Jackson Budget, While Improbable, Illuminates Impasse

Jesse Jackson’s budget plan needs to be taken seriously. With it he establishes an elaborate liberal agenda and himself as its champion. Jackson may not be elected President in 1988, but his ideas will exert a powerful influence on the left wing of the Democratic Party. Like Ronald Reagan, Jackson has a clear and compelling vision of what government should do.

The outlines of Jackson’s program, released in late May, are familiar. He uses higher taxes on the rich and cuts in defense spending to reduce federal budget deficits and to raise spending for education, housing, welfare and child care. What’s impressive are the details. George Bush and Michael Dukakis may be vague about their budget plans, but Jackson is not.

Jackson’s numbers shouldn’t cheer either liberals or conservatives. Conservatives will confront intense pressures to raise taxes on the rich and to cut defense spending. For liberals the message is that major new social programs can’t be financed without broad-based taxes.

These conclusions emerge from a look at Jackson’s five-year program. As a benchmark, he starts with the deficit of $134 billion projected for fiscal 1993 by the Congressional Budget Office. This baseline estimate assumes that most programs and taxes continue at current levels. Spending rises to keep up with inflation and population growth. Jackson then makes the following changes:

--Defense: It’s frozen, and there are no adjustments for price increases. The failure to keep up with inflation means that, by 1993, annual defense spending is $58 billion lower than the projection by the Congressional Budget Office. That’s a reduction of about 17%.

--Taxes: Sharp increases mean that revenues in 1993 are $98 billion above the CBO projection. Individual income taxes are raised about $65 billion, but nearly 72% of the added burden falls on taxpayers with incomes above $200,000. Corporate taxes would rise $24 billion; tougher compliance would raise revenues $9 billion.

--Domestic Cuts: Social Security isn’t touched. Nevertheless, non-defense spending in 1993 is $24 billion below the CBO projection. Most of the savings involve lower farm payments, reduced federal travel expenses and higher fees for a variety of federal services.

--New Spending: It totals $95 billion by 1993. Big increases include $20 billion for education and job training, $17 billion for low-income housing, $14 billion for welfare and social services, $12 billion for the expansion of Medicaid to those slightly above the poverty line, $6.5 billion for child care and $3 billion for drug enforcement and treatment.

On paper, national priorities shift and the budget deficit drops. By 1993, Jackson’s deficit would be $49 billion compared with the CBO estimate of $134 billion. Are these changes plausible? Probably not.

For starters, Jackson’s defense reductions seem beyond what’s practical or politically feasible.

Soaking the rich also has its limits. Much of their income comes from capital gains--the profits from selling stocks or bonds. If taxes on these gains are raised sharply (as Jackson proposes), many investors won’t sell. There would be no profits and no taxes.

But forget these difficulties for the moment. Assume that everything that Jackson wants is practical and possible. Even in this dreamy world there would be big problems. Left out of Jackson’s budget (as he concedes) are major new programs to address inadequacies of the nation’s health-care system. There’s no program to cover the costs of long-term care for the elderly, and there’s only a modest effort to provide health insurance for those who aren’t now covered. Either program could add tens of billions of dollars to total spending.

What Jackson has done is to illuminate the enormity of the political impasse facing the nation. If Americans want more government, they will have to pay for it. Even taxes that fall heaviest on those with high incomes will include many Americans who consider themselves average. In 1988 the richest 30% of taxpayers start with incomes of about $40,000, the CBO says.

The ultimate question is: How much government do we want? Most Americans aren’t prepared to answer that. The budget deficits exist because popular opinion is a muddle of mixed views. Opinion polls show strong support for greater spending on schools, drug enforcement and the environment. Yet there is no longer (as there was in 1980) a consensus to raise military spending. Neither, though, is there one for the sharp cuts that Jackson proposes.

The debate over government cannot be delayed forever, and Jackson will play a role. He has shown himself to be patient and persistent. In these respects he’s like Reagan. Indeed, these men--dissimilar in views but similar in political temperaments--may define the debate’s limits. Reagan would freeze government. His influence will endure after he leaves office. Jackson thinks that government must be used aggressively for national improvement. His budget plan is no mere campaign paper. It is more of a personal manifesto.