WASHINGTON ¾ With today’s new
forecast by the Congressional Budget Office showing that the projected
non-Social Security surplus is gone ¾
not just this year but for several years to come
¾ The Concord Coalition called upon
President Bush and Congress to reestablish the goal of balancing the budget
without using the Social Security surplus. The Coalition emphasized the
WASHINGTON ¾ With today’s new
forecast by the Congressional Budget Office showing that the projected
non-Social Security surplus is gone ¾
not just this year but for several years to come
¾ The Concord Coalition called upon
President Bush and Congress to reestablish the goal of balancing the budget
without using the Social Security surplus. The Coalition emphasized the
following points from the new CBO projections:
- Last year the CBO projected
a 10-year non-Social Security surplus of $3.1 trillion. Now, just one year
later, the projection over the same 10-year period (2002-2011) has plunged to
a deficit of $742 billion. - Over the new projection
period (2003-2012) there is a non-Social Security deficit of $242 billion,
even though the surplus for two of those years (2011 and 2012) is inflated by
the budget gimmick enacted last year that assumes Congress will allow all
provisions of the 2001 tax cut bill to expire at the end of 2010. - Last January there were
non-Social Security surpluses projected for every year. This January, there is
no annual non-Social Security surplus projected again until 2010. - Over 80 percent of the total
projected surplus (Social Security and non-Social Security combined) comes in
2008 through 2012, the last five years of the forecast. - Almost half (48 percent) of
the total projected surplus comes in the last two years of the forecast (2011
and 2012), due in large part to the tax cut “sunset” gimmick, which adds about
$600 billion to the 10-year surplus.
“One of the most dramatic
consequences of the deteriorating budget outlook is that we’re back to using the
Social Security surplus to help balance the budget. What was said to be a fiscal
and political ‘firewall’ has come down due to a combination of factors. The
cause of its demise can be debated on the campaign trail this year. But the
purpose of the firewall ¾ to use the
Social Security surplus as a means of increasing national savings in
anticipation of the program’s long-term unfunded obligations
¾ is still a sound one. We must begin
to rebuild the firewall,” said Concord Coalition Executive Director Robert
Bixby.
“Temporarily using the Social Security surplus in response to both recession and
military conflict is not by itself a major problem. But it will quickly become a
major problem if politicians once again get comfortable with the idea. Before
that happens, some markers must be laid down. The first step is commitment to a
goal. And the best goal is the one that commands strong bipartisan support
¾ balancing the budget without using
the Social Security surplus,” Bixby said.
The
Concord Coalition has recommend five fiscal policy guidelines to help ensure
that the long-term fiscal health of our nation is not sacrificed to short-term
concerns:
· Reaffirm
the fiscally responsible goal of balancing the budget without using the Social
Security surplus. It may take a few years to achieve, but unless the goal is
set there is a clear danger of drifting back into an era of sustained deficits.
We cannot afford taking such a risk in advance of the huge fiscal challenges
that loom just beyond the 10-year budget window.
· Recognize
that the post-September 11 environment requires a careful examination of
budgetary priorities. Policymakers can no longer delude themselves that
large perpetual budget surpluses will allow them to avoid making hard choices,
not just for the long-term, but now. Everything should be on the table.
· If
it is decided that an economic stimulus bill is needed, it should be carefully
designed to have its maximum effect in the very near future, minimize costs in
later years, and provide the most bang for the buck. Back loaded options,
whether tax cuts or spending increases, are not the right method of providing
short-term economic stimulus.
· Establish
a new budgetary enforcement framework to replace the expiring provisions of the
1997 Balanced Budget Act. The prospect of renewed budget deficits makes this
all the more important. A realistic set of spending caps and renewal of some
type of pay-as-you-go rule for mandatory spending and tax provisions would help
achieve the goal of returning to non-Social Security surpluses.
· Don’t
put Social Security reform on the back burner. There is no good reason why
this issue should be kept off the 2002 legislative agenda. The demographic and
fiscal challenges facing Social Security in the years ahead are well known.
What’s needed now is rejection of the Do Nothing Plan.
