The Republican-controlled House of Representatives popped the cork and celebrated the future last week when it passed a $796 billion tax cut, citing Federal Accounting Office projections that the Treasury will show a surplus of $1 trillion in a decade. The celebratory Senate passed a similar bill. Even as President Clinton vowed to veto any tax cut greater than $350 billion, any thought of a compromise — a reduction the nation could both afford and sustain — has been stamped out by the congressional conga line of tax cutters.

The Republican argument for a $796 billion tax cut goes like this: other than 1944-’45, government has never taken so much of the American family’s income. Include state and local taxes, and the typical family loses almost 40 percent to taxes. And, anyway, didn’t Clinton campaign on a middle-class tax cut that became a tax increase?

The Democrats huff that there is no trillion-dollar surplus. The assumptions that led the Federal Accounting Office to that number require that the nonentitlement programs, virtually all the domestic and military spending programs, not be increased for 10 years, not even standard increases for inflation. These assumptions have already been broken in the present budget by over $30 billion. Further, the tax reductions will benefit the wealthy far more than other classes.

The Treasury Department estimates that 78 percent of the tax reduction will go to families earning $100,000 or more. Families earning $35,000 or less would receive 8 percent of the reduction. How any tax cut is shared matters immensely, but one of the ways all taxpayers would be helped is by Congress dividing the surplus between direct cuts and the long-term savings of paying off the debt.

Even the normally opaque Federal Reserve Chairman Allan Greenspan is crystal clear on the subject: “As I have been saying since late last year as the surpluses began to evolve, these have been exceptionally beneficial to the economy, to economic growth, price stability; that the longer we can allow them to run and run down the debt outstanding to the public, the better off we will be.”

Sen. Susan Collins last week echoed those comments and gave the proper order to the question of tax cuts. My priorities for the federal budget include strengthening Social Security and Medicare to ensure the long-term solvency of those important programs, paying down our nation’s $3.6 trillion federal debt, and returning surplus money to the taxpayers, especially middle and lower-income families.” She voted in support of the Senate bill, but admitted to “reservations about the size” of the tax cut.

This year, the interest payments on the debt equal $229 billion. Reducing the debt lowers the interest payment, providing the Treasury billions every year. The time to reduce taxes is when the money is in the Treasury and the budget is under control, after the fact, not well before it.

Pay down the debt first.