Congressional Budget Office Forecasts $8 Billion Surplus This Year
Proclaiming that the end of federal budget deficits is at hand, the Congressional Budget Office on Tuesday said the government will run an $8 billion surplus this year, 12 months earlier than President Clinton had estimated when he unveiled his balanced-budget plan in February.
The new CBO estimates mark the first official prediction that the first surplus since 1969 will be achieved for this fiscal year.
The news adds fuel to a lively debate in Congress, both between the parties and within them, over how to use the government surplus. That debate is coming to a head as budget writers in both the House and Senate are drafting spending and tax blueprints for the new fiscal year starting Oct. 1.
“We’re now in a position to talk about how do we move into the future,” said House Speaker Newt Gingrich, R-Ga.
Clinton has been making headway - even among Republicans - with his idea that the surplus be reserved until Congress decides what to do to shore up Social Security, which needs financial help to handle the wave of baby-boomer retirements early in the 21st century.
But many Republicans are clamoring for a tax cut, and Gingrich and Rep. John Kasich, R-Ohio, House Budget Committee chairman, on Tuesday floated the idea of using the surplus to set up individual retirement accounts for baby boomers.
The transition from red ink to black has been coming more rapidly than policy makers had expected. When Clinton and Congress reached their balanced budget agreement in mid-1997, they expected deficits to linger until 2002. But the booming economy has continued to bring in far more tax revenues than predicted.
By December, Treasury Department reports were showing that the government had run a surplus for a 12-month period ending November 1997. The only question was whether that would be sustained for the full 1998 fiscal year, which runs until Sept. 30. Tuesday’s report projects that this will occur.
In January, the CBO had projected the government would continue running small deficits until 2001. The new estimates released Tuesday said that, thanks to greater than anticipated revenues, the budget would run an $8 billion surplus this fiscal year.
According to the CBO, the surplus would remain relatively small until 2002, when it would jump to $67 billion, and eventually rise to $138 billion in 2008.