The vanishing federal budget surplus has raised cries for repeal of cuts in income taxation that began last year. But a Heritage Foundation analyst thinks politicians should find a different culprit.

Brian M. Riedl, a fellow in the Washington, DC, group's Thomas A. Roe Institute for Economic Policy Studies, says the surplus has leaks bigger than the tax cut.

He notes that the Congressional Budget Office (CBO) has reduced its estimate for budget surpluses for 2002-11 from $5.6 trillion last year to just $336 billion in its most recent projection, published in August.

According to CBO data, tax cuts account for only 8% of the decline in the 2002-only budget surplus and less than 25% of the 10 year decrease.

A much more important reason for the decline, Riedl says, is a recessionary drop of $6.7 trillion in the amount of wealth expected to be generated through 2011.

He also points out that new spending is nearly double the surplus shrinkage attributable to tax cuts.

In a separate report, the Heritage Foundation analyst says that in 2000-03 the federal government will spend $782 billion more than it did during the previous 4 years.

And the reason for what he calls "colossal spending increases" isn't the war on terrorism. Defense outlays represent only 21% of the surge.

"The 2000-03 spending spree is a classic case of death by a thousand blows—record spending increases for dozens of medium-sized programs across several departments, none by itself fatal but collectively all lethal," Riedl says. "These scattered spending hikes are the predictable result of the inability of undisciplined policymakers to set priorities and say no to special interests."

The message is clear.

Instead of repealing a stimulative tax cut that has barely begun, Congress should be reining in its spending and encouraging the creation of wealth.

A proven way to create wealth, of course, is to find and produce oil and gas—such as what might lie under the Arctic National Wildlife Refuge coastal plain and sundry other places that a spendthrift federal government refuses to lease.

(Online Oct. 11, 2002; author's e-mail:

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