For most Americans, the national debt is as abstract as the numbers that measure it--currently about $3,000,000,000,000, as in trillion. For all its damaging effect on economic growth, the national debt seems far less menacing than an outbreak of measles on campus or the radiator grill of an 18-wheeler looming in the rear-view mirror.
Getting Washington to focus again on the debt is only one reason to cheer Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, for his bold plan to slash the federal budget deficit. A second good reason is that his proposal is a reminder that the burden of cutting the deficit would not be excessive for any Americans--taxpayers, pensioners or others who depend on the government for help. Rostenkowski's plan also is a reminder of how relatively easy it would have been if Washington had faced up to the problem nearly a decade ago when the debt was under $1 trillion.
The pattern of damage is the same now as it was then, although the damage itself is more extensive. The debt makes the U.S. Treasury dependent for operating expenses on its creditors, foreign and domestic. The more than $150 billion a year of the annual budget that vanishes into interest payments means that there is much less money in circulation for private investment and, in turn, economic expansion and job creation. This debt is of increasing consequence as the economy slows down because it severely cuts the nation's ability to bail itself out of a serious recession.
Rostenkowski's plan would not wipe out the national debt but would keep it from growing after 1994 because it would shrink the deficit from the current $166 billion to zero.
Where would the money come from? A one-year freeze on cost-of-living increases in all federal programs would cut the deficit by $9 billion the first year. Higher taxes on oil, tobacco, alcohol and industrial pollutants would cut it another $20 billion. Cutting the Pentagon budget by 3% a year would convert another $10 billion from red ink to black. Families with incomes above $185,000 a year, who now pay income taxes at a 28% rate, would pay the same 33% that families with smaller incomes pay. That would shrink the deficit by $4 billion the first year and $11 billion the last year.
Freezes in federal programs have the same effect on Democrats that higher taxes have on Republicans--like the sound of chalk screeching across a blackboard. Yet the White House and some Republican leaders in Congress resisted any temptation to attack the plan Monday. That, plus renewed attention to the deficit, is an improvement over recent behavior on all sides.