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Perot’s Candid, Painful Budget Plan : His attack on the deficit targeted a number of sacred cows

Ross Perot ended his unannounced run for the White House a few weeks before his proposals for cutting the federal budget deficit were ready to be released. But a lot of his ideas had already taken shape, and the details as they emerged this week indicate that in its scope, its departure from conventional political wisdom and, yes, in its gutsiness, the Perot plan would probably have been quite unlike anything any major candidate for President had ever offered.

THE SPECIFICS: Perot’s approach aimed at cutting $700 billion from projected federal spending over the next five years, bringing the deficit down to zero by 1998. For openers, he wanted to hike the federal tax on gasoline in stages by 50 cents a gallon. That would eventually produce more than $50 billion a year in new revenues while still--Americans don’t like to hear this--leaving the U.S. price of gasoline lower than in virtually every other industrialized country.

The Perot plan would also have boosted taxes on alcohol and tobacco, inviting an inevitable fight with two powerful industries that have frequently demonstrated their considerable influence over Congress. The timber lobby would also have been energized by a proposal to raise fees for logging on public lands. Subsidies to well-off farmers would have been cut, and so would the tax deductibility of business entertainment expenses. Even the valuable and near-total protection from foreign competition long enjoyed by the nation’s relative handful of peanut farmers--a true scandal--would have been ended.

The sacred cows of entitlement wouldn’t have been spared. Perot was considering proposals to curb the annual cost-of-living increases that have become virtually automatic for Social Security and other government pension programs. Higher taxes on benefits for Social Security recipients with incomes above $100,000 a year were also being pondered. So were cost-containment measures for Medicare and Medicaid and possible limits on mortgage interest deductions. Just about everyone, in short, would have stood to pay more or have certain benefits curbed under the Perot program. As the stand-up comic said at the end of his show: Is there anyone here I haven’t offended?

The Perot plan was not all take-away. Some positive ideas would have been offered: a lower capital gains tax for long-term investors, an investment tax credit for business, more money spent to repair and improve the nation’s infrastructure. But the emphasis would unapologetically have been on having government spend less and tax more, until the deficit was wiped out.

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THE PROBLEMS: The President proposes but Congress disposes, and it would have been interesting to see how a deficit reduction plan that spread the pain as widely as this one would have fared if Perot had been able to offer it formally as President. How would Congress have responded? In the past it has recoiled in political horror over the prospect of even modestly hiking gasoline taxes or controlling increases in Social Security and Medicare costs or tinkering with allowable home mortgage deductions. Would it have been different under a President Perot? And if Perot’s specific ideas were rejected, what if anything would Congress have offered in their stead to rein in budget deficits?

The Perot proposals may well have been flawed in some of their specifics, and under objective scrutiny some may even have been gauged as more likely to produce economic harm than good. But credit the candor and courage of this non-candidate’s decidedly unpolitical approach to deficit-cutting. Perot was ready to speak the brutal truth. The easy things in deficit reduction have all been done; from here on sacrifices by everyone are unavoidable. Perot’s presumed readiness to say so would have honored his now-abandoned campaign.


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