Ron Paul's Texas Straight Talk - A weekly Column

September 25, 2000

Spending, Tax Cuts, or Debt Reduction?
The Surplus Belongs to the Taxpayers

Last week I voted to support the "Debt Relief Lockbox Reconciliation Act," legislation designed to insure that any 2001 Social Security and Medicare surpluses are not spent on unrelated federal programs. The Congressional Budget Office projects that the Social Security and Medicare programs will have a combined surplus of approximately $198 billion in the coming year. Until Congress passes tax reform legislation that returns any surplus dollars to taxpayers, I will support efforts to prevent revenue-hungry politician and bureaucrats from spending your retirement and health care surplus dollars on pork-barrel projects.
This "lockbox" bill underscores the rise of a very important debate on Capitol Hill regarding our nation's "budget surplus." It is important to understand the budget process when we consider the rhetoric from Washington and the national media. While many politicians seek to take credit for the seemingly rosy outlook for the federal budget, it is easy for the public to be misled regarding the true nature of the surplus.
First and foremost, we cannot forget that our nation remains nearly $6 trillion in debt. This debt is the result of one very simple but enormous problem: over the years, Congress has spent more than the Treasury has collected in taxes. Note that Congress, rather than any particular administration, is responsible for creating this debt. Congress alone determines how much is spent when it passes appropriations bills each year. When Congress spends more than it has, it must (like any family or business) borrow money. Eventually we all pay for this fiscal irresponsibility, as more and more of the government's annual budget is spent on interest payments. Even worse, this debt has caused the Federal Reserve to authorize the printing of more and more money during past decades, creating price inflation and making your dollars worth less.
Accordingly, any surplus that exists must be understood as a surplus for the current budget year only. Politicians and the media have termed these funds a "budget surplus" or "government surplus." These terms are widely accepted, and the self-congratulatory debate in Congress centers around what the government ought to do with the money. The truth, however, is that these funds represent a tax surplus. The federal government did not create a surplus, nor did the congressional budget process create a surplus. No politician created the surplus. You created the surplus with your tax dollars. It is your money! I urge you not to permit Washington politicians to claim any credit for overcharging you on April 15th.
Obviously, taxpayers should decide what is done with any surplus funds. Rest assured many in Congress are eager to spend the surplus on a variety of wasteful federal programs. This is a golden opportunity for Congress, because it can go on a spending spree without raising taxes! I supported the "lockbox" legislation because it prevents any spending of surplus dollars, instead requiring that funds be applied to debt reduction (I also have introduced legislation that prevents non-surplus Social Security and Medicare trust funds from being spent on unrelated programs). Reduction of the national debt certainly is preferable to new spending. My preference, however, would be to return any surplus directly to taxpayers. American families are taxed far too much now, and they never should be required to overfund the government. A surplus refund check would be a step in the right direction. The most important point, however, is that Congress should not be permitted to find new ways to spend your surplus dollars.
The key to true budget reform is very simple: Congress must drastically reduce spending. A fiscally responsible federal government that adhered to limits set forth in the Constitution could easily operate on a dramatically smaller budget. Our government operated on a mere fraction of its current budget even when we were fighting the Korean War! Despite what you hear this fall, debt reduction and tax relief are not mutually exclusive. Government is far too large, and it performs far too many unconstitutional functions. A constitutionally proper limited government could function without debt and with much lower taxes.