A trillion-dollar yawn Newswatch ...on politics today

Jack W. Germond & Jules Witcover

February 05, 1991|By Jack W. Germond and Jules Witcover

WASHINGTON BTC — WASHINGTON -- A generation ago, the president's annual submission of his budget for the coming fiscal year was a very big deal, indeed. The economic pie was getting bigger every year, and the budget unveiled the priorities he was setting for spending the new money to be available over the next 12 months.

But, as President Bush's budget for fiscal 1992 demonstrates, ,, the document has become more of a wish list than a meaningful plan. It is founded on assumptions about both spending and revenues that have little to do with the real world of massive federal deficits and enormous demands for money.

And the central message is that the days of ambitious new initiatives have passed because the cupboard is bare.

Bush's $1.45 trillion budget for the fiscal year that begins Oct. 1 is based on a whole series of premises that cannot be taken at face value -- including a deficit estimated at $318 billion in the current fiscal year and then dropping to "only" $281 billion next year. Those figures, frightening as they are, probably vastly understate the deficits for both years.

For one thing, the Bush budget essentially ducks the question of the costs of the war in the Persian Gulf by including only $15 billion. The final costs, the administration says, will be estimated later and funded with supplemental appropriations.

And, although no one can say how high they will be, it already is evident that the expense of the war makes Bush's projected $3.7 billion reduction in defense spending a pipe dream. Ditto for the peace dividend.

The budget also allows only $105.5 billion for the costs of the savings and loan scandal and protection for the depositors in commercial and savings banks. But, again, those who are closest to that situation believe the final figures will be much higher.

On the revenue side, there is a similar optimism based on flimsy evidence. The Bush budget assumes not only that the recession will be over in the middle of this year but that the gross national product in 1992 will grow at a near-boom level of 3.6 percent. If those giddy assumptions don't prove accurate, federal revenues will be sharply lower -- and the federal deficit sharply higher -- than the president now estimates.

There also are other proposals in the budget that won't stand up to the test of political realism. The administration recommends, for example, that Medicare costs be reduced almost $3 billion in fiscal 1992 and $25 billion over five years. The chances of that plan, to take effect in an election year, sailing through a Democratic Congress are slim and none.

For all its failures to face reality, however, the Bush budget can be important as the focal point of political debate over the next year. Democrats in Congress concede they have been forced to mute their criticism of Bush on domestic issues because of the concern they would be seen as undermining the president's conduct of the war in the Persian Gulf. That intimidation factor was clear in the subdued response to Bush's State of the Union message the other night.

But the budget offers something concrete the Democrats can use to make their argument that staggering domestic problems are not being confronted effectively or equitably. It is clearly feasible, for example, for the Democrats to reject Bush's call for reduced capital gains taxes -- a gesture he made to the right wing of his own party -- without being accused of subverting the war effort. It also is possible for the Democrats to offer quite a different set of priorities in deciding where domestic spending cuts have to be made or how defense dollars are to be used.

Bush doesn't deserve all the blame for the awkward situation in which he has been placed. He was not responsible for those massive Reaganomics tax cuts a decade ago that, coupled with huge increases in defense spending, put the country in a position in which interest on the national debt will exceed $200 billion next year. Bush was not alone in failing to understand the implications of the savings and loan collapse. And the president has been victimized at least to some extent by a recession at just the wrong time.

But it is clear the president has no answers in his new budget. The figures all add up to a portrait of an administration facing severe domestic distress that will be there to confront long after Saddam Hussein has been defeated.

Political columnists Germond and Witcover of The Evening Sun's staff appear Monday through Friday. Beginning next Monday, their column will appear on the editorial page.

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