White House Releases Reduced Surplus Estimates
The Bush administration yesterday released a revised FY 2001 budget report estimating that the projected federal budget surplus has "shriveled" by $123 billion since April, "setting the stage for a bitter partisan struggle" over funding for a Medicare prescription drug benefit and other proposals, the Los Angeles Times reports (Rosenblatt, Los Angeles Times, 8/23). In a report released yesterday, the White House Office of Management and Budget projected a $157.8 billion FY 2001 surplus, down from the $281 billion estimated in April, and a $173 billion surplus in FY 2002, down from an estimated $231 billion. Excluding Social Security receipts, OMB estimated $1 billion surpluses in both FY 2001 and FY 2002 (Guinto, Investor's Business Daily, 8/23). Over the next 10 years, the OMB report estimated a $3.1 trillion federal surplus, "even after allowing for proposed new spending initiatives," such as a Medicare prescription drug benefit (Los Angles Times, 8/23). As part of the OMB report, the White House also added $37 billion to its proposal for a Medicare prescription drug benefit, bringing the total White House offering to $190 billion over 10 years (Godfrey/Sammon, Washington Times, 8/23). Many Democrats, however, have said that a prescription drug benefit would "cost far more" than what the Bush administration has allocated for it.
Democrats blamed President Bush's 10-year, $1.35 trillion tax cut for the reduced surplus estimates, saying that the plan has "jeopardized" the future of Medicare and Social Security. "He claimed we could afford his massive tax cut ... while paying down the debt and protecting Social Security and Medicare. He was wrong," Sen. Kent Conrad (D-N.D.) said, adding, "This is fiscal mismanagement, big time" (Los Angeles Times, 8/23). Based on the OMB projections, the government will spend "nearly all" of the Medicare Part A trust fund surplus, which Democrats and "most" congressional Republicans had "sought to put off limits," the New York Times reports. The Part A surplus for FY 2001 is about $30 billion (Stevenson, New York Times, 8/23). Bush's budget would use Medicare Part A funds to "finance current operations" (Los Angeles Times, 8/23). However, spending the funds "does not affect benefit payments" for Medicare beneficiaries, and the debate over spending Medicare funds reflects "politics rather than traditional economics," the Washington Post reports. The Congressional Budget Office will release an FY 2002 budget report next week (Kessler, Washington Post, 8/23).