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Livingston's First Bill Would Target Budget 'Surplus'

Legislation: Apparent House speaker-to-be aims to end practice of including Social Security fund in accounting. Without it, deficit would return.

November 12, 1998|ART PINE | TIMES STAFF WRITER

WASHINGTON — Rep. Bob Livingston (R-La.) has served notice that, in his first initiative after his expected elevation to House speaker, he wants to force the federal government to stop counting the Social Security trust fund when it calculates whether the federal budget has a surplus or deficit.

But his plan contains an ironic twist: It would make it far more difficult for Republicans to continue proposing large federal tax cuts--a goal that has been central to the GOP agenda for years and remains a hot-button issue for Republican conservatives.

The collision of priorities suggests the difficulties the party still will face in reconciling their agenda even after Livingston's expected replacement of Rep. Newt Gingrich (R-Ga.) as speaker.

Livingston, slated to win the job at a meeting of House Republicans next week, has vowed to introduce his proposal as H.R. 1, the first measure in the hopper of the incoming 106th Congress. "It's going to be my first bill," he has been saying.

The idea would be to defuse Democratic charges that Republicans are threatening the Social Security program by seeking to use the current budget surplus to finance big tax reductions.

Had the Livingston plan been in place during fiscal 1998, which ended Sept. 30, it would have eliminated the $70-billion budget surplus the government reported and replaced it with a $29-billion deficit, leaving no room for tax reductions.

The budget surpluses that the government has projected through fiscal 2004 also would disappear, according to the nonpartisan Congressional Budget Office. A surplus as large as the $70 billion reported for the '98 fiscal year would not reappear until 2009.

"That means that unless [lawmakers] can cut spending substantially--or pass new user fees or tobacco taxes--there will be no room for tax cuts through fiscal 2004 and only modest ones later," said Carol Wait of the nonpartisan Committee for a Responsible Federal Budget.

The fact that Livingston is proposing his legislation anyway--even though it would clip the GOP's wings in its push for tax reductions--is evidence of just how effective the Democrats' charges that the GOP threatens Social Security have been.

The speaker-to-be himself has acknowledged that the Social Security issue was a key to last week's stunning political setbacks for the GOP. "Tax cuts are the second most-important thing [after Social Security]," he said in an interview on CNN.

Analysts said they have little doubt that Livingston will be able to push the proposal through Congress early next year, despite grumbling by more conservative Republicans that the party needs to revive its push for tax cuts to attract more voters.

"It's almost certain to annoy the right wing of the party, but there's no doubt that he'll get it through" because Republican House members will coalesce behind it, said Stanley E. Collender, budget specialist for the nonpartisan Federal Budget Consulting Group.

Wait, of the Committee for a Responsible Federal Budget, agreed. "Republicans are really smarting over the president's . . . beating them over the head about Social Security."

Demonstrating the measure's appeal, House Minority Leader Richard A. Gephardt (D-Mo.) embraced the thrust of the Livingston plan Wednesday. "We've voted to do that several times. We say it, but we don't do it."

The current budgetary accounting system of using Social Security surpluses in calculating the overall federal budget surplus or deficit was instituted in 1967, partly to help shroud the effect of the fast-burgeoning cost of fighting the Vietnam War.

In fiscal 1998, the operating budget's $29-billion deficit was offset by a $99-billion surplus in the Social Security program and other assorted trust funds. As a result, the government posted the $70-billion budget surplus, its first since 1969.

Republicans wanted to use the surplus to finance new tax cuts, whereas Clinton urged lawmakers to "save" Social Security by leaving the surplus intact.

Under Livingston's plan, however, the government would have to declare a $29-billion deficit--without counting the $99-billion Social Security surplus--leaving the two parties with nothing to celebrate and nothing to give away in either tax cuts or additional spending.

Livingston's proposal would not address the problem of how to keep the Social Security program from running into the red when the baby boom generation begins to retire in 2012 and beyond.

And despite the new procedures for calculating the budget deficit, the bill would not change the way the government figures how much it will have to borrow every year. The Treasury bases its borrowing requirements on the government's total financial picture.

Nevertheless, some analysts believe that merely walling off the Social Security program symbolically would be a plus for fiscal management, if only to remove the temptation for lawmakers to raid the Social Security surplus for pet tax-cut and spending programs.

Robert D. Reischauer, a Brookings Institution budget expert who headed the Congressional Budget Office during the early 1990s, said he is "sympathetic" to the Livingston plan because it will help hold lawmakers' feet to the fire on budget issues.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Trust Fund's Effect on Budget

Rep. Bob L. Livingston's (R-La.)--the likely next speaker of the House--wants to end the practice of using the surplus in the Social Security trust fund in calculating the government's operating budget. That would turn federal budget surpluses projected between now and fiscal 2004 into deficits.

Billions of dollars

2004

Current projections (surpluses): $152

Without counting Social Security (deficits): -$2

SOURCE: CONGRESSIONAL BUDGET OFFICE

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