Don’t Let Go of the Crown Jewels : The deficit-reduction program was working--stay with that

Tax cuts are scarcely a new idea. Bill Clinton, when running for President, promised some kind of middle-class tax cut (though once in office he tabled the idea, wisely, to focus on deficit reduction). And tax cuts are almost always popular with Republicans, who spotlighted the idea in the so-called “contract with America,” the GOP blueprint issued earlier this year. So it’s no secret why President Clinton is now in such a big rush to be the front runner in the Washington tax-cut race; he fears that the Republicans are stealing the idea he stole from them and he’ll wind up the loser.

His hurried and incomplete proposals for both tax and spending cuts, however, will do little to raise public confidence in the Administration. Clinton has been too quick to bend to the political winds, jeopardizing the credibility of his otherwise prudent economic policy. He zeroed in on deficit reduction early in his Administration, showing leadership, courage and consistency. Now in political anxiousness brought on by the GOP election triumphs, Clinton could very well marginalize his own economic accomplishments.

The spending cuts that the Administration unveiled Monday were an exercise in political expediency and a demonstration of why the public is so cynical. In an effort to add credibility to his five-year, $60-billion middle-class tax-cut plan, disclosed last week, Clinton offered an elaborate briefing on Monday to explain some spending cuts needed to make those tax cuts possible.

His first attack on spending produces only $20 billion in savings and largely involves reconfiguring or selling assets, programs and departments in five agencies. The initial attempt to achieve a leaner government centers on consolidating and/or privatizing some programs. Clinton has proposed selling the government’s Naval Petroleum Reserves, in Elk Hills, Calif. He also wants to turn air traffic control operations over to a federal corporation.

The spending cuts, like the Administration’s tax cuts, raise more questions than they answer. Too many of the cutbacks are unspecified. How much will come from permanent reductions in ongoing government operations? Some savings, such as from the proposed sale of Elk Hills reserves, are mere one-time adjustments. Will safety be compromised if air traffic operations are privatized? Are government-owned corporations viable entities?

And now the public waits. A renewed sense of cynicism creeps in as we watch the tax-cut derby. The President is feeling the pressure. Worse, he is overreacting with a misplaced urgency that could undermine his program--and reelection. This is the time for a clear strategy at the White House instead of shortsighted tactical moves. If that takes time, take it.

It is clearly not in the nation’s long-term interest to rush into a tax cut. The recovering economy does not need the stimulus of a tax cut. Small and efficient government is desirable, but the savings from such a change should be used to pay down the debt.

Deficit reduction is a goal that should not be abandoned. The Administration responds that its new package also permits more deficit reduction, albeit modest. Don’t be so modest. Stay focused on reducing that deficit. The policy was working.

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Fooling With Success? Annual U.S. budget deficit: (in billions) 1990: $221 1991: $269 1992: $290 1993: $255 1994: $203 1995*: $167 * projected Source: U.S Treasury Department