Government to dip into Social Security funds

By Curt Anderson

Associated Press

WASHINGTON – President Bush’s tax cut and the nation’s economic downturn will force the government to take $9 billion out of Social Security this year to pay for other operations, breaking a bipartisan commitment in Congress, congressional analysts reported today.

The nonpartisan Congressional Budget Office offered a more pessimistic view of the government’s finances than the Bush administration did last week. The CBO estimated the total budget surplus for the fiscal year that ends Sept. 30 at $153 billion – down $122 billion from its May estimate.

The CBO says Social Security will be tapped for $9 billion in fiscal 2001. After a small non-Social Security surplus of $2 billion in fiscal 2002, it projects the government will use $18 billion out of the retirement program in 2003 and $3 billion in 2004.

While the White House projected similar numbers, it forecast a non-Social Security surplus of $1 billion this year and next. That was just enough to permit Republicans and Democrats to say they have kept a promise not to use Social Security tax collections for other government programs.

The CBO report was scheduled for official release Tuesday. It was obtained today by The Associated Press from congressional sources.

Diverting Social Security money has no practical effect on the program. It does prevent the government from paying down public debt as quickly as it otherwise would. But making the Social Security exempt from such invasions has become a political priority as both parties sought the mantle as its greatest protector.

The first year of the 10-year, $1.35 trillion tax cut championed by Bush accounts for about two-thirds of the lowered fiscal 2001 surplus estimate, the CBO report says. A fourth of the reduction was attributed to the troubled economy, mainly in the form of lower tax revenues. The tax cut includes $40 billion in income tax refunds this year and deferring about $33 billion in business taxes into fiscal 2002.

CBO analysts say the economy should “narrowly avoid recession and recover gradually next year.” The recovery, however, is projected to be less robust than the 3.2 percent growth rate estimated by the White House Office of Management and Budget. The CBO is forecasting 2.6 percent gross domestic product growth next year, slightly below private consensus estimates.

Over the next 10 years, the CBO is forecasting a $3.4 trillion surplus counting Social Security, down from $5.6 trillion in its May forecast. Bush’s tax cut and the associated changes in interest costs account for more than $1.7 trillion of the surplus reduction.

Those numbers assume no additional spending by Congress, including items already promised by lawmakers, such as a Medicare prescription drug benefit, increases for defense and education and a new $74 billion farm bill.

The Bush administration last week forecast a surplus of $158 billion this year, $173 billion next year and $3.1 trillion over the next 10 years. Over the decade, the White House figured defense spending at $198 billion above the numbers used by the CBO and Medicare spending $37 billion higher.

The White House used a Social Security accounting change and a few other assumptions to claim that Social Security would remain untouched this year; the CBO did not use those same assumptions.

The president last week said the Social Security fund should not be tapped unless the nation was at war or in a recession. He has said that Congress can avoid dipping into it by controlling spending. Yet many of the spending proposals that could force use of the retirement trust fund were made by Bush, not congressional Democrats.

Aside from the political fight, the main impact of the CBO forecast would be on repayment of public debt. The CBO says its new estimate will delay maximum debt repayment by four years compared with its May forecast.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Traffic idles while waiting for the lights to change along 33rd Avenue West on Tuesday, April 2, 2024 in Lynnwood, Washington. (Olivia Vanni / The Herald)
Lynnwood seeks solutions to Costco traffic boondoggle

Let’s take a look at the troublesome intersection of 33rd Avenue W and 30th Place W, as Lynnwood weighs options for better traffic flow.

A memorial with small gifts surrounded a utility pole with a photograph of Ariel Garcia at the corner of Alpine Drive and Vesper Drive ion Wednesday, April 10, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Death of Everett boy, 4, spurs questions over lack of Amber Alert

Local police and court authorities were reluctant to address some key questions, when asked by a Daily Herald reporter this week.

