Slaying the Deficit Dragon

February 17, 1993

Unless you've been trapped in a UFO for the past week, what President Clinton tells Congress in his first State of the Union message tonight shouldn't come as a shock. The administration has carefully orchestrated release and discussion of most aspects of the president's budget, tax and deficit-reduction plan, as Mr. Clinton himself did in his 10-minute address to the nation Monday night.

"My message to you is clear," he said. "The price of doing the same old thing is far higher than the price of change." That's a fancy way to let people know higher taxes are on the way (but this time more of the burden will be on the affluent, the president is quick to point out). No surprise there. Polls showed that most Americans expected higher taxes would be coming, regardless of which candidate won the November presidential election.

Mr. Clinton's toughest job is persuading Americans of the severity of the problem, or as he put it, "the price of doing the same old thing." If nothing were changed, if no taxes were raised, if all federal spending programs continued to grow at their current rate, what would the situation be like in five years or 10 years?

A good place to look for an answer is the Congressional Budget Office. If the status quo is maintained, the CBO says the deficit will be $357 billion in five years and $650 billion in 10 years. That's enough money to double Social Security payments to all recipients that year and increase the defense budget by 50 percent. Or that deficit money could be reinvested in the U.S. economy: the CBO estimates that eliminating the deficit would increase consumption for every American by 5 percent.

Without a change in federal spending and taxing policies, Medicare costs will zoom, from $146 billion to $432 billion in 10 years and Medicaid from $80 billion to $240 billion. Health care costs will be sinking this country.

That's the picture without action. The CBO, though nonpartisan, believes deficit-reduction is the best way out of this mess: "reducing the deficit is the most direct and reliable way to increase national saving and long-run economic growth. Increasing the share of government spending devoted to investment could also spur growth. . . Over the long run, a higher rate of saving would encourage new investment, boost workers' productivity, reduce net borrowing from abroad and raise real incomes and living standards."

If we are to improve the standard of living in this country, if we are to keep pace with competition from abroad, if we are to end this spiral of more and more debt consuming more and more of our scarce capital, the deficit dragon must be slain. We'll find out tonight just how committed the president and the Congress are to taking on the difficult and unpopular task of slaying the dragon.

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