"These are reasonably small differences when you take everything into account," budget director Daniels said.
Huge unexpected swings in federal tax revenues make long-range projections dubious at best. In May, for example, the CBO forecast a $275-billion surplus for this fiscal year. But Bush's tax cut, approved by Congress, sliced away more than $70 billion and the slowdown in economic activity pared more than $40 billion.
The impact is more political than substantive for ordinary citizens who don't participate in Washington's budget debate. The significance will come in how the debate shapes actual spending for defense, and for the proposed Medicare prescription drug benefit. Officials in the administration and members of Congress will be debating whether their respective parties get more mileage from the drug benefit or from holding the line on the budget and keeping the surplus intact.
Both political parties ignore the reality that money collected by the government is spent immediately, either on federal programs or on paying down the national debt. Unlike an individual, the federal government cannot invest in stocks or savings accounts that put aside resources for the future.
The surplus from Social Security cannot be put aside. It goes elsewhere in the government, and the Social Security trust fund receives in return a special issue of Treasury securities that must be redeemed later to make good on Social Security promises. These are obligations of the Treasury that must be made good by raising taxes, cutting government spending or by borrowing.
Social Security's financial crisis is predicted for 2038, when all the surplus securities will have been cashed in, and it is estimated that taxes will be sufficient to pay only 72% of benefits promised under current law.