Break the Tax Stalemate
If you wonder what happened to the budget-deficit crisis during all the other crises, it is still there, and getting bigger and bigger every day.
After two weeks of negotiations the House-Senate conference committee on the 1986 federal budget has failed to agree on an issue of any substance. The process is close to breaking down altogether.
The impasse is not, technically, fatal. Government will go on. The annual budget resolution merely sets guidelines for the appropriations committees to follow as they decide on specific spending measures in 13 broad categories of government.
But the psychological importance of the budget resolution is particularly critical this year as a measure of Congress’ seriousness about doing something about the deficit. The goal of everyone this year was to reduce the 1986 deficit by at least $50 billion and to have the annual deficit down to the range of $100 billion by 1988. These goals are not reductions in the federal debt, but merely a slowing of the rate at which new debt is piling up.
It will be regrettable if the budget resolution is abandoned and spending bills are allowed to roll their independent ways through Congress without some overall scheme to keep the debt in focus. Everyone seems to agree that the deficit is a critical issue, but few are acting that way. The problem should be considered even more critical in view of recent statistics indicating that economic growth may not come up to projections, thus making it even more difficult to close the deficit gap.
At the moment, the House and Senate are stuck over defense spending and Social Security cost-of-living raises. The Republican-controlled Senate has approved a one-year freeze in the Social Security benefits and a $302.5-billion defense budget. The Democratic-controlled House insists on granting a Social Security increase and holding defense to $292.6 billion for the fiscal year starting Oct. 1.
The Republicans’ secret weapon, of course, is President Reagan. But the President, when not understandably occupied by international crises, has focused on the more politically appealing subject of tax reform. His neglect of the deficit issue has troubled many GOP senators who would like some more White House support for their position. The extent of their concern is indicated by the comment of Sen. Pete Wilson (R-Calif.) that he considers the deficit as “far and away the most important of all priorities, with no close second--including tax reform.”
The President could break the deadlock in a minute with a recognition that the deficit is such a threat to the national economy that he would consider a modest tax increase that subsequently could be folded into any tax-reform program. Since he is proposing a boost in the corporate tax anyway, it would be difficult for him to claim that such a levy would jeopardize continued economic recovery.
This would, properly, allow retention of the Social Security increases and reduce the need for other severe cuts in domestic programs--mass transit, for instance--contained in the Senate budget.
In spite of his homely comment last week, when asked about new taxes, that “there just ain’t gonna be none,” the President has said that he would consider an increase as a last resort. The last resort is just about where things stand now, and the President is the one person with the ability to break the stalemate.