At zero debt, the continuing unified budget surpluses now projected under current law imply a major accumulation of private assets by the federal government.
Both CBO and OMB project an inability of current services unified budget surpluses to be applied wholly to repay debt by the middle of this decade.
In his State of the Union address in January, President Clinton threw in a new wrinkle by proposing to "reserve" unified budget surpluses to "save" the Social Security program.
But there is no way under current budget procedures to "reserve" unified surpluses for Social Security.
The CBO reportedly will be showing even larger surpluses. Moreover, the admittedly quite uncertain long-term budget exercises released by the CBO last October maintain an implicit on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation, especially on the major health programs.
Short of an extraordinarily rapid and highly undesirable short-term dissipation of unified surpluses or a transferring of assets to individual privatized accounts, it appears difficult to avoid at least some accumulation of private assets by the government.
The vehicle through which we save our surpluses is less important than the fact that we save them.
Once the link between payroll taxes and social security benefits is broken, the pressure to reform the social security system may ease, particularly in this environment of budget surpluses. For example, Medicaid and Medicare part B--both of which will face increasing demands as the population ages--are already financed with general revenues, and, consequently, there has been much less pressure to date to reform these programs.
The Administration would devote about $1.4 trillion of the projected $4.9 trillion of current law surpluses
over the next fifteen years to new spending and use the remainder to pay down our national debt.
The deficit dropped to its lowest level in more than two decades in fiscal 1997, and yesterday the Congressional Budget Office (CBO) released projections that show the budget remaining essentially in balance over the next few years, moving to annual surpluses
equal to 1 percent of gross domestic product by the middle of the next decade.
Thus, states whose current-year expenditures exceed their current-year revenues could still be reporting a positive year-end general fund "balance" as long as that gap does not exceed the net surpluses
accumulated in previous years.
As spending on infrastructure became less important in the late 1960s and early 1970s, the sector began to experience budgetary surpluses
, except when recessions eroded tax bases and expanded the demand for resources.