The $3-Trillion Monkey

There he goes again--and again and again. In what may be Ronald Reagan’s last press conference as President, he presented a rambling lecture on the federal budget deficit that was virtually identical to those that he used to deliver eight years ago. That was back when David A. Stockman was running his little budget scams that mutated into monster deficits. In effect, Reagan said, don’t blame us for increasing the nation’s debt from just slightly more than $1 trillion in 1981 to the present total that is approaching $3 trillion. It’s those other guys.

The President wove a gossamer tale of spendthrift Congresses and Presidents long past. Hundreds of billions of dollars in tax cuts and increases in defense outlays have nothing to do with it . . . . Just political propaganda . . . . Tax cuts produce more money . . . . Look at what Calvin Coolidge did . . . . We’ll grow out of it . . . . The defense increases were not even up to those proposed by President Carter. The President has spent eight years condemning budget deficits, but acting as if they did not matter.

Perhaps it is harmless that the President seems to have no better understanding of federal finance now than he did when he took office. But he is the one who will submit the next budget, and his policies will be passed along to the new President, George Bush, early in the budget-making process next year. During the campaign, Bush echoed similar fantasies, claiming that the budget could be balanced through a flexible budget freeze, without any news taxes or any cuts in Social Security.

In President Reagan’s budget ramble, he laid much of the blame on Lyndon B. Johnson and his War on Poverty, declaring that from the middle 1960s until Reagan took office the budget increased five times while the deficit soared to 58 times what it had been ($1.6 billion). Reagan over-looked a little spending item called the Vietnam War and the fact that, while Johnson’s five budget deficits totaled $51.8 billion, the red ink for the next five years under Richard M. Nixon rose to more than $77 billion.

The problem with a flexible freeze is that the deficit legacy of the Reagan Administration leaves Bush in a box, with little room for maneuvering. Annual interest on the debt alone is eating up more than $150 billion of the current budget, compared with $69 billion in Reagan’s first year. In spite of what Reagan says, individual income taxes are bringing in far less revenue as a percentage of gross national product than they were at the time of the 1981 tax cuts. Domestic spending already has been squeezed. Entitlements have been off limits so far. And the temporary surplus in the Social Security trust fund makes the deficit look smaller than it really is.

On Jan. 20 Bush will inherit a $3-trillion monkey on his back. One of his first discoveries on taking office should be the limits of a flexible budget freeze in attacking the problem. Then he and Congress can get to work on the deficit with a healthy sense of reality.