There is nothing wrong with having a deficit. As OMB Watch has pointed out for years, the real concern is to make sure that the deficit is kept as a small percentage of the GDP. As long as the economy grows, a small deficit is not a problem. And wise investments will lead to a strong economy. The first President Bush said, "Read my lips." And, of course, wisely violated his promise of no new tax increases. The second President Bush promised not to raid Social Security or Medicare trust funds in pursuit of his tax cut. And, as expected, unwisely violated his promise. Office of Management and Budget (OMB) Director Mitchell Daniels now calls the Bush promise a "symbolic goal." The Congressional Budget Office reported today, August 28, that the tax cut, compounded by the slowdown in the economy, will result in spending roughly $9 billion of the trust funds this year. This is in sharp contrast to an OMB assessment last week that said that none of the trust funds would be used. Moreover, the CBO figures show that this will be a regular event during Bush's term of office. CBO notes that the raid on the trust funds could grow much larger if Congress does no more than support Bush's proposed increases in defense and education spending. The single largest reason for squandering the surplus – the tax cut just enacted. (See OMB Watch's latest analysis.) While Bush should be held accountable for violating his pledge not to use Social Security or Medicare to pay for his tax cut, that obfuscates the real issue. The long-term consequences of the tax cut and maintaining a lockbox around Social Security and Medicare mean that there will be little opportunity to tackle the types of investments in our communities and families that will make us a stronger nation. Instead of providing health insurance for the uninsured, creating a prescription drug program or long-term health care coverage for the elderly, repairing our crumbling schools, addressing housing shortages, making our drinking water safe, or rebuilding our highways, we have wasted an opportunity for wise investments in favor of a reckless tax cut that will largely benefit the wealthy in this country. Bush has been rather direct in noting that the tax cut was partially intended to stop Congress from spending on programs as well as to provide benefits for wealthier Americans. Or as Rep. Dick Armey said more explicitly in a message to Republican colleagues, "Did we Republicans come to Washington merely to slow the growth of leviathan government? Or did we come to shrink and re-limit it? I say we came here to shrink and re-limit it... Restraining government [through the tax cut] was step one. Step two is roll-back." (emphasis not added) Daniels has already indicated that the Bush administration advocates spending cuts in programs to pay for the proposed increase in defense spending, although he has not identified which programs to cut. It is simply amazing that in an era of prosperity and budget surpluses that, not only are we not addressing needed investments, we are contemplating spending cuts. Rather than sit idly by and watch this conservative agenda wreak havoc on important services to our communities, OMB Watch will be launching a Social Investment Initiative (SII). The purpose of the Initiative is to recapture the public debate about the need to invest in our future. Over the next two years, we will provide research and analysis about investment opportunities, and we will work with state and community groups to better identify the values and types of investments that resonate with voters. We will tell stories of people who have been served well by government programs as well as those of people who are not receiving needed services. In developing investment ideas, we will work with policymakers at the local, state and federal level with the hope that they will use the ideas. We hope that ultimately the SII will lead to a long-term initiative that reinvigorates the role of government in our civil society. A description of the SII will be on our web site in September (www.ombwatch.org). Robert Kuttner, writing in the Washington Post today, identified three objectives with respect to the budget debate that we support. First, roll back the massive tax cut to undo the future damage it will cause. If the economy needs to be stimulated, then use spending which can be controlled on an annual basis or something similar to the tax rebate that occurred this year (only target it to those most in need). We hope that our Social Investment Initiative helps create an environment that makes it possible to undo the Bush tax cuts. Second, get rid of the Social Security and Medicare lockboxes. The lockbox is an arbitrary concoction: the trust fund money does not sit in a lockbox or in a special account. Traditionally the trust funds are used to buy government securities, such as Treasury bonds; this does not affect benefit payments unless, of course, the government goes belly up and cannot repay the loan. In the past the money borrowed from the trust funds was used for government programs. Now politicians want to use the trust funds to pay off federal debt. In essence, the lockbox has become a strategic wedge issue used to avoid tax cuts (e.g., Save Social Security First). It worked effectively when Clinton was in office, but with passage of the Bush tax cut, we are past that. If Democrats, who have become the fiscal conservatives, want to reduce the debt, then use a portion of the overall surplus to pay down some of the debt. But there is no need for a lockbox. Which brings us to the third objective. There is nothing wrong with having a deficit. As OMB Watch has pointed out for years, the real concern is to make sure that the deficit is kept as a small percentage of the GDP. As long as the economy grows, a small deficit is not a problem. But we should not have to encounter this debate if we undo the tax cuts to the wealthy and get rid of the lockboxes. Wise investments will mean a strong economy.