Why No Outrage?

Who would have guessed eight years ago that Ronald Reagan would submit his final federal budget on Monday with the “good news” that the proposed budget deficit for the coming year would be only $92.5 billion? Or that the new deficit figure would be the smallest of all the eight deficits generated by the Reagan Administration? Or that the federal debt would grow by nearly $1.5 trillion during the Reagan years, more than all the previous debt compiled by Reagan’s 39 predecessors?

Still, the Reagan budget was greeted on Capitol Hill with yawns. Nothing new, said some members of Congress. Irrelevant, said others, looking forward to President-elect George Bush’s own proposals.

Yawns for a budget deficit of nearly $100 billion in the absence of war or recession? Where is the outrage? It is outrageous that a $92.5-billion deficit can be considered business as usual. But even the $92.5-billion figure is a sham. The budget is based on overly optimistic economic forecasts and on the assumption that Congress will go along with spending cuts and federal asset sales that it has rejected repeatedly in the past.

Moreover, the real deficit for the coming budget year is closer to $140 billion because of a bookkeeping gimmick: The budget counts about $50 billion in temporary surplus Social Security trust-fund revenues against the deficit. These are tax receipts collected now to be set aside to meet the growing demand for Social Security benefits in the next century.

That still is not the full story. The debt does not go away each year. It piles up, and the federal government must pay interest on it. Annual debt interest has risen during the Reagan years from $69 billion to $170 billion. Counting this increased debt financing, the real cost of the deficit legacy of the 1980s is close to $250 billion for the new budget year alone.

Reagan is not alone in this deficit deception. Congress has been a co-conspirator by going along with the Social Security gimmick and refusing to be first in proposing the tax increase needed to make a significant dent in the deficit.

In his budget message on Monday, Reagan took credit for fostering the greatest peacetime economic expansion in U.S. history. Of course, it is an expansion built in large part on the quicksand of federal deficits. He said that the nation could wean itself from deficit financing without new taxes if only Congress would give him the necessary budget reforms. But no reforms are needed to produce a balanced budget. All it takes is plain old- fashioned budgeting in which spending is made to equal revenue, or vice versa. The nation establishes spending priorities and then pays for them.

First, however, Washington needs to hear a little outrage.