THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, July 1, 1995 TAG: 9506300030
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 60 lines
House and Senate Republicans have negotiated a budget blueprint that splits the difference between plans put forward in the two houses. The details won't be worked out until the fall when appropriations and tax bills will be passed. Still, in broad strokes, what the GOP proposes is clear.
The deal aims at a balanced federal budget by 2002. To get there almost $1 trillion has to be pared from previously planned spending levels.
Medicare will get $270 billion less and Medicaid $180 billion less. Food stamps, AFDC and other poverty programs will be cut $100 billion.
Defense is budgeted to receive $1.9 trillion over the seven years, an increase of $33 billion over Clinton forecasts.
Domestic programs other than entitlements and welfare will be cut by at least $100 billion including $13 billion in farm subsidies and research. Many so-called corporate-welfare programs have escaped with little or no cutting.
The House's desire for large tax cuts prevailed over more-modest Senate goals. The plan calls for $245 billion in tax reductions including liberalized IRA exemptions, a $500 per-child credit, reduced taxes on capital gains and relief from estate taxes for family businesses and farms.
The Commerce Department will be eliminated, but Energy and Education will survive.
The plan is a serious attempt at deficit reduction undercut by the proposed tax reduction. Allegedly, tax cuts won't be allowed until the Congressional Budget Office certifies a budget path leading to balance is in place. But once promised, tax cuts are hard to take back.
Much of the savings are back-loaded; that's to say, the most painful cuts won't come until the final years of the seven-year plan. Will politicians then have the courage to do what politicians now are postponing?
Finally, the budget plan could be a hard sell because of the way it skews toward the prosperous. Disproportionate benefits will accrue to a small minority of wealthy taxpayers who have large taxable estates or capital gains. Meanwhile 60 percent of all spending reductions fall on programs that benefit senior citizens or the poor.
Rep. Martin Sabo, ranking Democrat on the budget committee, says the plan ``will either mean significant increases in state or local taxation or the scaling back on the quality and quantity of health care - particularly for low-income families and seniors.''
The deficit needs to be eliminated, and entitlements that make up so much of federal spending will have to be targeted. Social Security probably shouldn't have been taken off the table. Means testing of its benefits is going to be inevitable. But it remains to be seen whether voters will welcome generous tax breaks for those who are already well-off while welfare for the poor is cut and the middle class feels the pinch on entitlements.
The adoption of this budget plan by House and Senate doesn't end the debate but marks the beginning of a wider discussion that will preoccupy the country for the next year or more. It should. There's now consensus on the need to attack the deficit, but doing so will entail new tax-and-spending priorities. On these, the country is far from agreed. by CNB