‘Trust Fund’ Plan Designed to Earmark Funds for Deficit

The deficit “trust fund” that President Clinton says he will create today is a device to ensure that government will not fritter away on other purposes the tax revenues and spending savings that the public wants to see used to reduce budget red ink.

Some critics, however, see it as little more than a gimmick.

The fund is supposed to earmark all new tax revenues and part of the spending cuts in the Clinton budget plan, making them unavailable for any other purpose. The idea has been advocated as a means of overcoming the skepticism of some taxpayers about what Washington intends to really do with their money.

“This locks up the savings and throws away the key,” as one Administration official put it.

But the critics--notably including Republicans--say that the funds are co-mingled with general funds and argue that there is nothing to stop officials from undoing the restrictions, as Congress repeatedly has in easing its spending ceilings.

Clinton first embraced the trust fund idea last May in a speech to college students in New York. He called the idea a response to the public’s sense that they have been “deceived.” At the time, Clinton said that he intended the trust to be part of his economic plan.

Tuesday, however, the Administration said that Clinton’s executive order setting up the trust will direct the Treasury to set up a special account for money intended for deficit reduction.