Top goal: a balanced budget Taxes and Medicare: GOP bedeviled by their contradictory effect on federal financing.

October 23, 1995

REPUBLICANS ENGAGED in the giant juggling act of cutting spending, reducing taxes and moving toward a balanced budget bring separate "reconciliation" bills to the House and Senate chambers this week as the year's legislative showdown begins. Before the battle ends, the two measures will be merged by a joint conference committee, sent to the White House for a certain Clinton veto and then buffeted by partisan politics into a final compromise.

Despite the juggernaut image fostered by House Speaker Newt Gingrich, the Republican program has built-in contradictions and political liabilities that worry the GOP rank-and-file, particularly moderates from swing districts.

The chief contradiction is the illogic between demands for a balanced budget and the steep tax cuts that make it so hard to achieve. The chief liability is the imperative to put clamps in the projected growth of Medicare, Medicaid, farm subsidies and other entitlement programs even though this is bound to enrage key constituency groups -- especially senior citizens.

The bottom line, in our view, has to be the goal of a balanced budget. That should be the standard. To the extent that tax cuts undermine that goal, they are (in Republican Sen. Alan Simpson's phrase) "a great lump the size of a hockey puck in my [i.e., the nation's] throat." To the extent that radical changes in the delivery of health care plug an unsustainable hemorrhage in federal finances, they are an essential reform.

This newspaper remains critical of proposed GOP tax cuts and supportive of Republican efforts to curb Medicare and Medicaid. President Clinton's alternative -- going halfway on both issues -- comes out a wash so far as balancing the budget is concerned. It amounts to little more than political hedging.

Given the clash between ideological conservatives, an utterly pragmatic president and liberal Democrats hooked on outmoded concepts, the nation's best hopes may lie with moderates in both parties. They could be the source of reasonable compromise on both taxes and Medicare so long as their end-game tilt puts the government unmistakeably on the fast lane to a balanced budget.

This must be the paramount objective since the huge deficits of recent years are the greatest threat to the nation's economic future. They force up interest rates, reduce personal savings, expand the gap between rich and poor (for who owns the bonds?), limit the government's ability to do what it should and impose cruel burdens on future generations.

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