PERSPECTIVE ON THE BUDGET : Clinton Drops the Ball on Deficit : The President retreats from any long-term strategy to keep a lid on spending and dooms future generations.

Two facts must be remembered in appraising what President Clinton did--and did not do--with his third budget. The first is that in 1993, as a newly elected President, Clinton submitted the most serious deficit-cutting plan in over a decade. He fought for seven months to get it passed, and it became law over the opposition of every single Republican member of the House and Senate. The second fact is that in November of 1994, largely because of that issue, three dozen Democrats were defeated for reelection and not a single Republican incumbent lost.

When Republicans complain, as they did last week, that the President has lost his courage and abandoned the fight for lower deficits, they are right. But they are in no position to point the finger.

In 1993, they condemned Clinton’s budget plan and asserted that the modest upper-income tax hikes included in it would bring about a recession. They were wrong. The budget has contributed significantly to making this one of the longest and most job-producing, inflation-free periods of economic growth since the 1960s.

Despite that, Republican candidates in 1994 again demagogued against the tax increases--and won. They now control Congress, but they are not even proposing to roll back the increase in the top marginal tax rate. Instead, they suggest giving the needy rich a capital-gains cut, whose budgetary costs would not show up for quite a while.

This is, to put it gently, not exactly a principled record or platform from which to condemn the President for fiscal cowardice. And yet he deserves the criticism, for he largely has abandoned the good fight he began. What the President has done in this budget may be a smart political tactic for the 1996 campaign, but it is a failure of leadership.

At a time when a vote or two in the Senate may decide the fate of the balanced-budget amendment to the Constitution, Clinton has undercut the principled opposition to that imprudent measure by failing to provide even a hint of a long-term plan for stopping the red ink. Instead, his budget projects a string of $200 billion-a-year deficits.

Clinton has given up, for now, the effort to curb the health-care entitlements that are pushing federal spending out of sight. White House officials say they will discuss Medicare and Medicaid cuts if Republicans want to talk about health reform. But the President, having been burned before, will not touch them on his own.

The failure damages Clinton’s own policy goals and does worse to future generations.

In the current budget year, Clinton secured a $10-billion increase in what he regards as a vital investment--education, training, employment and social services. In the next five years, his budget for these purposes does not even keep up with inflation. The same is true for science and technology, the environment and transportation. He is sacrificing all the things that could build a better future because of his political reluctance to touch the big entitlements programs.

Worse, Clinton has joined predecessor GOP presidents in robbing the future to pay for the present. By his own estimates, the total federal debt will grow from $4.35 trillion in the last year George Bush was President to $5.65 trillion in the final year of Clinton’s term.

Under Bush, the debt increased $371 billion a year. Clinton’s projected average is slightly better--$326 billion. Ronald Reagan, blamed by Democrats for starting the fiscal blowout, averaged “only” $234 billion a year of red ink.

Vice President Al Gore makes the argument that if it weren’t for the interest bill on the debt accumulated during the 12 Republican years, Clinton’s new budget would be in balance. Too bad he didn’t explain the law of compound interest to the President. Because of the debt Clinton is adding, the annual net interest is projected to climb from $198 billion in 1993 to $270 billion in 1997--when it will, for the first time, be larger than the projected defense budget.

And, Democratic claims to the contrary, the projected ratio of the national debt to the size of the economy will be 3 percentage points higher at the end of Clinton’s term than at the beginning, and will be the highest in more than 40 years. So much for the White House boast that the budget is “under control.”

The worst of it is that this decade represents the last, best chance to achieve real fiscal discipline. After the year 2000, as budget director Alice Rivlin knows better than anyone, powerful demographic forces unleashed by the retirement of the baby-boom generation will exhaust first the Medicare and then the Social Security trust fund.

The President knows it too. But, in his present funk, he’s going to let the Republicans worry about that problem as well. To call this shortsighted would be kind.