Wish List Budget

In proposing his eighth and his last annual budget, President Clinton seems to have a federal spending initiative for most problems, from tasteless food to bad weather. Most will, and should, fall victim to deliberations in Congress. But to the extent the budget addresses the country’s significant long-term goals--funding Medicare and paying down debt--it is on the right track.

The $1.84-trillion budget has all the hallmarks of an election-year document, putting numbers to the host of programs Clinton mentioned in his State of the Union speech. But it does not signal, as congressional Republicans would have it, a return to big government, and government spending as a percentage of gross domestic product would continue to shrink. Moreover, it restores some credibility to the annual budget process by removing the gimmicks Congress resorted to in the current fiscal year in order to meet unrealistic spending limits.

Clinton’s fiscal 2001 budget proposal rightly acknowledges that the 1997 spending caps, which have been breached in all subsequent budgets, were never realistic and should not be used in future budgeting. Instead, it takes current fiscal year spending as the base and adds roughly the rate of inflation to projected spending for the next decade. That’s significant because the new projections shrink the estimated non-Social Security budget surplus from $1.9 trillion--the amount Republican presidential front-runner George W. Bush would like to give away in tax cuts--down to $746 billion.

Even the lower surplus figure is a projection that will materialize only if some daring assumptions come true. For example, the economy will have to grow on average by close to 2.8% for the next 10 years. Spending too will have to be held steady. Bush may be wrong about his huge tax cut, but he is right in saying that Washington’s spending will always rise to the level of revenues.

Clinton’s plan follows the fiscally responsible line of calling for current Social Security surpluses to be used to pay down the $2.5-trillion national debt. It would also put $299 billion of the $746-billion non-Social Security surplus into a fund to extend the solvency of Medicare to at least 2020. Some form of prescription drug benefit for Medicare recipients is probably inevitable, and, considering the importance now of drug therapy, rightly so.

Where Clinton’s budget is less prudent is in proposing a $350-billion, 10-year tax cut and in adding tens of billions of dollars in new spending programs whose financing depends on new taxes. Clinton’s plan proposes to raise as much as $181 billion over 10 years by levying a new federal cigarette tax and closing some corporate tax loopholes. Congress has already rejected most of the tax increases, and it is unlikely to change its mind, especially in a presidential election year.