year which has led to a sharp contraction in federal tax revenues forcing him to break his pledge and to raid the Social Security trust fund? Hmmm. I don't know. Let me think about that.

[jimkress]

First by Clinton, who raised the marginal tax rates in '93 which led to a huge increase in tax revenues and let us eliminate the deficit and start paying down the debt,

That's B.S. Clinton benefited from an expanding economy. That's where the vast majority of the increased tax revenues came from.

Bush, who cut the marginal tax rate this year which has led to a sharp contraction in federal tax revenues

Also B.S. Spending was increased (by the Republicans and Democrats) in far excess of that used to define the prior 'surplus' projection. That increase in spending coupled with the Clinton economic collapse accounts for virtually the entire reduction in the 'surplus'. The amount of money returned in 2001 via the reduction in the 15% tax bracket is only $40 billion.

The Federal government must cut spending! The current budget of $2,000,000,000,000 (two trillion) is more than is needed to meet the Constitutionally enumerated responsibilities of the government.

[ConsistentLibertarian]

"Clinton benefited from an expanding economy. That's where the vast majority of the increased tax revenues came from." What about Reagan? Did he benefit from an expanding economy? I ask because that sort of confounding variable is almost never introduced into any discussion of Reagan's fiscal policy. Maybe people who think the expansion in tax revenues in the early and mid 80's vindicates Reagan's fiscal policy are being niave or they're deliberately distorting the facts? Maybe. I'd have to think about that.

[ConsistentLibertarian]

As for Bush, is there ANYONE who is forecasting a rise in federal tax revenues over the next 12 months? The CBO? The Republican leadership in the House? The Whitehouse? Hmmm ....

[jimkress]

1980-1990 per capita GDP increased by 1.9% per year. 1990-1995 per capita GDP increased by 0.9% per year. Federal tax receipts nearly doubled in the 1980-1990 time frame. They did not fare as well in 1990-1995 due in part to the Bush and Clinton tax increases. The ability to balance the budget was provided by the economic strength and its momentum generated during the Reagan years. A strength that was frittered away in a small way by the first Bush and then enthusiastically pissed away by Clinton.

The current Bush tax cut is stupidly back loaded (unlike Reagan's) and will have little effect on the economy (or the surplus/ deficit) for several years. With the Clinton 'economy' in collapse it doesn't take a rocket scientist to predict that government tax receipts will be flat or decrease.

The tax cuts should be revised to be front loaded and augmented with a significant capital gains tax cut. That approach would emulate the one taken by Reagan and would provide the same stimulus and economic growth.

[jimkress]

Also, the budget should be FROZEN at $2 trillion and spending (on and off budget) should be frozen at the same level. $2 trillion is more than enough money for the Federal spendthrifts - on both sides of the aisle in Congress.