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Insists He Can Eliminate Deficit : Simon Attacks Those Who Question Audacious Goals

November 27, 1987|JAMES RISEN | Times Staff Writer

INDIANOLA, Iowa — Illinois Sen. Paul Simon has begun to attack head-on the mounting charges, both in the media and from his rivals in the Democratic presidential race, that he is a budget-busting big spender who is offering unrealistic, New Deal-style proposals in order to attract liberal voters in Iowa and elsewhere.

Simon, who has emerged as the front-runner in Iowa in several polls, has pledged nothing less than the elimination of the massive federal deficit within three years. At the same time he has vowed to initiate a big new social agenda, including a new $8-billion jobs program, greater spending on education, and the introduction of new long-term health care benefits, especially for the elderly.

"Some people say if you have an economic agenda that requires balancing the budget, you can't have a social agenda," Simon told a large audience crowded into a cafe in this farming town south of Des Moines earlier this week.

"I would argue precisely the opposite, that those who say we can continue to indefinitely borrow from our children and grandchildren and generations to come in fact are eroding our ability to do what we ought to do in education, in health care, and in other things.

"Some people say when I talk about this combination that they are in conflict," Simon added. "I'm going to have to gradually persuade my opponents and my friends in the media that they are not in conflict."

Simon's aggressive new strategy follows a period in which other Democratic presidential candidates, along with reporters in the national press, were starting to put him on the defensive by questioning Simon's ambitious economic proposals.

Voters here were also starting to wonder how Simon could meet such audacious goals, at a time when virtually every other candidate has been emphasizing the need for sacrifice and austerity.

"All the things you say are fine, but how can you do anything until we get the deficit down?" asked one woman during a Simon "town meeting" in Osceola, Iowa.

Simon now offers an answer at virtually every campaign stop. First, he points out to voters here that he is a member of the Senate Budget Committee, and so is familiar with the arithmetic of the deficit. "I've dealt with the budget more than any candidate in either political party. . . . I think I know what I'm talking about."

Focuses on 1992 Deficit

Then, he insists that the deficit, projected by the Office of Management and Budget to be $91 billion by fiscal 1992--his third year in office--can be eliminated through a combination of measures.

He calls for cuts in defense spending of between $10 billion and $20 billion from the current projected level of spending for fiscal 1992, by expanding the use of competitive bidding and other procurement reforms, and by canceling some major weapons systems, such as the B-1 bomber and the MX missile.

In addition, he says he believes the nation's unemployment rate could be reduced by at least 1.5%, reducing the deficit by $45 billion, by his third year in office through stimulative measures, including a push to increase American exports by pressuring other nations to eliminate trade barriers. He also would propose new regulations to slow down the pace of business mergers, which can eliminate jobs when firms are restructured.

"Every 1% you reduce unemployment, you reduce the deficit $30 billion," he told his audiences across the state this week. "A 1 1/2% reduction, and I think that is a conservative estimate of what could be achieved, gives us $45 billion toward that deficit."

2% Interest Payment Cut

He also insists that interest rates can be reduced by 1% to 2%, thereby reducing interest payments on the federal debt by about $30 billion by the third year in a Simon presidency.

His proposals here are somewhat vague, however. Simon believes that prudent monetary policy, along with a display of "presidential leadership"--showing the financial community he can move on the deficit--will lead to a gradual easing of credit and a lowering of interest rates.

"I think (if) a President takes charge, (and) moves on our economic problems, and doesn't have monetary policy and fiscal policy in conflict, you're going to see interest rates drop," Simon said.

Finally, he says he would support higher taxes to balance the budget as a "last resort," if his other measures don't work.

Meanwhile, Simon stresses that his social programs would not bust the budget, and in fact could be funded mainly through reallocations of existing revenues. The cost of his jobs program, which would provide minimum-wage public works jobs to lower-income workers unemployed for at least five weeks, would be capped at $8 billion annually.

Self-Financed Health Care

Simon also would propose just $2 billion or $3 billion more in education spending, and he would not support a long-term health care program unless it were self-financed, with its own taxing mechanism.

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