THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, November 24, 1995 TAG: 9511230031
SECTION: FRONT PAGE: A18 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 55 lines
Sen. Fritz Hollings, the conservative South Carolina Democrat, deserves a hearing when the issue is a balanced budget. He's been crusading for one longer than most, and he says the GOP plan falls short.
In a ``Dear Colleague'' letter to fellow legislators, Hollings recounts some dreary history. In 1981, President Reagan promised balance in three years but a recession got in the way. A five-year plan was adopted in 1985 - Gramm-Rudman-Hollings. By 1990, the reform wasn't working so a second plan was adopted. A surplus by 1995 was promised.
Well, it's 1995 and - no surplus. Spending increases have outrun all efforts to reach balance. Now, Hollings says, ``Here We Go Again'' is the proper response to the latest GOP plan. Though more austere than anything Democrats propose, it reaches balance by 2002 very expensively.
Tax cuts that are part of the package are ``front loaded.'' That is, the cuts begin immediately. But the savings are ``back loaded.'' That is, spending cuts in the first years are small and painless. The big cuts and real pain don't kick in until the end of the process. And a later Congress may flinch when the public howls. In the meantime, the deficits continue and the national debt grows.
Some frightening figures: In 1996, under the GOP plan the federal government will spend $1.58 trillion and take in $1.35 trillion for a deficit of $228 billion. Deficits are also projected for 1997, 1998, 1999, 2000, 2001.
The result of delaying balance for seven years will be an additional cumulative deficit of $1.05 trillion. The national debt is now $4.9 trillion. Paying interest on that huge amount now costs $336 billion a year. That's 20 percent of the budget.
By 2002, according to Congressional Budget Office figures, the national debt will grow from $4.9 trillion to $6.7 trillion and annual interest payments will increase from $336 billion to $436 billion if the GOP plan is adopted.
Hollings argues that we may achieve a balanced budget by 2002 but only at the expense of almost $2 trillion in additional debt and huge annual interest payments. We will continue to mortgage the future.
His solution is to front load the spending cuts and forget about the tax cuts, Indeed, Hollings believes a tax increase is needed if we are to avoid adding another $1.8 trillion to the national debt over the next seven years.
No one wants to hear that. But if Hollings' prescription is a bitter pill, his diagnosis is a sobering reminder that, even under the GOP plan, before the disease gets better it gets worse. Instead of a cure, the deficits keep coming year after year, the debt keeps growing, the interest payments balloon. by CNB