Uncertain promises

What would you do with $4,561,000,000,000?\nThis is the United States' 10-year projected budget surplus according to the Congressional Budget Office and both presidential candidates want everyone to feel like they'll get a big slice of the pie.\nDuring the presidential debates, Vice President Al Gore has touted using the money to pay down the national debt, refuel public schools, hand out targeted tax cuts for education, re-secure Social Security and offer better social programs. Meanwhile, Texas Gov. George W. Bush said he wants to use the could-be cash to reduce taxes for Americans of all incomes.\nProfessor of economics Eric Leeper, a macroeconomist and policy analyst, doubts any of the billion dollar campaign promises will come true.\n"It's pretty damn unlikely because it builds in pretty optimistic assumptions about the economy, robust economic growth," Leeper said. "It doesn't allow for the possibility that there might be an economic slow down or, even worse, a recession. If that were to come about, surpluses could become deficits."\nThe assumptions Leeper finds to be optimistic are listed in an October 2000 Congressional Budget Office report as a prelude to the $4.5 trillion estimated 10-year surplus. "Assuming that discretionary spending grows at the rate of inflation after 2000," the report reads. The report later reads "... the path of surpluses over the next decade are highly uncertain because they are subject to legislative action and shifts in the economy."\n"When I listen to candidates for president talk about what they're going to do with the surplus, it's very, very uncertain," Professor of Economics Gerhard Glomm said. "A recession could happen, oil prices could go up another 50 percent, a war in the Middle East could break out, or another war could require a major allocation of resources."\nIf the $4.5 trillion dollar dream does come true, the way the money should be spent comes down to what Professor of Economics Hugh Kelley referred to as "philosophical differences, rather than economic differences."\n"A lot of people think it's our money," he said. "Other people think it's the government's money."\nThis philosophical difference parallels the difference in the candidates' proposals. For example, in the first presidential debate, Gore repeatedly proposed protecting Social Security in a so-called "lock box" and Bush emphasized allowing individuals to invest a portion of the money themselves.\n"There's a part of me that doesn't like forced savings that Social Security represents. But there's a part of me that realizes people don't have the foresight to save for retirement," Leeper said.\nLeeper thinks if the surplus does come to be, paying the national debt should take priority over tax cuts or social programs. He doesn't think the candidates are playing up that possibility enough because paying down the debt isn't a "sexy" enough stance for candidates to take during an election.\n"There's little doubt that government borrowing, which is what the debt represents, increases interest rates that crowds out private investment, which we should be trying to promote," Leeper said. "It could also lead to inflation.\n"The other thing is, the effects of government debt are very diffuse and hard to discern. If you have a high mortgage interest rate, you have no way to know how much of that is because of government debt. If we could say we'll pay down the debt and you'll save 2 percent in monthly mortgage rates, then you'll know what it means to you. That's why it's not sexy."\nWhile Bush and Gore argue over what should be done with the prospective surplus, Kelley, Leeper and political science professor Leroy Rieselbach, agree the prospects are overly optimistic.\nRieselbach said politicians are "always" trying to guarantee money to win votes.\n"There is no guarantee," Rieselbach said. "If you simply think back to five, eight years ago, the phrase always was 'there are deficits as far as the eye can see.' But now we have surpluses. \n"It's like the white whale, Moby Dick. It's big, it's out there. It seems to be around and who knows where it will go and when it will come back," said Rieselbach?