THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, October 26, 1994 TAG: 9410260020
SECTION: FRONT PAGE: A16 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 60 lines
President Clinton and his aides have found themselves on the defensive over a leaked memo drafted by Budget Director Alice Rivlin listing cuts in entitlement programs as ``options'' to fund favored Clinton administration projects after the November elections. The president and his staff have been distancing themselves from the memo, saying it was only a proposal and that the administration has no intention of touching Social Security or Medicare.
Proposal or no, the memo is a glimpse inside administration thinking. Democratic candidates have been lashing their Republican opponents with the charge that the GOP's ``Contract with America'' will require cuts in these very same programs, even though the contract mentions no such thing. (A copy of the contract appears in this week's TV Guide.) The administration is vulnerable on the charge of hypocrisy.
But for all the efforts to disavow the spending proposals contained in the Rivlin memo, the administration has been strategically silent on another key section: the one that deals with proposed tax increases.
On Page 8 of the memo, a copy of which we have obtained, appears a list of ``Illustrative Tax-Related Options.'' These include: taxing health-insurance plans that provide benefits above an arbitrarily determined ``minimum''; tax capital gains on the estates of the deceased; and end or limit mortgage-interest deductions for second homes. (Only the rich own vacation homes, apparently.)
But most disturbing of all are the last two proposals on the list. ``Repeal or amend bracket indexing'' for inflation, and a 2.5 percent Value Added Tax. The former, of course, would give the government a vested interest in higher inflation, bringing back the ``bracket creep'' that lacerated so many American families in the stagflation of the 1970s. The latter, a kind of national sales tax, has the advantage, from the government's perspective, of being virtually invisible while raking in enormous amounts of revenue.
What this means, of course, is that in spite of tax-rate increases under President Bush in 1990 and President Clinton last year, even higher tax rates are not off the table for next year.
The budgetary problem in Washington - and voters understand this instinctively, which is why they are in such a sour mood - is not a lack of tax revenue. The average American is now paying more than 40 percent of his or her income in taxes to all levels of government. To coin a phrase, it's the spending, stupid.
And the Rivlin memo talks about all manner of new spending. Welfare reform is penciled in at $10 billion; $1.5 billion to subsidize ``alternative fuel vehicles'' that are supposed to help fix a smog problem that doesn't exist; and $1 billion for ``National Information Infrastructure,'' to build the information superhighway that the communications industry seems to be building very well itself without Washington's help.
The Rivlin memo is a smoking gun that proves the Clinton administration simply is not serious about real budgetary restraint. For all the rhetoric in this election season about lower deficits, the true agenda is more of the same: higher spending and more taxes. by CNB