Budget Spin Won’t Make It to Parking Lot : Clinton’s cuts are illusory. Will new taxes and spending halt the country’s economic upswing?

Government predictions are like the double dip on a soft ice-cream cone. The butterscotch glaze looks solid enough when you buy it, but it comes apart when you bite it. By the time you leave the Dairy Queen parking lot, the thin crust is only a memory, the ice cream underneath is melting and soon you have a mess. President Clinton’s fiscal 1995 budget numbers are similar: a candy coating on $1.5 trillion of stickiness.

Clinton served up a deluxe scoop of spin. He let it leak that this was a “bare-bones” budget, axing 115 programs and reducing 300 more. Cuts in subsidies to diverse constituencies--mass transit, agribusiness, defense contractors--made it look as if everyone was feeling pain. The Pavlovian yelps of the special interests helped Clinton look tough, enabling him to get maximum credit for a minimum amount of actual chopping.

Of course, programs with truly powerful patrons got second helpings of federal money. Some budget winners were predictable: Clinton’s friends at the National Education Assn. will help Uncle Sam spend another $3 billion for schools next year. Other increases were tributes to business-as-usual in Washington. Clinton proposed increased spending for the National Board for the Promotion of Rifle Practice, the NRA’s pet federal program.

Clinton arrived at his impressive-sounding total of 115 program eliminations by itemizing even the dinkiest deletions. Thus he got a mention in news accounts for killing $140,000 for shark research, which is the amount that the federal government spends every three seconds. Overall, the $3 billion in cuts that Clinton trumpeted come to just 0.2% of the budget.

In fact, all of Clinton’s austerity occurs within the one-third of “discretionary” spending. Automatic entitlements account for half of the budget, and here Clinton proposed no reductions at all, letting them continue to rise. While Clinton takes credit for fiddling with funding for oilseed and job training, the bulk of the budget was left untended.

Clinton’s numbers only seemed solid when they were released on Monday, but by Tuesday they were already bleeding. Congressional Budget Office Director Robert Reischauer declared that the cost of the President’s health plan should count “on budget,” and that it would amount to $132 billion more than the Administration esti mated. Stumping in Louisiana, Clinton dismissed these unhelpful CBO findings as “a Washington policy-wonk deal,” adding that “no serious person out here in the real world” will worry about the CBO’s findings. Yet any President’s budget is a dependent variable, hanging on the reality of the macroeconomy.

Five years ago, President Bush said that thanks to his “realistic plan,” the deficit would shrink to $98 billion. He was off by 124%. In “the real world,” inflation, unemployment and 96-point drops in the stock market mean far more to the deficit than presidential assurances. The Cato Institute found that the deficit projections of the last four Presidents have been off by an average of 1% of gross domestic product. If 1994 holds to the pattern, then Clinton’s deficit will be some $60 billion higher than the $176 billion he’s aiming for.

Leon Panetta, director of the Office of Management and Budget, conceded this week that no forecast could be precise in this swirling world: “The fundamental test of a budget is whether or not it is working in the economy.” If our crystal ball is perpetually cloudy, then what do we do? We should pay less attention to charts and graphs and more attention to the fundamentals of economic growth.

So far, at least, Clinton policy has not made a dent in the upward trend of the U.S. economy. By leaving well enough alone, Clinton will rightfully benefit from relative peace and prosperity around the planet. The great engine of that prosperity is world trade. Since World War II, presidents of both parties have expanded commerce through the General Agreement on Tariffs and Trade. This 80% reduction in the tax on trade has made us all better off. U.S. exports, for example, have more than doubled in the past decade. Clinton has helped by pushing the North American Free Trade Agreement and the latest round of GATT.

But what will be the impact of more taxes, regulation and unchecked entitlement spending here at home? The strong performance of the economy in recent months offers hope that we can weather another squall of domestic government activism. But the fate of Clintonomics--including the deficit--will be determined by what happens in “the real world,” for the rest of this year and the rest of this decade.