THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, December 11, 1995 TAG: 9512090017
SECTION: FRONT PAGE: A6 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 57 lines
The third time is the charm, they say. But President Clinton's third budget proposal in 10 months is not really a viable alternative to the Republican plan already on the table.
The Republican proposal is unnecessarily lopsided. The poor take a substantial hit through changes in the Earned Income Tax Credit, welfare and Medicaid. The well-off get tax breaks personally and corporately. One middle-class entitlement - Medicare - comes in for a serious cost-containment effort, but the money saved is largely given back in tax cuts.
The latest Clinton plan inches nearer to the Republicans' by spending less than previously suggested for Medicare, welfare and discretionary programs. It tries to shelter the poor from some of the pain, but it makes only a meek assault on corporate welfare and cuts even less from agricultural subsidies than the Republicans'. Yet the libertarian Cato Institute believes there's $87 billion a year in corporate welfare waiting to be cut.
The worst flaw in the Clinton plan is its failure to employ agreed-upon budget assumptions, balancing the budget in seven years using Congressional Budget Office figures. For that reason, the Clinton budget wins on style points but flops dismally on degree of difficulty. Most estimates say the Clinton plan comes up $300 billion or more short of achieving balance over seven years.
It sounds like a deal is far off, but Norman Ornstein of the American Enterprise Institute has pointed out that the cumulative budget over the next seven years is $13 trillion. To get to an agreement, each side has to give up only about $200 billion, or less than 2 percent.
It is now generally agreed that the Consumer Price Index overstates inflation with expensive consequences. If it were brought closer to reality, Ornstein estimates $50 billion or more would be saved. Cutting proposed tax cuts and curbing corporate welfare would be good for another $100 billion.
If means-testing Medicare makes sense, the same logic applies to Social Security. And if pain is going to be shared equally, defense, intelligence and agricultural subsidies belong on the table. As Republican Sen. Everett Dirkson said: A billion here and a billion there and pretty soon you're talking real money.
So far, each side has been trying to spare its core constituents as much pain as possible, but a deal won't fly unless the people feel it is fundamentally fair. There is no way to balance the budget and have it all - protection for the poor, untouched entitlements for the middle class, welfare for the wealthy, subsidies for special interests, tax cuts for all.
But if everybody gives up something, a deal is waiting to be cut. And it's time to get cracking. If, as appears increasingly likely, the economy is slowing or even tilting toward recession, the rosy scenarios that lie behind all the present proposals will be knocked into a cocked hat. by CNB