A Mixed Bag The President's New And Improved Plan To Balance The Budget Is Not Enough Of Either.

Posted: December 10, 1995

Huffing and puffing, President Clinton has released his latest plan to balance the budget bye and bye. There's less to it than he and his spin machine would have you believe.

Under the Clinton plan, the deficit - which drains money away from private investment and passes the burden to future generations - would decline over the next two years by only $6 billion. At this rate of nibbling, it would take 55 years to get rid of the deficit.

But the Clinton plan shows a balanced budget in seven years by claiming that deficit-cutting will magically accelerate in 2001 and 2002 - a pretense that's in the Republican plan as well. If he and Congress were serious, they'd concentrate on slaying the deficit in the here and now.

The most glaring problem with the President's plan is that it relies on his budget office's economic assumptions, even though he and the Republicans agreed last month to let the nonpartisan Congressional Budget Office (CBO) keep score. By using his more-optimistic numbers, Mr. Clinton gets to look like a budget-balancer even though he's proposing only about half as much deficit-cutting as the Republicans want.

This prompted one of the economists in the House, Majority Leader Dick Armey (R., Texas), to say: "If you bring the smoke and we bring the mirrors, we can make this deficit disappear." After 15 years of broken promises on deficits, CBO's conservative assumptions are the better foundation for attacking the problem.

Tomorrow, CBO will update its forecast, presumably narrowing its disagreement with White House bean counters. Given those newer numbers, Mr. Clinton will owe Congress and the country an explanation of how he would balance the budget.

Mr. Clinton is rightly resisting harsh GOP cuts in the tax credit for the working poor, welfare, Medicaid and other safety-net programs. But he is wrong to oppose Republican plans to raise premiums for Medicare - especially for upper-income folks - and he is wrong to resist the GOP's savings on agriculture subsidies.

Even though his latest plan is mostly a rehash, it did include a sensible change in the complex formula used to adjust federal benefits and tax brackets to inflation. Experts generally agree that the formula exaggerates the effect of inflation.

Mr. Clinton's suggestion to reduce the Consumer Price Index by 0.2 percent would save $32 billion over the next seven years. It's a brave idea and it may lead to the larger adjustment that many experts recommend.

The biggest barrier to sensible deficit-cutting is still tax-cut fever. At a cost of $14 billion a year, Mr. Clinton's tax-cut plan seems chintzy compared to the GOP's giveaway. But with the debt barreling past $5 trillion, tax cuts are simply idiotic.

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