WHERE THE CANDIDATES STAND ON / The Deficit

Background: With this year’s shortfall projected at a record $400 billion, the skyrocketing federal deficit is taking on even more force as a political issue. Experts agree that the staggering debt is hurting the nation’s competitiveness in the world because it soaks up money that might otherwise go toward productive investments, such as education and rebuilding infrastructure.

President Bush has proposed a freeze on total domestic discretionary spending, elimination of 246 government programs, a $50-billion reduction in defense spending by 1997, reforms that would reduce entitlement spending by almost $35 billion by 1997 and caps on entitlement growth. Bush asserts that his proposals, including those aimed at stimulating economic growth, would reduce federal deficits from the 5.6% of gross domestic product projected for next year to 2.4% in 1997.

Patrick J. Buchanan contends that the President has the power of a line-item veto and that he would use it. He also says he would freeze all discretionary federal spending, exempting only cost-of-living increases for Social Security recipients. He would put a moratorium on new government regulations and consider repealing some existing ones. Buchanan also would cut the capital gains tax and reduce taxes on the middle class. Although many economists say tax cuts would increase the deficit, Buchanan and others say it would reduce the shortfall by spurring economic growth.

Bill Clinton says he would reduce bureaucratic overhead through yearly 3% cuts in federal administrative costs. His budget plan includes allowing programs that are deemed “consumption” to grow no faster than the nation’s personal income. That way, he argues, the budget could not grow faster than the typical American’s paycheck.

Edmund G. (Jerry) Brown Jr. proposes a 50% reduction in defense spending over the next five years. He also says he could reduce the deficit with tax and trade reforms aimed at increasing productivity and creating high-wage jobs.