Surplus fears? Bigger tax cut is the answer

Washington, D.C., is known as a malarial swamp from which the sane try to escape during the month of August.

But even by Beltway standards, the current furor over the federal budget surplus is zany.

Last year saw the largest budget surplus in history. The current fiscal year will see the second largest. Budget estimators in both the White House and Congress agree: The feds will this year run a surplus well in excess of $150 billion, unthinkable just a few short years ago.

The reason many leading Democrats are screaming to high heaven is that nearly all of this surplus is payroll-tax revenue generated by FICA taxes for Social Security.

So we get the hysterical charge from opponents of President Bush that he is raiding Social Security and that he is doing so because his tax cut has left the rest of the government bankrupt. (The president set himself up, of course, for deserved criticism by vowing not to touch Social Security funds and then saying it might be unavoidable.)

The principal fact about the Bush tax cut is that it wasn't large enough and is too weighted to future years, meaning its real cuts take effect only years down the road when the economy's producers need tax relief now.

What we really need is for congressional tax cutters to see the president and raise him by slashing the crucial capital-gains tax right away, stirring the animal spirits of the stock market to an explosive rally and lifting every retirement account invested in the stock market.

Besides, with economic growth having slowed to a crawl and markets in the doldrums, it isn't even clear that running a large surplus is good economics.

The money belongs to the people and should be returned to us to spend, save or invest as we see fit.

If the Democrats really have the courage of their convictions, they should come clean and propose a bill raising taxes. With Sen. Tom Daschle in charge of the Senate, he could put such a bill before that body at any time.

This they won't do, of course, because they want to have it both ways in the drearily familiar manner of irresponsible congressional barons.

Stephen Moore of the Club for Growth asks a good question: "What kind of economic illiterate would call for a tax increase just as the economy is tanking?"

Meanwhile, President Bush is correct to target congressional overspending.

He should, in fact, make clear that he will meet all congressional budget-busting bills with an uninterrupted string of vetoes.

In our constitutional scheme, the president is the one who represents the entire national interest, while members of Congress represent the parochial interests of their districts.

In the meantime, everyone involved should take a large chill pill and just relax.

The surplus is huge and not going anywhere for the time being.