Analyzing The Budget Surplus
May 13, 1998
In just two years, the Congressional Budget Office's official budget projection for fiscal years 1999 to 2003 has shifted from a cumulative deficit of $1.32 trillion to a surplus of $143 billion -- and the CBO believes the surplus could be even higher once all the numbers come in.
Where's all the money coming from?
- The CBO's new, improved macroeconomic forecast accounts for $600 billion -- or 41.1 percent -- of the $1.46 trillion swing in the fiscal outlook since May 1996.
- "Technical changes" not stemming from new laws or revisions in the CBO's forecast account for another $577 billion -- or 39.5 percent of the improvement.
- And 19.4 percent of the shift -- $283 billion -- is credited to laws passed by Congress and signed by President Clinton.
Polls show voters prefer using the surplus to pay down the national debt. But economists point out that using the $143 billion for this purpose would only reduce it by 3.8 percent.
Devoting the entire surplus to tax relief would reduce taxes 1.53 percent over five years. And spending the entire surplus would boost government outlays 1.56 percent.
Source: James Carter (adviser to Sen. John Ashcroft, R-Mo), "Great Expectations in Era of Surplus Politics, Investor's Business Daily, May 13, 1998.
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