President Clinton and exhausted Democratic congressional leaders may be breathing a bit easier, in anticipation of final passage of the Administration's battered deficit-reduction package. But what's that sound emanating from the office of Senator Bill Bradley? Sounds a lot like a Bronx cheer.
The New Jersey Democrat, a member of the House-Senate conference committee that struggled to meld competing versions of the Clinton program, says that the exercise fell far short of what was needed to make a big dent in the deficit. In an unusually blunt interview with BUSINESS WEEK Editor-in-Chief Stephen B. Shepard, Washington-based Senior Editor Lee Walczak, and Congressional Correspondent Richard S. Dunham, Bradley had harsh words for his fellow lawmakers and the President. His warning: Because of the plan's shortcomings, "we'll have to come back for more" spending cuts soon.
Q How do you assess the compromise on the Clinton budget?
A I give the Administration credit for backing the biggest deficit-reduction package in years.... [But what emerged] could have been better and should have been bolder.... It's symptomatic of an unwillingness to confront reality. That means that to get what the President wanted, which was more jobs and higher wages, will require some more [cutting]. We're going to be back here for Act II.
Q Democrats control Congress and the White House. Why was this so hard?
A People didn't clearly understand the Clinton economic plan. They focused on deficit reduction, but there was no principle that informed the deficit reduction. Are we cutting the deficit on the basis of income, which implies some kind of means testing? Do we think people above a certain income category should pay more taxes? There's a little bit of both. Do we want the market to allocate resources instead of government? If that's the case, you should eliminate tax and spending subsidies [rather than creating new ones], and we're doing a little bit of both there, too.
Q There sure seemed to be a lot of unseemly dealmaking going on...
A It was like a giant bazaar.... This was not what you'd call a principled debate. I mean, how many head of cattle do you trade for a good horse? That's what this thing was about.
Q Why was Congress so reluctant to enact anything other than a small hike in the gasoline tax? Is the gas tax such a hard sell?
A The reason this can't be sold is that the President said [in the campaign] that he didn't want to do it.... It's a missed opportunity.
Q What else about the budget package particularly disappointed you?
A Not having anything systematic on [curbing] entitlements is a tremendous lost opportunity. You've got to do something directly on entitlements, probably in 1995. Means testing is the way to go in some areas, such as federal pensions. On things like farming, you want to limit subsidies.... And we need the line-item veto.
Q To get back to your idea that additional deficit cuts will be needed, how would President Clinton manage this?
A I think his next deficit-reduction program is going to be his health-care program. And that implies some rather stark actions.
Q The economic plan raises tax rates on the wealthy, mostly under the guise of "fairness." Your view?
A That's not the explanation I would have used. It's not correct to demonize the successful. Because you've done well and earned money doesn't mean that you are guilty of something. It means you worked hard and beat the competition--and were rewarded for it. To say that you got unjust gains in the 1980s, and now we're taking them back, is really shortsighted.
Q But shouldn't the rich pay more?
A They have to be asked to do this as part of a national commitment to deal with the deficit. And how you do it is not by raising rates and putting back loopholes but by limiting the value of deductions--for example, for people who have $500,000 mortages on their homes. But of course, that doesn't serve the [political] purpose. The purpose is to say you socked the rich. But [by hiking rates], the Clinton program risks the following: It will not raise the projected revenue, because the rich will avoid paying taxes through shelters. Therefore, it will not produce the economic bump people think it will.
Q Administration economists lament that the final package doesn't contain full funding for the investment incentives Clinton wanted. Is this justified?
A If you totaled all these things up, from expensing to the capital-gains cut for small business, you'd be under $10 billion. And that is going to make a difference in a $6 trillion economy? Give me a break! That's not even symbolism. It's a total giveaway, a gift to different constituencies. Will it have an impact on the economy? Zero.