A decade ago, Washington grappled with a problem that seems unreal in today’s economic climate – what to do with the budget surplus? In 2000, George W. Bush had campaigned on a pledge to return part of the surplus to taxpayers in the form of an across-the-board tax cut. Bush’s opponent, Al Gore, countered with his famous “lock box” proposal, a promise to devote surpluses to shore up Social Security and Medicare.

Bush lost the battle for public opinion about what to do with the surplus. Pew Research Center surveys in early 2001 found that nearly twice as many favored using the budget surplus for securing the finances of Social Security and Medicare than for a tax cut (37% vs. 19%).

Yet the tax cut received a boost from an unexpected rise in economic anxiety. When Bush took office, the economy was thriving – the unemployment rate of around 4% in early 2001 would be cheered today – but Americans sensed that the 1990s economic boom was drawing to a close. A Washington Post/ABC News poll in January 2001 found that 55% said that the economy was heading into a recession.

Read the complete findings Bush Lost Battle Over the Surplus, But Won Tax Cut War on the Pew Research Center for the People & the Press Web site.