Republicans and Democrats are tripping over each other trying to take credit for the first federal budget surplus in 29 years. But with many world economies teetering on the brink, politicians who aren't careful may find they are dancing on the deck on a sinking ship.
Make no mistake, the surplus of roughly $70 billion is worth celebrating. However, it has little to do with anything Congress or, particularly, the president did. It has more to do with what they didn't do, namely, increase costly entitlements, pass stricter regulations on businesses or pass the massive Clinton health care plan. The surplus is a direct result of an expanding economy, fueled by a surging stock market.But, as everyone knows, the stock market isn't surging any more. That means Congress and the president shouldn't get too carried away with their celebrations. Here are some important things to remember:
First, the $70 billion surplus isn't really a surplus at all. For decades, Congress has robbed Social Security funds to pay for other things. Put that money back where it belongs and the surplus becomes a $41 billion deficit. No one should be talking about spending anything yet.
Second, the good times may well be short-lived if the economy takes a turn for the worse. For all their bluster, politicians haven't really made any difficult decisions yet. Entitlement programs still need trimming, Social Security still needs a radical overhaul. The budget balances because revenues went up, not because expenditures went down.
Third, the nation still has a debt of about $5.4 trillion - roughly three times the size of the current fiscal budget. The improper thing would be to consider the federal government awash in money.
A balanced budget does wonders for the economy. It keeps consumer confidence high. It has lowered interest rates. Some economists say mortgage rates would be up around 9.5 percent instead of the current 6.5 percent if the $200 billion yearly deficits of the early '90s had continued. All of this helps businesses thrive, which in turn leads to greater tax revenues.
Congress and the president must do everything they can to keep the surpluses flowing. That includes fixing Social Security, holding the line on spending and reducing the tax burden on average Americans. The world may well be at an economic crossroads, and the decisions made in Washington now could determine whether the future remains bright.
That requires a more serious approach than simply grabbing a microphone and taking credit for what might well be a one-time event, regardless of how much fun that is in an election year.