The nation's fiscal condition continues to improve at a startling pace, so much so that Washington is having trouble keeping up.
After saying less than two weeks ago that it saw no reason to increase its estimate that the federal budget surplus would be around $18 billion this year, the Congressional Budget Office reversed itself late Tuesday and told lawmakers that a surge in tax receipts in late April meant the government would run in the black by $43 billion to $63 billion this year.The White House also quietly increased its informal estimate of the surplus to around $40 billion, about twice what it had been projecting. The new forecasts moved Congress and the White House into a range that private analysts had been predicting for months.
Much of the late surge in tax receipts appeared to come from capital gains reaped by investors in the booming financial markets. The new calculations were the latest in a long string in which budget analysts have been surprised by the strength in revenues. The Congressional Budget Office in particular came under attack Wednesday from Republicans for once again having to revise an overly pessimistic projection.
The good news only served to highlight the deep divisions among Republicans about how to approach the new era of fiscal plenty. Many want bigger tax cuts. Others are loathe to risk a confrontation with Democrats over President Clinton's demand that any surpluses be left untouched until the nation settles on how to fix Social Security. Some want to use the money to pay for the recently passed highway and mass transit bill.
So deep are the divisions that the House has still not taken up a budget plan, and any measure that does make it through is likely to be very different from the budget resolution passed last month by the Senate. Republicans concede that they might not even try to reconcile the House and Senate budget blueprints, and instead may have to leave the tough decisions to the spending bills.
"As long as we were in deficit, we were unified in pursuing the goal of a balanced budget," one Republican staffer said. "Now that that's been achieved, folks have different thoughts about what we should do next."
The size of this year's surplus has no direct effect on the debate over next year's budget. It simply means that the Treasury Department can pay off a small slice of the nation's $5.5 trillion debt. Moreover, the budget is only balanced when taking into account the proceeds of the tax levied to finance Social Security. If that money was not included, the government would run a deficit this year of around $50 billion.