WASHINGTON -- The Concord Coalition today disputed claims that there will be a federal budget surplus by 1999, pointing out that the projected surplus is only reached by borrowing Social Security's annual surplus revenue to fund other government programs.
While today's projections from the Office of Management and Budget (OMB) predict a budget "surplus" of $9.5 billion by 1999 under the Clinton administration's latest budget plan, that surplus is possible only by borrowing Social Security's surplus of $105 billion in that year.
Without borrowing the Social Security surplus, OMB does not project that balance will be reached within the budget's five-year planning window. For the year 2003, the OMB projects that the government's "on-budget" operating accounts will be $63 billion in the red.
"The so-called budget surpluses that policy-makers are lining up to spend consist entirely of Social Security's annual trust fund surpluses," said Martha Phillips, executive director of the Concord Coalition. "We should be saving those surpluses to prepare for the retirement of the Baby Boomers, which will put a huge financial strain on future taxpayers."
Phillips also questioned several assumptions in the President's budget proposal. Among these are an assumed deal with the tobacco industry that the White House hopes will produce $65.5 billion in increased federal revenue over the next five years, and tax loophole closings that will garner $23 billion.
Phillips said the OMB's projection of budget surpluses "as far as the eye can see" also includes assumptions that depend on the economy remaining robust, and the president and Congress exercising fiscal restraint. The Congressional Budget Office has pointed out that if Congress spends projected surpluses on new programs or tax cuts, the long-term budget outlook will become much more pessimistic.
"Any combination of slower economic growth, increased federal spending or tax cuts could lead to deficits as far as the eye can see," Phillips said.
|OMB Projection: Budget Deficit
Without Borrowing Social Security Trust Fund
|Projected Annual Social Security Surplus|
|OMB Projection: Budget Deficit/Surplus After
Borrowing Social Security Trust Fund