Good Opener for Livingston

We don’t know yet what kind of a House speaker Bob Livingston might make, but the Louisiana Republican who is expected to be elected to that post when Congress convenes in January deserves early praise. He’s had the courage to say what no one of such eminence has said before, that the vaunted budget “surplus” is a fiscal illusion.

The so-called surplus--$70 billion this year--is indeed a bookkeeping myth and a political fraud. President Clinton and Congress can claim it exists only because the Social Security system is still collecting more in payroll taxes annually than it disburses to retirees and other beneficiaries. This year’s Social Security surplus was $99 billion. Had that not been counted as part of the government’s operating budget, the budget would have been $29 billion in the red. This is not a revelation. Independent economists, the nonpartisan Concord Coalition and many others have been warning that the budget surplus is a sham. But few elected officials, and none with the visibility that Livingston now has, have had the guts to say so.

Livingston’s first announced order of business in January will be to introduce a bill to prevent the Social Security trust fund’s surpluses from being used when calculating the budget’s deficit or surplus. That would reverse a practice dating from 1967, when President Lyndon B. Johnson, desperate to avoid submitting deficit budgets as he tried to finance both his Great Society programs and the Vietnam War, sponsored such hocus-pocus bookkeeping. Since then the Treasury has steadily borrowed from the trust fund, issuing IOUs that will have to be paid off not too many years hence, when payroll taxes can no longer meet all the claims on Social Security.

Projections aren’t infallible, but for now it appears that if the trust fund can’t be used for deficit reduction, the first genuine budget surplus won’t come until fiscal 2007. In the absence of real surpluses until then, the rationale underlying such favored projects as tax cuts disappears. That prospect will displease those in Livingston’s party who believe that the GOP’s disappointing showing in this month’s congressional elections came from its failure to satisfy its core constituency by cutting taxes. Despite that, Livingston’s plan seems almost sure to pass. After all, how can anyone be against requiring more honest accounting practices when it comes to the federal budget?