President Bush calls it "incredibly positive news,'' but most Americans probably are alarmed to learn that the federal budget surplus has disappeared.

Remember the federal budget surplus? Just three months ago it was estimated to be $122-billion, not including excess Social Security collections. But it disappeared faster than an elephant in a Las Vegas magic show.

Not only is the surplus gone, but the country will have to take $9-billion out of the Social Security trust fund just to meet its needs this year, the nonpartisan Congressional Budget Office reported Tuesday. That is an even more pessimistic forecast than the one last week from the Bush administration, which used some funny numbers to predict a slim $1-billion surplus.

Most astonishing is President Bush's delight at the predicament, calling it "incredibly positive news." How can losing $122-billion dollars in three months be good news? Because it creates "a fiscal straitjacket for Congress," Bush said. It's a remarkable confession. The president is admitting to a radical agenda to shrink government by starving it of revenue.

What the president failed to acknowledge is that his $1.35-trillion tax cut is most responsible for the lost surplus. The CBO found that 75-percent of the surplus decline can be attributed to the tax cut and the rest to a slumbering economy. The trend is expected to continue into 2003 and 2004 when the government will need to dip into Social Security ($18-billion and $3-billion respectively) just to maintain current levels of service.

That puts both Republicans and Democrats in a tough spot, because both have vowed not to use the Social Security trust fund for other purposes. The blame game has already started.

Last week, Bush hedged his position, saying Social Security funds should be used only "in the case of an economic recession or war." We're not at war, and the CBO doesn't expect our economy to dip into recession, so the president could be doing some more equivocating in coming weeks.

The White House is trying to blame congressional spending for the financial situation. But a nonexistent surplus also denies Bush the money needed for his own priorities. His ambitious plans for education, the military and anti-missile defense would appear to be in jeopardy. There is apparently no money for even a modest prescription-drug benefit or Bush's controversial plan for private-investment accounts under Social Security.

Democrats have gone on the offensive, too, blaming Bush's tax cut for destroying the deficit (the CBO confirmed it) and warning that Republicans are about to raid Social Security. Yet the tax rebate ($300 for individuals; $600 for couples) had the biggest impact on the surplus this year, and it was a Democratic idea (although Bush was quick to claim it when it proved to be popular). Democrats will also find it impossible to pay for their favorite programs without tapping Social Security.

There is no easy way out of this. Long-term provisions in the tax cut can no longer be justified because they will rob the government of needed revenue for years to come. Yet Democrats probably don't have the courage to try to repeal the tax cuts. And if President Bush lives up to his promises on education, the military and missile defense, he'll have to break into the Social Security lock box and dig deeply into its contents.

The only thing in Washington shrinking faster than the budget surplus is the credibility of the politicians on both ends of Pennsylvania Avenue. Americans might as well get ready for a loud, dishonest argument over who's to blame rather than a discussion of how to fix the problem. Unlike the disappearing elephant act, this one will leave few feeling as if they got their money's worth.

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