Cut Spending, Not Taxes

March 10, 1995

Before the Balanced Budget Amendment went down to defeat last week, Republican leaders in Congress refused to reveal the details on how they would reduce the deficit to zero by 2002 out of fear that the implicit fiscal pain would doom their proposed change in the Constitution. Well, the BBA died anyway. The GOP excuse for keeping mum on details is gone. The time is approaching to start actual cutting of government spending on a scale commensurate with the Republican objective. Policy must prevail over process.

In the House of Representatives, an impressive Republican show of force is in the making. Coming to the floor next week is a bill to slash $17.3 billion out of spending approved by the last Congress for the current fiscal year. Democrats are predictably aghast. They see such welfare state programs as aid to the poor, environmental protection and aid to education on their way to evisceration.

In political terms, this is a fight whose time has come. It can be a harbinger of how this GOP-controlled Congress proposes to move toward a balanced budget instead of just talking about it. The Republicans won the last election. They deserve their shot. Their effectiveness should be judged not by a bit of flimflam like the BBA but by their willingness to do the hard stuff -- begin cutting programs with real, live, hurting constituencies.

That $17.3 billion rescission in the House is a good beginning. But another test will come on taxes. If Republicans try to outdo the Democrats in proposed "middle class tax cuts" for purposes of political pandering, then all their rhetoric about balancing the budget will be so much blather.

Why say we this? Consider the latest report of the non-partisan Congressional Budget Office, which projects a course for balancing the budget by fiscal 2002. It foresees a need to cut discretionary spending by $193 billion and mandatory entitlement programs by $843 billion over the six-year period -- a 20 percent reduction in each that would require major restructuring of the federal government and its mission.

If such massive spending reduction were achieved, interest costs on the national debt would be reduced by $175 billion over a six-year period -- by $64 billion in fiscal 2002 alone. Think how this would release funds for more meaningful purposes. Think how the nation's savings rates would go up and its current account deficit would go down.

But here's the joker. At no point in the CBO projection does it countenance the tax cuts both parties are pushing. Instead, the CBO talks about "the challenge facing policy makers who may have to enact the spending cuts or tax increases needed to balance the budget by 2002" [italics ours]. As debate flares over spending, those who share this newspaper's zeal for deficit reduction should keep an eye on the tax side of the ledger.

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