Released: September 8, 2001
The Vanishing Surplus, Barely Noticed
By Andrew Kohut, Director
Special toThe New York Times
Judging from recent political discourse, “Who lost the budget surplus?” threatens to become the “Who lost China?” question of our times — the focus of finger-pointing for years to come. But there is a problem with that parallel: The American public knew about the loss of China — not so with the surplus.
As recently as June, a 46 percent plurality in a survey by the Pew Research Center for the People and the Press thought the federal government was spending more than it took in this year. Only 19 percent knew it was spending less. The debate over the budget surplus is one of those Washington conversations that goes right by the public, in part because of its complexity, but in larger part because of people’s cynicism.
It’s very hard for people who were lectured and admonished for years about a federal deficit — and told it would rob their children of their future — to shift gears so quickly and worry about the surplus. The budget deficit slipped away in the night during Bill Clinton’s presidency, with little fanfare and little explanation short of each party trying to take credit for it. No political leader stood up to say, “We were not expecting this either, and it’s happened mostly because the economy zoomed ahead, also unexpectedly.”
As a consequence, despite all the talk in the past couple of years about what to do with the surplus, nationwide surveys have shown only limited increases in awareness of the reality of the surplus. And not surprisingly, when poll takers inform respondents that the surplus does exist, Americans are quick to discount reliance on it. Two in three respondents in nationwide surveys this past spring by Newsweek, ABC and The Washington Post said the projected “$6 trillion surplus” would prove to be lower than expected. Similarly, a Pew survey to be released next week finds a plurality of the public expecting a smaller rather than larger surplus.
While the reality of the surplus never fully sank in, and people have been quick to minimize it when told that it existed, the conversation about it has mattered to ordinary Americans. The projections of surplus opened up a discussion of new government spending, and that is where the ears have perked up. Americans tell poll takers about a long wish list for new spending, with education and prescription drug benefits through Medicare at the top — but nothing is more important to Americans than protecting Social Security and not using its revenues to pay for other things. Yet three in four Americans think that the government has spent the Social Security reserves on other programs and that this is the main reason that the system is in financial trouble.
Sparring between the White House and the Democrats over whether the tax cut endangers needed spending or threatens the inviolability of Social Securityfunds will certainly go on despite the fact that the tax cut passed because it had support from some Democrats. Blaming the other party when no one is really in a position to be absolved of blame can only add to public cynicism and doubts about the debate in Washington. An August Gallup survey that pretested the blame game found the president was held most responsible for the shrinking of the surplus, but most respondents also assumed that the Democrats in Congress bore some responsibility.
The direction of the economy is about the only thing likely to clear the air on this argument for ordinary Americans. Fully 80 percent in a new Pew survey say keeping the economy strong is the most important thing the president and Congress can do. If the tax cut comes to be viewed as the stimulus that revived the economy or, at minimum, put a Band-Aid on it, the president will prevail. If, on the other hand, the economy continues to decline and the wish list gets trashed, the president’s signature tax cut program will be seen to have led the country astray. In the end, “who lost the surplus” is the wrong rhetoric. The public wants to know what will fix the economy.