Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 17, 1993 TAG: 9301180350
SECTION: EDITORIAL PAGE: C-2 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
HOW TO CUT THE BUDGET
THE OUTGOING Bush administration has predictably confessed that the budget outlook is worse than was earlier (before the election) estimated. Unchecked, annual deficits could reach $500 billion early in the next decade.In reaction, President-elect Bill Clinton has predictably hedged on his pledge (made before the election) to halve the deficit within four years.
Which may look like backsliding on Clinton's part. But there are also hints, from within the Clinton camp, that the bad budget news may prompt a more serious examination of ways to stem the hemorrhaging.
We hope so.
Annual $200 billion-to-$300 billion deficits dramatize the fiscal failure of the Reagan and Bush years. Each president, though a self-described conservative, left the deficit twice as large as he found it. (Bush did this in only four years; Reagan required eight.)
It is Clinton's misfortune to inherit this red tide, but he must reverse or be overwhelmed by it. The deficits are a drag on the economy. They immorally pass our debts onto our children. And they require heavy government borrowing of capital needed for productivity-enhancing investment.
The challenge is to find ways to cut the deficit while still raising enough revenue to pay for public investments that promise long-term paybacks - such as in education, infrastructure, and research and development.
Here are some of the better means available for reducing spending:
Reform entitlements. Mandatory spending programs are the fastest growing portion of the budget, accounting for about one-half of all government expenditures. Over the next decade, yearly spending on Medicare alone is expected to rise from $128 billion to $368 billion.
Good options for taming these monsters include health-insurance reform to reduce Medicaid and Medicare spending growth, a tax on health-care benefits of wealthy Americans, and acceleration of plans to raise the Social Security retirement age to 67.
Clinton avoided most of these ideas during the campaign, even demagoguing when his opponent hinted at the need to slow entitlement-spending growth. He can't afford to avoid these options as president.
Cut military spending. Clinton has said he would spend just about 4 percent less than projected expenditures under the Bush administration's five-year military plan. Even these modest savings are in jeopardy.
In search of votes, Clinton during the campaign endorsed several weapons systems that not even the Bush administration wanted, including the Seawolf submarine and the V-22 tilt-rotor aircraft. He hasn't proposed terminating a single new weapons program.
A closer look at defense spending, combined with an overdue reorganization of the armed services to reduce redundancy, could save many tens of billions annually.
Eliminate unproductive subsidies for special interests, such as for wealthy farmers. So-called tax expenditures should be looked at, too, as a way special interests commonly are subsidized. Tax breaks distort the flow of private investment as they add to the deficit.
Campaign-finance reform might help reduce the ability of special-interest lobbyists to defend subsidies and loopholes. But not only business lobbies are getting unwarranted breaks: A big dent in the deficit could be achieved by capping the deduction on mortgage interest.
Cut waste and pork barrel. This is a rhetorical favorite, more complicated than it seems. There are no line items labeled "waste" or "pork barrel." But of course there is plenty of both. The Agriculture Department employs one bureaucrat for every three farmers receiving federal aid. It's too easy to find ridiculous things on which the government spends good money.
Rep. Leon Panetta, Clinton's good choice for budget director, said during his Senate confirmation hearings that Americans should be prepared for shared sacrifice in the fight against deficits. He said everything should be "on the table" in the search for weapons. "We have a small window of opportunity to get this done," he said. "It is going to be risky, but the bigger political risk will come if we don't do anything."
He's right on all counts.