TO MAKE the numbers come out even when they passed the balanced budget act in 1997, the president and Congress promised, without ever specifying how, that in the future a large category of federal spending would be cut by 20 percent in real terms. The promise was widely recognized at the time to be unrealistic, not to say phony -- something that ultimately neither would nor should be done, given the widespread devastation it would cause. But because it nonetheless purported to be official policy, the budget estimators had no choice but to incorporate it into their projections of future federal spending, and thus deficits or surpluses.
Most of the budget surplus over which the president and Congress now are fighting -- the projected surplus in other than Social Security funds -- derives not from rosy economic assumptions, but from this one implausibly rosy legislative assumption. If a realistic assumption were used instead -- if it were assumed, for example, that in real terms the cost of operating most of the government is likely to stay about the same over the next 10 years -- the trillion dollars in non-Social Security funds whose allocation congressional Republicans were giddily debating the other day would reduce by about three-fourths, to perhaps $250 billion.
The Republicans would use most of the non-Social Security surplus for tax cuts; the president would use a chunk to strengthen Medicare. But they are arguing over money that doesn't exist and won't unless their successors make deep spending cuts, from just the first stage of which they themselves are backing away.
In the 1997 legislation, the president and Congress were trying not just to balance the budget but to give a tax cut. To do both they had to cut spending, on paper, if not in fact, but as ever they found it easiest to agree on which spending not to cut. They couldn't touch interest on the debt, chose not to touch Social Security or defense and had worked their way through the welfare part of the budget the year before. They ended up making a lot of cuts in Medicare, some of which they may be about to ease, and achieving most of the rest through a promissory note. The promise was not to cut particular programs, but to cut a category. Total annual appropriations would be given one more chance to rise -- these ceremonies are never complete without a last swig from the bottle -- and then would become subject to tight caps. It would be up to the appropriators to allocate the available funds among competing programs each year. The particular pain was thus left for later; the budget-balancers were able to vote for economy in the abstract.
It was understood that the burden of the caps would fail mainly on domestic appropriations, which are the source of funds for most of the operations of the government -- everything from the IRS and Head Start to air traffic control and the maintenance of the national parks. The caps, together with other elements of the budget, imply a cut of more than 20 percent in the overall budgets for these programs. Should spending on any one of the programs increase, as highway spending is scheduled to do, the rest would have to be cut more.
That would be the price of the further tax cut the Republicans now want to grant. They tend not to talk about it in those terms, for understandable reasons. The president likewise tends not to talk much about it, because it was he who agreed to the caps in 1997 because they suited his purposes at the time; no matter that they were fake.
Maybe a modest non-Social Security surplus will develop over time. Not even all of it will be available for tax cuts, if you assume that some will have to be used for Medicare. The pie these folks are slicing up is an illusion. A slice is all there is likely to be, and not even that is sure.