The new Amazon fulfillment center under construction along 172nd Street NE in Arlington, just south of Arlington Municipal Airport. (Chuck Taylor / The Herald) 20210708
Frito-Lay leases massive building at Marysville business park

The company will move next door to Tesla and occupy a 300,0000-square-foot building at the Marysville business park.

Everett Mayor Cassie Franklin steps back and takes in a standing ovation after delivering the State of the City Address on Thursday, March 21, 2024, at the Everett Mall in Everett, Washington. (Ryan Berry / The Herald)
In meeting, Everett mayor confirms Topgolf, Chicken N Pickle rumors

This month, the mayor confirmed she was hopeful Topgolf “would be a fantastic new entertainment partner located right next to the cinemas.”

Alan Edward Dean, convicted of the 1993 murder of Melissa Lee, professes his innocence in the courtroom during his sentencing Wednesday, April 24, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Bothell man gets 26 years in cold case murder of Melissa Lee, 15

“I’m innocent, not guilty. … They planted that DNA. I’ve been framed,” said Alan Edward Dean, as he was sentenced for the 1993 murder.

FILE - A Boeing 737 Max jet prepares to land at Boeing Field following a test flight in Seattle, Sept. 30, 2020. Boeing said Tuesday, Jan. 10, 2023, that it took more than 200 net orders for passenger airplanes in December and finished 2022 with its best year since 2018, which was before two deadly crashes involving its 737 Max jet and a pandemic that choked off demand for new planes. (AP Photo/Elaine Thompson, File)
Boeing’s $3.9B cash burn adds urgency to revival plan

Boeing’s first three months of the year have been overshadowed by the fallout from a near-catastrophic incident in January.

Police respond to a wrong way crash Thursday night on Highway 525 in Lynnwood after a police chase. (Photo provided by Washington State Department of Transportation)
Bail set at $2M in wrong-way crash that killed Lynnwood woman, 83

The Kenmore man, 37, fled police, crashed into a GMC Yukon and killed Trudy Slanger on Highway 525, according to court papers.

A voter turns in a ballot on Tuesday, Feb. 13, 2024, outside the Snohomish County Courthouse in Everett, Washington. (Annie Barker / The Herald)
On fourth try, Arlington Heights voters overwhelmingly pass fire levy

Meanwhile, in another ballot that gave North County voters deja vu, Lakewood voters appeared to pass two levies for school funding.

Judge Whitney Rivera, who begins her appointment to Snohomish County Superior Court in May, stands in the Edmonds Municipal Court on Thursday, April 18, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Judge thought her clerk ‘needed more challenge’; now, she’s her successor

Whitney Rivera will be the first judge of Pacific Islander descent to serve on the Snohomish County Superior Court bench.

In this Jan. 4, 2019 photo, workers and other officials gather outside the Sky Valley Education Center school in Monroe, Wash., before going inside to collect samples for testing. The samples were tested for PCBs, or polychlorinated biphenyls, as well as dioxins and furans. A lawsuit filed on behalf of several families and teachers claims that officials failed to adequately respond to PCBs, or polychlorinated biphenyls, in the school. (AP Photo/Ted S. Warren)
Judge halves $784M for women exposed to Monsanto chemicals at Monroe school

Monsanto lawyers argued “arbitrary and excessive” damages in the Sky Valley Education Center case “cannot withstand constitutional scrutiny.”

Mukilteo Police Chief Andy Illyn and the graphic he created. He is currently attending the 10-week FBI National Academy in Quantico, Virginia. (Photo provided by Andy Illyn)
Help wanted: Unicorns for ‘pure magic’ career with Mukilteo police

“There’s a whole population who would be amazing police officers” but never considered it, the police chief said.

Officers respond to a ferry traffic disturbance Tuesday after a woman in a motorhome threatened to drive off the dock, authorities said. (Photo provided by Mukilteo Police Department)
Everett woman disrupts ferry, threatens to drive motorhome into water

Police arrested the woman at the Mukilteo ferry terminal Tuesday morning after using pepper-ball rounds to get her out.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.