Commentary: The Budget: Clinton Shouldn't Stop The Surgery

Just five years ago, a Democrat who dared send Congress a budget resembling the one President Clinton unveiled on Feb. 6 would have been denounced as a traitor to the party. Clinton's blueprint for fiscal 1996 proposes to kill 130 programs, holds the line on most others, turns over huge chunks of the Great Society to the states, and slashes federal payrolls by 170,000 by next year. On top of that, it would cut taxes by $56 billion through 2000.

While Republicans quickly denounced the President's fiscal plan as a cosmic punt, in some ways it goes way beyond anything that was offered by his GOP predecessors. By freezing all spending except interest payments and entitlements such as Social Security and Medicare, Clinton would put tighter strictures on the "discretionary" portion of the budget than either Presidents Bush or Reagan. For instance, Reagan proposed increasing discretionary spending by 6.7% in 1982, while Clinton would trim such outlays by about 1% in 1996. Many of the Clinton cuts were sought by Reagan and Bush--and rejected by Congressional Republicans and Democrats as being too deep.

DID HE BLINK? But history doesn't hold much interest for Clinton's Republican critics. Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) gripes that "the President took a walk" on tough cuts. His House counterpart, Representative John R. Kasich (R-Ohio), says that Clinton "came eyeball to eyeball with change. And blinked." Even the Senate Budget Committee's ranking Democrat, Nebraska's J. James Exon, grumbles that the budget "falls way short" of fiscal prudence.

Clinton's chief problem is that the fiscal debate has moved so far to the right since the November elections that he looks hopelessly behind the curve. And he surely could have done more. While congressional Republicans talk about balancing the budget in seven years, Clinton would allow the deficit to settle in at about $200 billion a year for the foreseeable future. That's because protected entitlements account for half of all spending and are the fastest-growing portion of the budget. Nearly all of the $73 billion in added spending next year is due to just three programs--Medicare, Medicaid, and Social Security.

The President ducked tougher cuts because his advisers convinced him that the hard choices should be left to the GOP. He figures public fury over specific spending cuts will overwhelm support for the idea of a balanced budget. "It makes sense when you look at recent elections," says Price Waterhouse budget analyst Stanley Collender. "Bush tried to cut the deficit and lost. Clinton cut the deficit and the Democrats got no credit in November. Reagan increased the deficit and won."

In the short run, such maneuvering may pay off. The President can watch the Republicans choke on their incompatible vows to cut taxes, protect Social Security and defense, and balance the budget. Already, the House GOP has been forced to delay a rollout of its own fiscal plan until April. In part, that's because Republicans fear the bloody details would spook senators now debating the Balanced Budget Amendment. But they also are finding $1.5 trillion in spending cuts darned hard to come by.

START TALKING. Ultimately, though, Clinton will have to compromise with the GOP. Budget Director Alice M. Rivlin hints that the White House might be willing to deal with Republicans over deeper spending cuts. The budget, she says, is "the start of a dialogue."

Clinton already has brought the deficit down from $290 billion, or 4.9% of gross domestic product, to $203 billion, or 3.1% of GDP. Now, he ought to be able to wring out an additional $100 billion a year in red ink. He could pull that off by putting together a bipartisan deal on trimming health-care costs. For a President who badly needs to show the public that he can lead, such a strategy might prove smarter than scoring quick political points over the GOP's fiscal agonies.

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