Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, August 10, 1993 TAG: 9309110270
SECTION: EDITORIAL PAGE: A7 EDITION: METRO
SOURCE: JODIE T. ALLEN
DATELINE: LENGTH: Long
The ``$496 billion deficit-reduction'' measure agreed to last week by Democrats in Congress was, for sure, a big deal for the Clinton presidency. Had the White House failed to persuade the Democrat-controlled Congress to vote for its five-year package of tax and spending hikes and cuts, the blow would have been staggering for an administration that has been having a hard time getting its sea legs.
But more than staggering, it would have been awfully surprising.
For this is a measure that, judged by whom it seems to hurt and whom it seems to help, should be hard for a Democrat not to love.
After all, the deal's main real accomplishment the imposition of some $240 billion in new taxes over five years, mostly on higher-income taxpayers, together with the provision of a host of new spending and tax benefits for lower-income families, workers and such favorite Democratic political contributors as real-estate moguls and art collectors. What could be more, well, Democratic?
The wonder is not that Congress passed the measure but that it seemed to suffer so in doing it. That reluctance, however, as Sen. Bob Kerrey eloquently suggested when he cast his crucial vote on Friday, may have had less to do with principled restraint than with the potential for extortion created by the administration's strategy of total reliance on Democratic votes in a Congress in which party loyalty counts for little more than the opportunity to seek extra favors for one's constituents.
It is true, of course, that much of the strutting and fretting on both sides of the aisle last week had to do with professed concerns that the deal did not do too much, but too little.
Here the Republicans - who can claim no glory on the deficit-fighting field - score a few telling points. It is true that a big part of the promised spending cuts - some $36 billion in defense reductions plus an associated $8 billion in interest savings - had already been promised (but are not yet delivered) by Congress when it signed on to its last deal-of-the-century back in 1990. But what's the harm in promising it again - if this time you really, really mean it?
It's also true that 80 percent of the rest of the promised savings (60 percent of the total) wouldn't come until 1997 and 1998. Mostly that's because the plan relies heavily on ``freezing'' rather than cutting programs.
But where would these same protesters look for further cuts?
Surely not from the sacred middle class that was so widely thought last week to be unable to bear even a teensy hike in the gasoline tax. (4.3 cents? Even Ronald Reagan signed a 5-cent gas tax hike into law, and that was back in 1983 when a nickel was worth 7.2 cents in current change.)
Surely not from worthy small businessmen or their investors (who garnered some nice new tax breaks out of the current deal) or yacht brokers and fur retailers (they did fine too) or veterans or students or displaced homemakers or single spouses or retrainable workers or home-builders or home-buyers or food-stamp users or .... This budget deal doesn't seem to hurt anyone - except rich people (including doctors) and a few beekeepers and sheep-raisers.
Tens of billions of its claimed savings were produced by dipping into Congress' standard bag of tricks: pretending that popular tax breaks for such things as research and hiring disadvantaged workers won't be renewed when they are due to expire; assuming that natural disasters are once-in-a-lifetime occurrences instead of events that happen almost every year; phasing in new programs and tax breaks so their full costs aren't felt until after the five years the deal covers; taking credit for billions in Medicaid dollars that could have been - but weren't - spent under past budget rules; overestimating savings from shifts in the way the Treasury finances the debt; and taking a large windfall from the one-time chance to sell off spots on the radio band.
Still these fiscal finagles don't come close to producing the $200 billion or so in spending cuts (excluding user fees and interest savings) claimed for the plan. Surely someone is gonna get nicked a bit.
Well, of course, there are the doctors and other health-care providers who are slated to absorb another $56 billion in Medicare cuts. But Medicare payments have been under severe constraints for several years now. By expert consensus, what that has mostly accomplished is to shift more costs on to private insurers and patients.
And state administrators won't be happy to pick up another billion dollars or so in costs for fraud control and other monitoring of welfare programs, especially since they're counted on to help produce almost $2 billion in welfare and Medicaid savings from tougher policing of deadbeat dads and nursing-home residents. And civil service and military pensioners will have to wait a few months longer for their regular cost-of-living adjustments.
But states are used to taking pain, and the retirees should settle into their new payment cycles without too much discomfort.
As for the rest, which is to say most, of the cuts, well, you will have to trust Congress. You don't feel reassured? Take comfort from the fact that Congress has signed on to some tough pay-as-you-go rules that will make it at least highly inconvenient, if far from impossible, to circumvent the lids on discretionary spending.
So keep your fingers crossed, and hope other things conspire to give Congress the courage - in such short supply last week - to deliver at least the goods it has promised. Hope that the Federal Reserve keeps interest rates low, not because it's so wowed by the budget deal, but because the economy is weak, and Europe is making it easier for us to keep our interest rates down by cutting its own. Without a perkier economy to take the pressure off, there's not a chance in the world that the caps will stay put.
Hope too that the health-care sector, looking over its shoulder at the Clinton reformers bearing down on it, reins itself in. (It happened before. When Jimmy Carter looked like he really meant it about hospital cost containment, medical prices actually lagged behind general inflation.)
Hope that the tax hikes don't discourage investment. Unlike most of the ``tax increases'' in the 1982 tax bill to which this one is frequently compared, these really are new taxes. In 1982, as Sen. Bob Dole will recall, most of the tax ``hikes'' were simply rollbacks of a small part of the huge tax cuts enacted in 1981 but not yet put in place.
And hope that in their efforts to paint a gloomy picture of what might happen without the new plan, budget estimators have been too pessimistic about such important factors as the growth in the number of disabled people and others needing government care.
These aren't foolish hopes. What would be foolish would be either to dismiss last week's deficit deal as small potatoes or to assume that it's the final serving.
\ Jodie T. Allen is editor of the Outlook section of The Washington Post.
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