THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, December 30, 1994 TAG: 9412290004
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 83 lines
This is the fourth in a series of editorials examining issues that will face the 104th Congress.
Cutting taxes is popular. Cutting government spending is unpopular with whomever the cuts hurt.
But cuts in government spending are coming. Virginians, no less than other Americans, are demanding them. The biggest cuts in federal spending must be made in the biggest programs. That's where the savings will be found.
The new congressional Republican majority has been commissioned by the voters to chop spending. President Clinton, whose administration had already done some downsizing and ``reinventing'' of the federal government, is promising $72 billion in spending cuts to pay for the $60 billion in tax cuts he outlined two weeks ago. The GOP says Clinton proposes too little too late.
The Republicans' Contract With America calls for slimming the federal government and tightening spending. But no one yet knows whether the 104th Congress will cut spending deeply enough to compensate for any tax cuts it votes. If it cuts taxes without cutting spending, it will perpetuate a ruinous fraud. Further, fiscal irresponsibility would intensify the anxieties of struggling middle-income taxpayers who replaced George Bush with Bill Clinton, from whom they turned in anger and disappointment in the midterm elections.
The national debt totals about $4.7 trillion. Interest paid on that debt equaled 4 percent of gross domestic product in '93 and equals 3 percent in '94. It is expected to dwindle to 2.3 percent next year. Because of the low ratio of national debt to gross national product, some economists contend ongoing deficits matter little.
Not so. The deficits run to many billions of dollars - about $200 billion this year. Government borrowing competes with private borrowing and burdens all. Federal deficits ad infinitum also worry foreign investors who underwrite much of the multitrillion-dollar debt. If they choose to invest elsewhere in the world, the United States could experience major economic and social turmoil.
So what must be done?
The Republicans and Clinton propose to spend more money on defense. That's the wrong way to go at the moment, considering that the U.S. armed forces are clearly much stronger than any potential adversary.
Social Security and Medicare are said by both Republicans and Democrats to be off limits - but their growth could and must be curtailed.
The nonpartisan Concord Coalition, in its Zero Deficit budget plan, recommends means testing of benefits to well-off Americans as a way to cut costs. That's reasonable.
But beneficiaries don't think so. The bipartisan commission on entitlements that recently submitted its report identified several ways to slow cost increases in Social Security and Medicare. Major savings could be achieved simply by moderating cost-of-living adjustments to Social Security recipients. But Social Security is a sacred cow almost certainly will not be touched.
If changes in Social Security and Medicare are not made, it will be clear that neither Americans generally nor our representatives are serious about bring governmental revenues in line with spending without raising taxes.
The same is true of agricultural subsidies. Newt Gingrich of George, the next speaker of the House of Representatives, and the next Senate majority leader, Bob Dole, R-Kan., Republican of Kansas, say aid to farmers - many of them giant corporations - won't be touched. But judicious cuts in farm-loan and price-stabilization programs could be made without throwing agriculture into turmoil - and save billions of tax dollars.
NASA's space-station project could be put on hold until the government doesn't have to borrow money to pay for it. Foreign aid could and should be cut back, although it constitutes only a small portion of the budget. Federal employees' pay, pensions and health-care arrangements are superior to those of most private-sector workers. These could and should be moderated. The rural-electrification subsidy, dating from the 1930s, should be ended. Airport-construction grants should go. . . .
Clinton proposes shrinking the Energy, Transportation and Housing and Urban Development departments. The Republicans aim to abolish entire departments to deflate the executive branch. So there will be cutbacks in executive-branch spending.
Republican spokesman Gingrich proclaims that his party will move fast to cut the federal Goliath down to size. But the enthusiasm for tax cuts is greater than that for spending cuts. And if we get the first without the latter, we will find ourselves in worse trouble than we are. by CNB