Precious Little Time

Here’s a muted cheer for congressional budget negotiators and the White House. They have agreed on a framework for a 1986 budget compromise that maintains Social Security cost-of-living increases and puts the galloping defense buildup on hold for a year.

On paper the budget would come somewhere near everyone’s original goal of reducing the projected 1986 deficit by $50 billion. This means that the deficit for the coming fiscal year would be only about $180 billion or $190 billion, depending on what happens to the economy in the next 15 months. The longer-range effort of reducing the deficit to $100 billion a year by 1988 is highly dubious because of concessions made on both Social Security and defense.

Politically, House Democrats emerge as the winners if the framework is ratified. They properly insisted on maintaining the Social Security raises, and got them. It would have been imprudent at best to fashion a trillion-dollar budget by snatching away a $14-a-month increase from senior citizens. The Democrats also were correct to insist that the defense buildup would not be harmed by a one-year bookkeeping freeze when in fact the Defense Department has billions in backlogged spending on hand for arms purchases.

The irony of Wednesday’s tentative agreement is that it came at the White House only after President Reagan returned his attention to the budget problem and demanded a solution. The President then proceeded to complete a total reversal of position on Social Security and to give away even more in arms spending just one day after reiterating his refrain that national security was in jeopardy if defense was cut once again.

So now the budget framework bears little resemblance to the document that Reagan sent to Congress in February. It had contained a 6% increase after inflation in defense spending, and the elimination of more than a dozen domestic programs. Only one program elimination is left--state and local revenue sharing, which was being phased out anyway.

But Reagan’s 1986 budget strategy was flawed from the beginning, and the President would have known that if he had listened to then-Treasury Secretary Donald T. Regan. Back in December, Regan said that “we won’t have a prayer” in getting the budget through Congress without substantial restraint in defense spending. Others in the Administration warned then that the only way the Administration could win on defense was to agree to the obvious solution of the budget-deficit dilemma: a tax increase. But the President refused except as a last resort. He stoutly maintained that position on Wednesday.

So now the President is left less than half a loaf: a freeze in defense spending, Social Security raises that he first supported and then opposed, virtually none of the domestic program eliminations that he demanded, and continued massive deficits.

There is still time--precious little time--for Congress and the President to agree that the new budget does not reduce the deficit enough and that the only prudent solution is a modest tax increase. With an election year looming, this may truly be the last resort for some time to come.