If Something Cannot Go On Forever, It Must Stop

January 31, 1995|By CAROL COX WAIT and SUSAN TANAKA

WASHINGTON — Washington.-- Balance the budget. Increase defense spending. Take Social Security, Medicare, veteran's benefits and who knows what else off the table. This is virtual reality. Sooner or later our public officials will walk through the hologram and into a brick wall of real reality.

It is analytically possible to balance the budget and cut taxes. Perhaps American voters are so tax-averse that they will support very deep cuts in benefits and services to achieve that nirvana.

Common wisdom and more than a decade of results from our Exercise in Hard Choices suggest that balancing the budget will require a combination of spending cuts and tax increases. But not necessarily. How can anyone know what the public will support until the president and Congress describe candidly what the real hard choices mean to real people? It is possible to increase spending in nominal dollars and balance the budget without raising revenues. But doing so will require real reductions in federal benefits and services.

On the other hand, opponents of balanced-budget constitutional amendments have been crying wolf. They rant and rave about deep cuts in popular programs. Social Security, Medicare and Medicaid, Head Start and other education programs, veteran's benefits and services, food stamps, welfare -- the list goes on and on. Likely budget cuts are not an argument against the amendment. These folks are arguing against balancing the budget. Or, they are making the case for a whopping big tax increase to balance the budget and avoid cutting programs.

Congress and the president can balance the budget and cut taxes. They can balance the budget, cut taxes, increase defense and take Social Security off the table. But they cannot do them all and avoid benefit reductions in Medicare, Medicaid, farm price supports, federal retirement and veteran's benefits and other big entitlement programs.

Almost every budget and economic expert warns that federal spending and the national debt cannot continue indefinitely to grow faster than the economy. Herb Stein's first law of economic theory tells us, ''If something cannot go on forever, obviously it must stop.'' The only question are: When will we stem this tide of red ink and how will we do the deed?

Dr. Stein offered another piece of sage advice. What America really needs, he said at a Senate Committee hearing on the balanced-budget amendment, is a constitutional amendment mandating that all school children pray for a balanced budget. Continuous deficits and exploding national debt are the fiscal equivalent of child abuse. We force our children and grandchildren to help pay for government benefits and services we consume. How will future generations react when they face huge tax burdens resulting from our inability to control the growth in government spending and pay for the government we want today?

Balancing the budget is a matter of setting priorities. It has been years since Washington really had to set priorities. When our political leaders run out of money, government simply borrows more. When entitlements grow out of control, politicians explain with a straight face the entitlement spending is uncontrollable.

Last week the House passed the balanced-budget amendment, and the Senate seems likely to follow suit. Its ratification by the states then would put the budget on a glide path toward balance by 2002, the deadline cited by the amendment.

Surely, Congress and the president would not trivialize the Constitution by playing games and employing budget gimmicks to avoid the discipline they have voted to write into it. The country has a right to expect them to match outcomes to oratory. Cut spending, cut taxes and balance the budget if they can. If not, they may have to consider modest revenue increases. And they must pass new budget rules that will hold themselves accountable. The country needs action now.

Carol Cox Wait is president and Susan Tanaka vice president of the Committee for a Responsible Federal Budget.

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