Congress predicts $9 billion taken from Social Security
WASHINGTON (CNN) -- The federal government will be forced to use $9 billion from the Social Security surplus this year because of the ongoing economic downturn and the Bush administration's tax cut, congressional budget calculations indicated Monday.
The numbers, confirmed by both Democratic and Republican officials, are included in the latest budget estimates from the Congressional Budget Office, which is scheduled to release them Tuesday morning.
These numbers from the non-partisan CBO are significantly more grim than estimates from the White House Office of Management and Budget, which predicted a surplus for the year of $158 billion when it brought forth its own calculations last week.
In its mid-session budget review, the OMB found that the surplus plunged to $158 billion from an estimated $281 billion in April.
The White House numbers estimated that the Social Security surplus would not be touched, despite the projected shrinking of the wider federal budget surplus. That would allow President Bush and Congress to continue to fulfill their pledge that the retirement fund surplus would not be used to pay for other government spending.
"We are confident in our numbers," said Chris Ullman, OMB spokesman in response to news of the CBO findings. "We think our projections and estimates are based on reasonable assumptions."
But the CBO will estimate Tuesday a total federal surplus for the fiscal year that ends September 30 of $153 billion. According to the CBO, that means Social Security would be tapped by $9 billion this year. Projections are that funds would also be taken from the retirement fund in fiscal 2003 and in 2004, though not next year.
The longer-term predictions are at odds with the White House because the two budget offices are using different estimates for economic growth. The Bush White House predicts the economy will rebound and grow at a rate of 3.2 percent next year. CBO, on the other hand, is more conservative, projecting 2.6 percent growth next year.
Rep. John Spratt, a South Carolina Democrat who is the ranking member of the House Budget Committee, argued Monday that the CBO's estimates offer a more realistic picture of the budget outlook. In addition, Spratt said, the new numbers are troubling because they show the long-term impact not just of the economic slowdown, but of the White House's $1.35 trillion tax cut and other budgetary policies.
"This year's budget is a concern because it marks a retreat," Spratt said in a Capitol Hill news conference. "But it's mainly a concern because it is a sign of things to come, a sign of things that are likely to be worse."
Though dipping into the Social Security surplus has no impact on current benefits, Spratt said the pledge not to use those moneys for other spending is important for the program's long-term health. Using those funds to pay down debt rather than for new spending, he said, is a wise investment that could help preserve Social Security despite concerns over the impact of the looming retirement of millions of Baby Boomers in the coming decades.
The government has taken advantage of recent surpluses in the Social Security fund to pay off its debt, and the Bush administration was eager to continue this practice.
The issue of the surplus -- and the threat that it might vanish after years of growth -- is one that carries significant political risks for both sides, each of which have pledged not to dip into Social Security for other spending priorities.
The pledge by both parties not to use those funds, Spratt said, is "a responsible policy that is the best first step we can devise until we come to some agreement about the long term future of Social Security and Medicare."
The debate over the dwindling surplus and the budget will likely be the main order of business when both the White House and Congress return from their far-flung vacation destinations next week.
At the top of Congress's 'to do' list in the coming weeks will be completion of the 13 yearly appropriations bills, which will determine how the nation's $2 trillion, fiscal 2002 budget will be spent.
Bush defends tax cut
Democrats seized on the White House's lower surplus projections last week to blame the Bush administration for reversing years of gains, citing the tax cut as a main reason for the gloomy projections.
The White House, however, has said the tax cut will act as an economic incentive that will help the economy turn around. The main threat to the budget, Bush has said repeatedly in recent days, is overspending by Congress.
"You see, there's a big debate in Washington about the money in Washington. Sometimes folks up there lose sight about whose money it is," Bush said during a tour of a Pittsburgh-area steel plant on Sunday. "That money's not the government's money. It's the people's money. And we did the right thing with sharing that money with the people who pay the bills."
-- CNN White House Correspondent John King contributed to this report.
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