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GOP aims to trump Clinton on budget surplus

Republicans are in a quandary about how to respond to the president's deftly brilliant budget. It marks - and masters - an epochal shift from deficit-driven to surplus-driven politics. As always, Clinton is miles ahead of the opposition. They had wanted to sail into this election year under the banner of tax-cutting. Clinton has flummoxed them by declaring that every penny of the surplus would go instead to "save Social Security first."

Of course, as with everything Clintonian, this is not exactly true. Clinton is saving for Social Security what little surplus is left over after he first throws $150 billion (over five years) at new government programs. It is only after he has spent billions on his favorite child-care, education and sundry other initiatives that a bit of surplus pocket change survives - in fiscal year 1999 less than $10 billion or about one-half of 1 percent of the budget.Republicans and Democrats have all read the polls: Most Americans would rather save the surplus than give it back in tax cuts. They are even less inclined to spend it on more government programs.

Yet Clinton manages to do exactly that by hiding it politically behind the surplus. He spends - but leaves just enough surplus untouched to allow him to demand sternly that none of it be used for anything - read: Republican tax-cutting - but saving Social Security.

Now, given the power of the Democrats' pent-up urge to start spending again, tax-cutting is a sound idea. Consider: On Jan. 5 Clinton first announced a balanced budget. It took 29 years of struggle to get the deficit down to zero. It then took Clinton exactly 24 hours to propose the largest expansion of Medicare in 25 years. And the very next day, he proposed $22 billion for "the single largest national commitment to child care in the history of the United States."

Seeing the avalanche of social programs about to be brought on by the coming surplus, Republicans responded with the tried and true: Cut taxes, starve the government, make it impossible for Democrats to go bingeing again.

Then came Clinton's "save Social Security first" State of the Union address. Republicans have since been at a loss, offering lots of me-toos and mumbles.

What to do? Shape up and dish the whigs. Buy the president's idea, then trump it. Expose the fraud of Clinton's surplus-stealing spending programs and offer to save all the surplus.

First, "save Social Security first." It is important to understand what this means. If, say, a $25 billion surplus goes into the Social Security trust fund, the cash is by law immediately lent back to the government - the left hand lending the right hand - and redeems $25 billion worth of Treasury bonds. Net effect: It retires $25 billion of debt.

Putting the surplus into the Social Security trust fund is thus simply a disguised way of paying down the debt. And supremely clever: Debt paying sounds like green-eyeshade (Republican!) accounting. Saving for Social Security sounds like responsible (Democratic!) compassion. Yet in a pay-as-you-go system like Social Security, they are one and the same.

Republicans should thus embrace "save Social Security first" not just because it is a political winner but because it is a euphemism for debt-retirement. And while debt-retirement is no tax cut, it is a perfectly serviceable straitjacket to keep LBJ wannabes from spending us into ruin again.

Second, trump the president. Republicans should point out that he is, in fact, looting the surplus to pay for his new social spending. They should demand that all of the surplus go to "saving" Social Security (i.e., paying down the debt).

What is "all of the surplus"? The money left over after the government collects its taxes and spends what it must on existing programs and entitlements. That would be about $26 billion in 1999, not Clinton's projected $9.5 billion; $34 billion in 2000, not Clinton's projected $8.5 billion; and so on.

Senate Budget Committee Chairman Pete Domenici caught on to the president's strategy when he assailed Clinton for proposing to use the $65 billion expected windfall from the tobacco settlement for assorted Hillary-care programs. Instead, said Domenici, we should use it to "save Medicare first." Nice touch.

But a little too complicated. Stick to the script, Clinton's script: Save this $65 billion and every other component of the surplus for Social Security (again: debt-retirement). Just as Clinton promised.

Hoist him by his own petard. He won round one by saying "Do you want Social Security or tax cuts?" You win round two by saying "Do you want Social Security or Hillary care?"