DECIDING what to do with the budget surpluses is the major policy question facing this Congress. Projected surpluses of several trillion dollars over the next decade have created a clamor of demands: cut taxes, save Social Security, pay down the national debt, and increase education, transportation, job training and other federal programs.
Congress' first priority should be ensuring continued economic growth. The best way to extend a steady recovery far into the next millennium is by paying down the $3.7 trillion in national debt.
Federal Reserve Chairman Alan Greenspan agrees. He told the Senate Budget Committee last month: "As the debt goes down, so do long-term interest rates, so do mortgage rates, and, indeed, economic growth would be materially enhanced."
Last year, $243 billion, or 17 percent, of the federal budget was set aside to pay interest on the national debt. By reducing outstanding debt, as President Clinton has proposed, the government will spend less on interest payments. And since the government won't be competing with businesses for capital, lower interest rates and more capital for private investment will result. Theoretically, private investment will stimulate economic growth and increase tax revenues without tax increases.
Twenty years ago, Republicans were in favor of precisely this type of fiscal discipline. Now the party is agitating for a tax cut that won't produce the broad economic benefits of debt reduction.
Congress must ensure that the budget surpluses are put to better use for the nation.