For the second straight year the White House is projecting a big budget surplus. And once again, the American people are unlikely to see a penny of it in tax cuts.
"Before we consider any new spending or tax cuts, first we must set this surplus aside until we save Social Security for the 21st century," President Clinton said at a recent White House ceremony announcing this year's projected $76 billion surplus. Of course, he immediately followed that pronouncement with a call for new spending on "investment needs" in education and health research.
The list doesn't end there. The White House also wants to boost transportation spending, along with new funds for local traffic-congestion projects under Vice President Gore's $10 billion "anti-sprawl" effort. Like reckless gamblers with found money, politicians can always find another horse to wager on.
But don't be surprised. Remember, these guys spend money for a living-your money. And they're good at it. Never mind that the U.S. tax burden is at record levels, forcing the average family to pay more in taxes than it spends on food, clothing and housing combined.
Although they won't admit it, many members of Congress would rather choke on a chicken bone than give this tax "surplus" back to the people who paid it. That's the only use of the surplus that gives them pause.
No one's arguing that Social Security doesn't require serious reform. It does. But the White House is creating a false dichotomy. Tax cuts do not have to be sacrificed in favor of Social Security reform. With more than $1.5 trillion in projected surpluses over the next 10 years-or roughly $22,000 for every family of four-there's no reason Congress can't reform Social Security and cut taxes.
In fact, with money pouring into federal coffers, there has never been a more opportune time for a tax cut. Federal taxes now consume about 20 percent of the nation's economic output-a higher percentage than in 1981 when President Reagan was swept into office on a platform of lower taxes.
Combining tax relief and Social Security reform is not only possible, it makes good economic sense. Federal tax laws already discourage savings and investment. And without fundamental reform, the only way to ward off Social Security's impending bankruptcy is with a politically untenable mix of tax hikes and benefit cuts.
Congress should seize this rare opportunity to do two things: 1) cut taxes to let Americans keep more of what they earn, and 2) begin updating Social Security by allowing Americans to invest some of their payroll taxes in personal retirement accounts.
The good news is there's a glimmer of hope for overtaxed American families. Senate Budget Committee Chairman Pete Domenici, R-N.M., and his House counterpart, Rep. John Kasich, R-Ohio, recently met to discuss a budget that includes $500 billion in tax cuts over 10 years. That sounds big, but it's only one-third of the projected surplus. The idea's still on the drawing board and could fuel a much-needed debate.
For years, the drumbeat out of Washington was that taxes couldn't be cut until the federal deficit was brought under control. Now we have budget surpluses and we're still told taxes can't be cut.
Don't believe it. Washington is flush with cash, and it's time to give some back to those who paid it. Remember, it's not Washington's money. It's yours.
Edwin Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.