Candidates limited by budget surpluses : Sanctity of Medicare and Social Security constrains proposals

Campaign 2000


WASHINGTON -- A1 Gore's pledge to make preschool available to every child in America had become a rallying cry, a campaign pledge matched by no other candidate seeking the White House in 2000.

But when confronted by the costs of truly universal preschool -- as much as $200 billion over 10 years -- the vice president's proposal solidified into $50 billion in matching grants to the states that would be decidedly less expensive, but less compre-hensive, than federally fi-nanced preschool.

Gore campaign officials say they never changed their program, just transformed an idea into a workable propos-al. But the vice president's suddenly modest preschool plan is telling.

The first presidential cam-paign of the budget-surplus era could have sent candi-dates off on a race to spend as they never would have when deficits were soaring. Instead, they appear strangely constrained by budget terrain that is now drawn in sharp relief, with $1 trillion expected in non-Social Security surpluses over l0 years, and $1.8 trillion in Social Security surpluses that have been declared un-touchable.

"The principle of restraint has been in the air, hovering over all our deliberations from the beginning," said William A. Galston, a public affairs professor at the Uni-versity of Maryland and a se-nior Gore policy adviser.

To be sure, many indepen-dent budget analysts say both Gore and his rival for the Democratic nomination, former New Jersey Sen. Bill Bradley, have offered pro-posals that more than spend the projected $1 trillion sur-plus. Republican candidates, by embracing the congressional GOP's proposed $800 billion tax cut and pushing for higher defense spending, may have also spent the sur-plus.

Still, that $1 trillion esti-mate has forced candidates to scale hack some proposals, drop others altogether, and publicly scramble to shoe-horn their agendas into con-crete monetary limits.

The first campaign of the surplus era may be more re-strained than some of the campaigns fought during the era of swollen budget deficits. In 1992, Arkansas Gov. Bill Clinton took a "go slow" approach toward re-ducing the federal deficit while pledging to provide universal health insurance, to expand "Head Start and to pump money into the inner city.

"All these initiatives have to fit into an explicit budget now. That is new," said Robert D. Reischauer, a former director of the Congressional Budget Office. "There is an agreement about what is available, how we define what is available."

Both Democratic candidates maintain they have stayed within that $1 trillion limit, but budget analysts say that appears doubt-ful.

Bradley's ambitious health Care program alone could consume most of the surplus, when inflation is factored in.

Kenneth E. Thorpe, a health policy professor at Emory Univer-sity in Atlanta and a former Clinton administration official, put the cost of Bradley's health insurance program at $1.06 trillion over 10 years, a figure widely cited by Gore but derided by Bradley.

Add to that Bradley's $100 billion child poverty program, his $13.2 billion farm policy, his policy prescriptions for working families, which would cost $36 billion over 10 years when fully implemented, and interest on the debt, estimated at $132 billion over the next decade, and the surplus appears to be spent.

Squeezed into limit

Gore aides say his proposals on health care, education, defense and other new spending just squeeze into the trillion-dollar limit. But that relies on the $146 billion estimated cost of Gore's health care proposal. Thorpe, whom the Bradley campaign con-siders a Gore ally, put the cost of the vice president's plan at more than double that, $312 billion, shattering the surplus ceiling.

Republicans may have to face similar facts. The GOP tax plan, vetoed by President Clinton this summer, officially would deprive the government of $792 billion over 10 years, but that figure de-pends on ending many of the most popular tax breaks after 2008. Once a tax break is given, it may be politically impossible for Con-gress to take it back.

The full tax package, complete-ly phased in, would cost $2.6 tril-lion in its second decade, when budget surpluses are projected to decline as the baby boom genera-tion begins to retire.

Republicans may feel less con-strained by the surplus projections than Democrats, since they advocate significant cuts in gov-ernment spending to offset the cost of their tax proposals. Some GOP candidates, notably publish-er Steve Forbes, have proposed fiat tax plans that could create their own squeezes on govern-ment revenue.

Flat tax plans

William Gale, a Brookings Insti-tution economist, says a fiat tax rate would have to be set at 21 per-cent to recoup the $1.8 trillion the federal government now spends, yet Forbes set his fiat tax at 17 percent. Campaign manager Bill Dal Col said the shortfall would be more than made up by a simplified tax structure that would spur more people to comply with the law, spark economic growth and lower interest rates.

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