Senator: OK to Spend Part of Social Security Surplus

WASHINGTON – Social Security surpluses remain so huge that it would be harmless to use some of the money to finance other programs, a top Senate Republican said Thursday in a departure from the orthodoxy of both parties.

"There is no reason in the world you should look at it for only one purpose, to pay the debt down. What's wrong with using it for education" or other purposes, said Sen. Pete Domenici, R-N.M., a respected veteran lawmaker who has been top Republican on the Senate Budget Committee for two decades.

Domenici's remarks, made as White House budget chief Mitchell Daniels appeared before the budget panel, made him the highest-ranking official of either party to publicly suggest using a portion of Social Security's surpluses for anything but debt reduction. President Bush and members of both parties have repeatedly promised to use that money only to reduce the debt in a symbol of their fiscal responsibility.

"I have now talked to at least 15 economists," Domenici said. "None of them believe that is good economic policy for America, to say we cannot touch those (funds) in a time of declining growth."

With his comments, Domenici underlined the political shifts that have begun following last month's sharp reductions in official surplus projections.

For the next several years, almost all that is left of overall federal surpluses is the portion that comes from Social Security, the giant pension program for the elderly and disabled.

But the tighter budget forecasts -- along with bipartisan demands to boost spending for defense, education, farmers and other programs -- have left many analysts doubtful that the extra spending can be financed without dipping into Social Security's surpluses.

A desire by many GOP leaders for an additional economic stimulus bill this fall -- perhaps including a capital-gains tax cut -- could make it even harder to avoid using Social Security funds.

Some lawmakers and White House aides privately agree with that scenario, but Domenici's public remarks were exceptional. On Tuesday, Bush dodged questions about whether he would veto spending bills that eat into Social Security, though senior aides later said he would.

And after a GOP leadership meeting with Bush Thursday, Rep. J.C. Watts, R-Okla., said, "Every dime of Social Security will be protected."

Domenici said he expected that despite his own views, the Social Security surplus would not be siphoned for fiscal 2002, which begins Oct. 1. Congress is working now on spending bills for 2002.

The White House's Daniels did not comment on Domenici's remarks. He reiterated Bush's position that there is enough room in his budget to raise defense and education spending and cut taxes without eroding Social Security money.

Sen. Kent Conrad, D-N.D., who chairs the Senate Budget Committee, said Bush would never be able to honor his promise to pay for his priorities without dipping into Social Security.

"I think it defies logic and defies the truth," he said.

Overall federal surpluses are still expected to hit near-record levels for the next few years, despite the economic slowdown. Using small amounts of Social Security funds to finance other programs has no effect on the program's solvency or ability to pay benefits, but Bush and lawmakers from both parties have pledged not to use that money as a symbol of their fiscal responsibility.

Meanwhile, in a closed-door meeting Wednesday, House GOP leaders decided to ask the White House to take administrative actions in the waning days of this fiscal year to ensure that Social Security surpluses are not spent, Speaker Dennis Hastert, R-Ill., said in a brief interview. Fiscal 2001 ends Sept. 30, and lawmakers have little stomach for enacting 11th-hour spending cuts for this year.

As for making sure Social Security surpluses are not tapped next year, one option House GOP leaders discussed is an across-the-board cut in spending, said another participant in the meeting who spoke on condition of anonymity.