For the first time in 30 years, the U.S. budget will be balanced, and more astonishingly, a surplus of $9.5 billion is projected. Where the extra cash should be aimed already is at issue.
But before the spending frenzy begins, lawmakers should keep two things in mind. First, the surplus is contingent on passage of the $65 billion tobacco settlement; no guarantee exists that the settlement will pass. Second, the national debt stands at a precipitous $5.6 trillion. Similarly, without major intervention, the Social Security system will not be solvent by 2029. These should be the primary concerns of Washington lawmakers, not pork barrel projects.
Both Republicans and Democrats warn the tobacco settlement may be in trouble in Congress. Unless the Clinton administration aggressively pursues it, the entire deal may become bogged down in legislative wrangling.
Without the $65 billion, the entire balanced budget may unravel – and the surplus disappear. Before counting unhatched chickens, Congress should make sure those funds exist.
Federal Reserve Board Chairman Alan Greenspan has warned this possible surplus is not evidence of “chronic surpluses,” and that any actual surplus now should be used solely to pay off the national debt. According to him, that would help reduce long-term interest rates and spur savings and investment. Regardless, the national debt must be the top priority. If it is ignored, our generation may face tremendous economic difficulties.
Those difficulties will be compounded if Social Security and other entitlements are not revamped. The United States spends 23 percent of its budget on Social Security; 30 percent on Medicare, Medicaid and other entitlements. When baby boomers begin retiring en masse, it is the baby buster generation – us – that will need to fork over more of our paychecks to pay for the system.
The Clinton administration must keep focused on making this surplus happen. And Congress must make paying off our national debt and stabilizing U.S. entitlement programs top priorities. If these key issues are not addressed, future generations will pay a heavy price.