The best thing about President Clinton's budget is that it would slice the famous federal deficit by $500 billion over five years. That's worth doing. But the way things are in Washington, maybe that won't happen.
The toughest part of the deal is raising energy taxes. The House-Senate conference committee might even choke on this when it takes up the budget today. There's some talk of removing new energy taxes entirely and scaling back on the commitment to cut the deficit. Such cowardly downsizing would send precisely the wrong signal worldwide: that America is not, after all, serious about the deficit problem.
Assuming everyone sticks to the $500-billion goal, some form of new energy tax is probably necessary. But there is a $50-billion difference between the House and Senate proposals. Unless that huge disparity is overcome, the committee will have to take the hatchet to other programs--specifically the earned income tax credit for the poor, urban enterprise empowerment zones and Medicare.
The House version will die if, as widely expected, the Administration abandons its politically unpopular BTU energy tax, which would raise $72 billion over five years and include a gasoline tax of 7.5 cents a gallon. Clinton began his retreat from this once the Senate took up the budget.
The Senate plan does provide a beginning framework. But the committee must increase the Senate's proposed 4.3-cent-a-gallon tax on gasoline and other motor fuels and combine it with new levies on home heating oil and possibly utility bills. Such adjustments would raise more revenues than the current Senate plan, which would provide about $22 billion over five years.
With prices at the gasoline pump (adjusted for inflation) at their lowest levels since World War II, a tax of 10 more cents shouldn't be a killer. In California, drivers now pay combined state and federal taxes of 29 cents a gallon. Ross Perot, as a presidential candidate, was advocating a 50-cent-a-gallon tax over five years. And everyone knows that America must more and more think in terms of fuel conservation.
In order to eliminate regional disparities so that Western states are not disproportionately hit by higher gasoline taxes, home heating oil must be subject to similar taxes. That would be only fair.
The energy taxes are the most delicate proposition for the Senate-House committee because they are the only new taxes that affect middle-class and working families. But a new energy tax, constructed justly and carefully, is a relatively small price to pay for true deficit cutting.