U.S. Sens. Bennett and Hatch urge caution on spending federal surplus; warn states to avoid long-term commitments

U.S. Sen. Robert Bennett spoke to the Utah House on Feb. 17, urging caution about federal budget projections and advising state lawmakers not to rely on uncertain long-term revenue when making spending commitments. "We don't know," Bennett said of the Congressional Budget Office's 10-year $4 trillion surplus projection, quoting Alan Greenspan's warning that the surplus could prove temporary and arguing that the safest course is to let surpluses pay down the national debt.

Bennett told legislators that if policymakers "can't resist the impulse to do something" with a surplus, the next-best option is to return money to taxpayers through temporary tax cuts rather than create new, permanent entitlement programs. He described two possible scenarios for the new-economy revenue streams: one in which the gains are short-lived and another in which they are structural and larger than current estimates.

Members followed Bennett with questions on how national forecasts affect the state budget, whether Utah should change its tax system to reflect the information economy, and whether to lift the earnings cap for Social Security recipients. Representative Yer thanked Bennett for his counsel and asked specifically about the sustainability of revenue tied to the information economy; Bennett recommended careful study over several years before making large commitments.

Later in the session U.S. Sen. Orrin Hatch spoke briefly and invited questions. On the tobacco settlement, Hatch cautioned lawmakers to be careful about treating settlement proceeds as ongoing revenue, noting litigation and uncertainty; he said states must guard against spending the funds on permanent programs that would be unsustainable should the money not be available in future years. Hatch observed there is a projected national surplus, but that it is contingent on many assumptions.

On Internet taxation and e-commerce, Hatch said he personally opposed saddling the nascent online industry with immediate sales taxes, calling it an "infant industry" and warning that premature taxation could jeopardize U.S. preeminence in the market. On immigration and workforce needs, he urged careful expansion of visas to bring needed high-skill workers into the country.

The senators' visits included back-and-forth with members on Medicare and Social Security pressures, the role of federal policy in state finances, and preparations for the Winter Olympics. Both senators emphasized the need for long-term prudence rather than immediate expansion of recurring spending. The House reconvened after the Committee of the Whole and continued its regular calendar.