Word: surpluses
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...trillion-dollar windfall really be a problem? For nearly two decades, the U.S. wrestled with huge budget deficits that burdened the economy. But now that Washington projects a $1 trillion budget surplus over the next 10 years, the delightful news has mainly become a cause for pitched partisan wrangling...
Absent politics, which is to say, in purely economic terms, the debate focuses on two issues: Should the surplus be returned to taxpayers, who put up the money in the first place? Or should it be used to pay down the $5.6 trillion national debt and shore up wobbly Medicare and Social Security funds? "This is a wonderful problem for the U.S. to have," says Allen Sinai, chief global economist for Primark Decision Economics...
...huge tax cuts make sense at a time when the U.S. economy is running flat out after nearly nine years of expansion. Slashing taxes now "seems a little odd," says Cynthia Latta, principal U.S. economist for Standard & Poor's DRI. "Its support comes from the assumption that if [the surplus] is not handed back to taxpayers, the government will just use it for more programs." Latta's fellow critics include Federal Reserve Chairman Alan Greenspan, who warned last week that "the timing is not right" for the House measure, which calls for a 10% across-the-brackets cut in income...
...champions of tax cuts argue that the surplus rightly belongs to citizens whose Form 1040s gave rise to it and who now deserve their money back--to do with as they see fit. As a Wall Street Journal editorial-page headline framed the issue last week, WHOSE SURPLUS IS IT, ANYWAY? Indeed, Americans now pay an amount in taxes equal to 20.7% of gdp, a post-World War II high that is up from just over 18% 10 years ago. Nor are many economists bummed by the fact that most of the benefits that would flow from the G.O.P. cuts...
...almost ready for their showdown. By a 57-43 vote that got ?- but didn?t need ?- support from four Democrats, Senate Republicans passed their ten-year, $792 billion plan to give Americans an annual April dividend on their surplus. They don?t have a bill that'll go anywhere -? President Clinton, says TIME White House correspondent Jay Branegan, "will veto anything this big" -? but Senate Majority Leader Trent Lott and his House counterpart, Speaker Denny Hastert, have their defining issue. "We want to cut taxes and the President wants to spend it," Lott said after the vote. "That's what...