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The Nation | Taxes

Amid a Mock Debate, Opportunity Is Lost

July 18, 1999|Robert L. Borosage | Robert L. Borosage is co-director of the Campaign for America's Future and an adjunct professor at American University School of Law

Washington shimmers with possibility. Surpluses as far as the eye can see. A public that favors spending on health care, Social Security, education and poverty over tax cuts. Two parties with opposing positions. So will we finally have a broad debate about national direction? Not likely. Instead, Washington's summer fare offers a political farce featuring false choices built on fraudulent assumptions. And the best opportunity in 30 years to offer a hand up to the most vulnerable is likely to be squandered.

This year's budget debate is driven by $2.6 trillion in surpluses now projected over the next 10 years. Both Democrats and Republicans solemnly pledge to lock the $1.6 trillion that comes from Social Security taxes away, using it only to "save Social Security" by paying down the national debt.

The fight is over the remaining $1-trillion surplus. Republicans, no surprise, want to use it to pay for tax cuts that will primarily benefit those who are already thriving. President Bill Clinton wants to devote some to Medicare, some to a targeted tax cut to spur retirement savings among middle- and low-income workers and some for a new "children's and education trust fund." The contrasting position share one trait: They are equally disingenuous.

Both are premised on that $1-trillion non-Social Security surplus. Put aside the fact that the figure comes from a guess about economic growth over the next decade that is surely wrong. The real fraud is in the political assumptions, not the economic projections. The surplus is based on the assumption that Congress will abide by the limits it put on federal spending in the 1997 agreement to balance the budget.

That act came from a deal cut between Clinton and then House Speaker Newt Gingrich, still in the flush of power. Congressional Republicans demanded a plan to balance the budget while cutting taxes. Democrats wouldn't allow reductions in Social Security. The two leaders agreed to take a chunk out of Medicare--a bite that even Republicans now say was too harsh--but that wasn't nearly enough. No one wanted to fess up to what programs would be gutted so instead they promised to cut a category, "discretionary spending"--essentially everything the government does other than entitlements like Social Security and Medicare. And they agreed to defer the pain: The deep cuts were put off until 2000, 2001 and 2002.

The $1-billion "on budget" surplus is based on those cuts being enforced and then sustained for the next 10 years. It assumes that federal spending will be cut by about 20% in real terms over the next few years. Forget about new investments in housing or health care. If federal spending were simply to stay at current levels, adjusted for inflation, three-fourths of the projected surplus evaporates. And the commitment to increase defense spending would consume all of what's left.

Since many Americans assume that government wastes about half their tax dollars, making such cuts might seem simple. But in fact, even conservative GOP appropriators report they can't stomach the reductions needed for next year, much less the far more severe ones scheduled in the years to come.

Moreover, the pain won't be shared evenly. The most powerful lobbies will protect their programs; the weakest will take a bigger hit. Both the president and Republican leaders have pledged to increase defense spending by some $200 billion over the next 10 years. Spending on roads and airports is going up. Both parties are pledged to boost education funding. Neither will cut veteran's programs significantly nor touch the cost of administering Social Security.

That's about 60% of the discretionary budget, which means the remaining programs will face cuts of 30% or more. Will Congress fire a third of the FBI agents? Will it slash funding for Head Start by half, even as poor mothers are pushed into low-wage jobs? Will it end support for housing, even as the working poor struggle with soaring rents? Will it slash spending on clean water by 75%? Will it cut funding for cancer research by half?

The GOP plan is premised on slashing spending on the environment, health care and the poor in order to pay for tax cuts for the rich. Voters rejected this when Gingrich shut down the government over it in 1995. The president's "new investment agenda" also assumes the same discretionary cuts, so his trust fund for children's programs only serves to insulate them from the general carnage.

In reality, everyone knows that program cuts that deep aren't going to happen. Never have; never will and shouldn't--particularly in a time of prosperity. So both sides are presenting programs based on an assumption they know to be untrue.

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