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Bush Advisor Suggests Using Social Security Surplus To Pay for Tax Cut In a swift turn-around from the budget policy of the past two years, the Bush administration`s chief economic advisor, Lawrence Lindsey, said that `questions should be asked` whether the Social Security portion of the surplus should be `temporarily` tapped to help pay for a massive $1.6 trillion tax cut. Before President Bush had even delivered the federal 2002 budget, Congress began considering his $1.6 trillion tax-cut proposal which would reduce all federal income tax rates, raise the child credit, reduce the so-called `marriage penalty` and repeal the federal estate taxes. Lindsey also said that the Social Security surplus should be considered as part of a unified budget. This means the government could use some or all of the Social Security surplus for other government spending rather than to pay down the debt, as was done over the past two years. There was little support for Lindsey`s suggestion. The House passed a `lock box` provision that would put excess Social Security and Medicare payroll taxes off limits to other uses. The Senate is expected to approve a similar measure. In January, the Congressional Budget Office (CBO) released new budget figures which estimated a budget surplus of $5.6 trillion over the next ten years. About $2.5 trillion of that comes from Social Security, and about $390 billion from Medicare. That would leave Congress with about $2.7 trillion for a tax cut and to fund other government spending. The problem facing Congress and the White House now is that the combined cost of a tax cut, Congress`s previous spending and future proposals such as adding a prescription drug benefit to Medicare, may well exceed that total. Sources: `Bush Tax Cut Faces Spending Pressures,` Glenn Kessler and Eric Pianin, The Washington Post, January 25, 2001. For more information on this issue, see `Ask the Advisor: The $900 Billion Dollar Question,` The Social Security & Medicare Advisor, Feb. `01, V6#3. This article first appeared in Volume 6, Issue 5 of "The Social Security and Medicare Advisor" newsletter (April/2001). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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