For instance, working families could receive an annual, refundable income tax credit equal to a percentage of what they pay in social security taxes, without affecting what they've invested for retirement. That would allow people to keep more of their own money while supplementing Social Security for their retirement. A third reasonable, balanced, broad-based progressive tax alternative is to give every American taxpayer a refund, a flat dollar amount like a dividend, to reflect the growing budget surplus and the hard work that went into creating it. And incidentally, if we do it right, there will be some money left over for tax cuts for business, tax cuts to encourage investment and innovation, tax cuts that can help small business work their way into the new high technology economy and that might include another round of capital gains tax cuts. Now, on the question of spending, I think we have the opportunity to make some investments in a limited, restrained and targeted way.
None is more important than education.
President Bush has made a very thoughtful proposal on education reform, which is not tremendously unlike proposals that many of us have made. The same is true of our national defense. If we spend all the money on his tax proposal, there's no way we will have the money we need to invest in strengthening our military to keep our nation secure over the next decade. It would be foolish to forget that as quickly as these surpluses materialize they can disappear. That's why we should follow a cautious approach to the surplus projections and assumptions and a balanced approach to the policies that are based on those assumptions.