Study Foresees Tough Moves to Balance Budget

The much-ballyhooed proposal for a balanced-budget amendment to the Constitution would require a combination of government spending cuts and tax increases far exceeding anything ever attempted in U.S. history, a study scheduled for release today by the House Budget Committee shows.

Even if Congress and the White House agreed to scrap the space station, the superconducting super collider and the Seawolf submarine project, shut down veterans hospitals and slash or eliminate funding for small business loans, rural housing, mass transit, airports, community development, the arts and maternal health care, they still would be less than halfway to the savings needed in the first year alone, the committee estimates.

To achieve a balanced budget within five years--the goal of the chief proponents--the government would have to reduce spending below current levels by $38 billion the first year, $70 billion the second, $113 billion the third, $173 billion the fourth and $237 billion the fifth year, the study found.

The impact of the cutbacks on government projects, state governments and social service recipients would be staggering, according to some budget experts, and the challenge to Congress to devise a politically acceptable package of spending cuts and tax increases would be daunting.

The House panel’s study shows three ways to get to a zero deficit incrementally. The three approaches would result in spending cuts or tax increases that would total $560 billion over five years. The government also would save $71 billion in interest payments, as the deficit begins to shrink and the government has to borrow less. The committee’s scenarios:

--Option 1 balances the budget solely through spending cuts and reductions in entitlements.

--Option 2 blends two-thirds spending cuts with one-third tax increases to meet the goal.

--Option 3 uses a 50-50 combination of spending cuts and tax increases.