NCSL calls for fiscal responsibility.

• Position: National Conference of State Legislatures

Inside the beltway, some politicians and pundits are rejoicing the end of "deficit politics." Plans to spend the surplus or cut taxes are being floated. There are even plans for the feds to recoup and spend tobacco settlement awards that belong to the states. You might think the federal government had won the lottery.

This euphoria is premature. The overriding federal budgetary issue, according to NCSL policy, remains the deficit, which can explode again as quickly as it receded. Moreover, many state officials are concerned about the federal debt, which now amounts to $5.5 trillion. The extravagant fiscal irresponsibility of the federal government and the resulting sluggishness of the national economy over the past 25 or so years has had a disproportionate and negative effect on state budgets. No one wants to repeat that experience.

From the standpoint of state fiscal systems, a strong economy over a sustained period has a greater positive impact on state revenues than any set of individual federal tax and spend policies. For this reason, state legislators have for over a decade expressed a willingness to accept a proportionate and reasonable share of domestic spending cuts. Most important, state legislators have supported reform of federal entitlement spending, a problem that has not been comprehensively addressed by Congress and the president. These entitlements threaten to result again in exploding federal deficits early in the next century when the baby boom generation begins to severely tax the Medicare, Medicaid and Social Security systems.

President Clinton in his proposed FY 1999 budget has proposed both tax cuts and new spending initiatives. Congress is more focused on tax cuts and tax restructuring.

The president would increase spending for child care, health care, education, the environment and scientific research in FY 1999. Some of these proposals are supported by NCSL because they would help fund mandates on the states or compensate for cost shifts. The president also is proposing tax cuts of $24.2 billion over five years, including tax incentives for child care and education.

The president's budget is highly dependent on $65 billion in anticipated federal receipts from tobacco companies. The president proposes to provide approximately $11 billion of the receipts in unrestricted grants to states. The tobacco settlement agreed to by the attorneys general and the tobacco companies would have been more generous to states...