Republican budget claims are a load of malarkey

ROBERT KUTTNER

August 21, 1992|By Robert Kuttner

THE PLATFORM approved by the Republican National Convention is a remarkable document. On the one hand, it calls for across-the-board cuts in the income tax and the capital gains tax, as well as new tax deductions for health insurance, education, enterprise zones, savings accounts, home ownership, real estate tax shelters and business investment generally. All these, of course, will cost the Treasury revenue.

But on the other hand, the platform waxes indignant about the government's failure to balance the federal budget, which it blames (naturally) on the spendthrift Democrats, who "continued delay and defeat the president's agenda for growth, jobs and prosperity. Spending faster than ever, they blocked Republican reforms that would have saved billions of wasted taxpayer dollars."

The platform continues:

"For 12 years, Republicans in the White House and Congress have battled a Democrat system corrupt and contemptuous of the American taxpayer. Our Republican presidents have vetoed one reckless bill after another. But liberal Democrats still control a rigged machine that keeps on spending the public's money.

"The only solution is for the voters to end divided government so that a Republican Congress can enact the Balanced Budget Amendment . . . Deficits have grown as Democrat Congresses have converted government assistance programs into entitlements and allowed spending to become uncontrolled."

To read this document, one would think that you can cut taxes by something close to $100 billion -- the cost of all the proposed new tax breaks -- and still balance the federal budget, now in deficit by over $300 billion. President Reagan made that claim in 1981; the deficit is that claim's living refutation and Mr. Reagan's monument. President Bush, in embracing a balanced budget amendment as well as new tax breaks, should indicate what he plans to cut.

You would also think that Presidents Reagan and Bush had submitted 12 years of balanced budgets, only to have spendthrift Democrats thwart their fiscal prudence by pouring on red ink. Here are the facts:

According to the Congressional Budget Office, the budgets submitted by Presidents Reagan and Bush, and those enacted by Congress, were within a few billion dollars of each other. What varied was the mix of domestic and military spending, not the amount of taxes or the size of the deficit. In some years -- every year between 1983 and 1988 for example -- Congress' budget actually carried a lower deficit than the president's.

In 1983, Mr. Reagan submitted a budget with a deficit of $122 billion. Congress passed a budget with a deficit of $104 billion. In 1987, the White House proposed a deficit of $160 billion. Congress' budget carried a deficit of $143 billion. For 1992, the White House asked for deficit spending of $281 billion. Congress provided a deficit of $279 billion.

So the image of Republican White House budgets being busted by Democratic legislators in Congress is so much malarkey.

In some years, the actual deficit has turned out to be larger than that forecast by either the White House or Congress (the actual 1992 budget deficit is now expected to be well in excess of $300 billion). But these discrepancies are the result of recessions reducing revenues, or unanticipated costs of the S&L bailout. And Congress' deficit forecasts have been more accurate than those of the White House in 11 of the past 12 years.

For example, in 1988 the White House forecast a deficit of $108 billion. The Congressional Budget Office calculated it at $134 billion. The actual deficit was $155 billion. In 1989, the White House projected $130 billion, the Congress $165 billion; the actual deficit was $154 billion.

One more piece of dishonesty in the Republican platform: The blame on "entitlements" is also miscast.

The biggest entitlement is of course Social Security, but it is self-supporting. Social Security funds don't contribute to the deficit -- they run a surplus.

The only entitlement that has been growing faster than GNP is health outlays, through Medicare and Medicaid. Here, the Republicans have proposed to cut costs by having recipients pay higher out-of-pocket charges -- a tax increase by another name, while the Democrats want comprehensive medical coverage and cost containment.

The trouble with politics in a sound-bite age is that the claims often go by too quickly to verify. But in this case it's worth lingering to check the record -- which reveals that the Republican budget claim is a fiscal whopper.

Robert Kuttner writes regularly on economic matters.

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