THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Tuesday, February 4, 1997 TAG: 9702040014
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: 76 lines
Tonight, President Clinton will discuss the State of the Union and his second-term agenda in soft-focus general terms, but later this week he'll submit his real agenda in the hard, black and white of budget figures.
An outline is already available, and once again schizophrenia reigns. At the same time that the president is proclaiming a balanced budget his top priority, he'll call for $100 billion in tax cuts over five years, making it that much harder to achieve balance.
Republicans want $200 billion in tax cuts over the next six years, making their path to balance even more difficult to navigate. Tax cuts are the spoonful of sugar that makes the bitter medicine of reduced services go down, but until deficits are eliminated, cutting revenues remains counterproductive.
Tax reform is something else again. If the same revenues can be raised in ways that grant relief to a squeezed middle class or that spur greater economic growth and investment, those steps should be seriously considered. And if unfair and unnecessary loopholes have been built into the tax system, they need to go.
Both Clinton and House Budget Chairman John Kasich, R-Ohio, have now set their sights on so-called corporate welfare. The Clinton budget will go after $80 billion in subsidies and special provisions that are really a form of pork.
Among tax reforms worth considering are expanded availability of IRAs, eliminating the tax on the first $500,000 of capital gain on the sale of a couple's home and raising the estate-tax threshold for small businesses and farms. In some cases, these family companies must be sold on the owner's death simply to pay taxes.
On the high cost of a college education, Clinton has put his finger on a serious concern for middle- and lower-income families, but there's some question whether his proposed solution is the right one. Federal tax credits and deductions for education spending would appear to do little to restrain rising costs. They actually could reward schools that have done the least to control costs. A way needs to be found to help make college affordable that doesn't provide perverse incentives to keep costs going up.
Clinton and the Republicans are now close to agreement on a reduction in planned spending on Medicare in excess of $130 billion. But those ``savings'' could come in the form of a squeeze on health-care providers and a cap on the amount that can be spent on any one patient. Care must be taken to streamline Medicare without undermining quality of care.
There will be a big fight on welfare as Clinton tries to reform the reform bill of last year by including an additional $16 billion to provide for legal immigrants and to do more in the way of job training. Republicans say the reform hasn't even been tested, so ``fixing'' it is premature. But governors of both parties, who may be left dealing with the fallout, seem inclined to support the administration.
No large fight appears probable on defense spending. The Clinton budget will propose spending $5 billion - or about 2 percent - less on defense. Republicans will demand a little more. The outcome is likely to be a status quo budget that both sides will agree to live with.
Clinton and the GOP already have moved close to one another on many budget issues. There may be a year's worth of squabbling ahead over details, but the outlines of a path to a balanced budget are in place. To succeed, the parties must restrain both spending and their desire to cut taxes. And they must compromise on ideologically sensitive issues in order to achieve pragmatic cost control.