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February 23, 1999

Taxing Our Patience

By

The American people frequently criticize politicians for being out of step with the rest of the country. They're right. For proof, consider the current talk in Washington about a "budget surplus."

It's an innocent-sounding phrase, but it obscures an important truth: What Washington has is an excess of our tax money. Under truth-in-labeling laws, our representatives should be required to call the extra money a "tax surplus." By calling it a "budget surplus," they make it sound as if they just kicked over a rock and there it was.

The fact that we have a surplus means we paid the IRS too much money. And now, like a teenager pocketing the change from his parent's $20 bill, the politicians don't want to give it back. They've got important plans for it. You, on the other hand, would just waste it on something frivolous, like braces for your kids' teeth or a new microwave.

In announcing this year's $76 billion surplus, President Clinton said, "Like any family with long-term financial needs and a little more earnings than we expected, we can't go out and spend the surplus today. We have to save for the future." Who is he kidding? Governments don't save money, they spend it. Those who think politicians will stash our extra tax dollars in a savings account or a safe-deposit box don't understand how reckless Washington is. As political humorist P.J. O'Rourke once put it, "Giving money and power to government is like giving whiskey and car keys to teenage boys."

Of course, when the president lectures us about not "spending" the surplus, he really means he opposes refunding your tax overpayments. But this hardly qualifies as spending. If I overpay for a service-say, dry cleaning-and the proprietor refunds the extra money, he hasn't "spent" it. He's simply returned what doesn't belong to him. Giving the surplus back to those who created it can be called a lot of things-a tax cut, a refund, a rebate-but it can't be called "spending."

For examples of real spending, look no further than the $1.8 trillion budget President Clinton just submitted to Congress. It contains increases for dozens of programs, from research on fuel-efficient cars to efforts to protect "at-risk" species such as the Pacific salmon. Even more amazing, it actually increases taxes by $45 billion. How can any politician propose a tax increase in a year when the government will run a $76 billion surplus?

Now is not the time for Congress to be timid about returning the surplus to its rightful owners. The accumulated tax surplus over the next 15 years is expected to total $4.5 trillion. The White House and Congress have already agreed to set aside 62 percent, or about $2.8 trillion, for Social Security. But that leaves 38 percent, or $1.7 trillion, for other purposes. How big a tax cut would that mean over the 15-year life of the surplus? How does $25,660 for every family of four sound?

In the end, this is an issue of who will spend your money more wisely: you or the government. President Clinton made clear where he stands recently when he said of the surplus, "We could give it back to you and hope you spend it right." But "if you don't spend it right," government programs could run out of money. That's the kind of government-knows-best attitude that keeps our taxes at record levels.

Come to think of it, that's the same attitude that allows politicians to call your tax overpayments a "budget surplus."

Edwin Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.

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