My Turn
By Tim Leeds
One of the ideas that seemed to get President Bush elected last year was the idea that he would return the surplus money the government has to the people of the United States.
Returning a surplus seems like a good idea. Why should the government take more from its citizens than it needs? Doing that would put it on the level of old robber barons, mistreating their people to their own gain.
The question is, what surplus does the government have to return to the people?
The Associated Press reported last week that the Treasury Department announced the government has to borrow $51 billion this quarter, in part to pay for the refund checks the government is issuing to taxpayers.
If the government has to borrow money to pay the surplus back, how can there be a surplus? You would think the government could use the extra money to pay the extra money back. Maybe there isn't as much of a surplus as the government thought.
In all fairness, the Treasury said the slowing economy and the shift of corporate tax payments from mid-September to Oct. 1 were factors in the need to borrow money. The tax refunds going out to people this summer were also listed as a factor, though.
It is an interesting shift in plans. On April 30, the Treasury reported it planned to pay off $57 billion of public debt this year. Now it will borrow another $51 billion.
Projections of the surplus and buy-back of debt have changed, too. The surplus could drop below $200 billion to as low as $160 billion. That seems like a lot of money, but a change in the amount changes the scene for the tax refund, too.
The current estimate of how much of the public debt the Treasury will buy back this year has dropped from $252 billion to $120 billion.
Which brings me to my next point. Current estimates of the federal public debt are at more than $5.7 trillion. Count it. $5.7 trillion. What surplus is there if the government owes more than 35 times what the surplus is.
If I owe $50,000 and come up with a windfall of $5,000, is it a good idea to go use it on a new car or something like that? Is that a good idea if it means missing my next debt payment?
And, what if I go buy a new car because I expect to receive $5,000, but the closer I get to receiving my money, the smaller the amount becomes? (Kind of like what many people are finding out about their refund checks this summer.)
The desire to reduce taxes and give a refund, to stimulate the economy, was brought about by this expected budget surplus. The closer we get to the end of the year, the smaller the surplus seems to be becoming. Was it a good idea to give back money before the government had it? I think the need to borrow $51 billion to do it answers that question.
As Rep. Charles Rangel, a Democrat from New York, pointed out, it seems a little ironic to borrow from people to pay them back the extra money they paid.
And what does the future bring? Outside of issues like will Social Security be able to hold up while more and more baby boomers retire (will the surplus be needed for that?), what will happen with the national debt if the "surpluses" are paid back to the taxpayers?
The Congressional Research Service states that national debt exploded from 1980 to 1995. The debt quintupled, to be precise. From 1997 to 1999 that started to reverse, as the deficit dropped, then surpluses occurred, which were used to pay down the debt.
Which way should the country go? If it uses the surplus to make refunds to the taxpayers, that's less money to pay down the debt. Following that road seems to lead to a land of no more surplus.
