An Actual Plan, Even if Details Are Sparse : Congress gets its first budget-balancing measures in years

For the first time in years, a plan to balance the federal budget is actually before Congress. It’s far from perfect--indeed, the GOP proposal is short on some key details. Nevertheless, Senate and House Republicans have presented an unprecedented framework to eliminate the deficit by the year 2002. Their deficit-cutting message is clear: no pain, no gain.

The GOP had been properly criticized for its lack of specificity on deficit reduction. But the plan set forth Tuesday by Sen. Pete V. Domenici (R-N.M.), chairman of the Senate Budget Committee, and a parallel measure introduced Wednesday by Rep. John R. Kasich (R-Ohio), chairman of the House Budget Committee, spell out how to downsize government. The plans differ in significant ways, however. The Domenici plan calls for $961 billion in cuts over the seven years; the Kasich figure is $1.4 trillion. Both include adjustments in politically sacrosanct Social Security and Medicare.

We like the direction of Domenici’s plan more. That plan seeks no tax cut, while the House proposal would slash $350 billion over seven years. The House would scale back cost-of-living increases for Social Security recipients and beneficiaries of other federal pensions. The Senate proposes limiting cost-of-living increases too, but by a lesser degree. Domenici would leave defense spending and the school lunch program as they are. The Senate Republicans want to eliminate the Commerce Department as well as 100 federal agencies, programs and commissions. To erase the deficit by 2002, a saving of $961 billion is needed, and that cannot be achieved without slowing the growth in Medicare and Medicaid and shoving some responsibilities to states. Many of the cuts would hit the poor the hardest.

The plans are merely the first round of what undoubtedly will be a huge and long budget fight. The Clinton Administration’s initial attack zeroed in on Republican proposals for changes in Medicare. To reject any possible change in the health program for the elderly is unrealistic because Medicare accounts for a significant part of the budget. To the extent that there is bipartisan consensus that deficit reduction should be the nation’s No. 1 priority, President Clinton and the Democrats ought to present deficit reduction plans too.

Poll after poll shows that Americans see deficit reduction as more important than tax cuts. But a new poll shows that when it comes down to choosing between deficit cutting and keeping Medicare as is, Americans choose the latter.

Implementation of a credible U.S. deficit reduction plan would have a positive effect on the economy. It would help to stabilize and bring down interest rates, which would help businesses and consumers alike. The benefit of lower interest rates for the federal government alone would be small initially but could amount to $155 billion on government bonds over the seven years.

Under the Senate plan, the money no longer needed to pay down the debt could be diverted to job-generating investments. Maybe then Americans could save and invest more. The Republican plans must be scrutinized carefully, and their potential impact on California assessed. Deficit reduction is vital to ensuring a healthier U.S. economy for our children and our children’s children.

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On the Table

Yearly deficit reduction, in billions of dollars, as proposed by Senate Republicans.

1996: $39.3

1997: $85.3

1998: $111.6

1999: $138.1

2000: $163

2001: $194.9

2002: $228.9

Grand total: $961 billion, resulting from $806 billion produced by policy changes and $155 billion produced by reductions in interest payments.

Source: Senate Budget Committee