Budget Cuts: Let The Voters Decide

President Clinton has now met congressional Republicans more than halfway. He has agreed to a seven-year timeline to a balanced budget as well as significant cuts in social outlays. He has even accepted the Congressional Budget Office's economic assumptions, with his own budget analysts at the Office of Management & Budget acting merely as consultants.

However, the two parties remain far apart on the details of how to achieve the cuts. The GOP wants much steeper reductions in Medicare, Medicaid, income support, and education funding as well as fundamental changes in the structure of entitlements. Republicans also want larger tax cuts, with the biggest breaks tilted toward the upper brackets--making balancing the budget that much more difficult. Based on the latest economic forecasts, there is about a $300 billion to $350 billion gap between the Clinton budget plan of Dec. 7 and the Republican plan that the President vetoed. The Republicans seem willing to accept little more than total surrender on Clinton's part.

BALANCING ACT. There's an outside chance that the two parties will be able to reach agreement before Christmas. If not, the government will lurch from one short-term funding crisis to another. Yet there is a sensible alternative, one that makes more sense with each passing day: The President and the Republican Congress should agree to a one-year budget deal to keep the government running for fiscal year 1996 and leave the details of the six remaining years to voters.

After all, both parties now support the same fiscal goal of a balanced federal budget by 2002. But there are fundamental ideological differences over which path to pursue. Republicans have interpreted their narrow 1994 congressional win as a mandate for sweeping change. Yet as voters have become more familiar with the details of the Republican contract, support for it has plummeted in the polls.

American voters evidently do not want sweeping changes in Medicare and Medicaid and major cuts in education aid. Surprisingly, most voters would even give up a tax cut in order to achieve a balanced budget. As we head into an election year, it makes far more sense to spend 1996 debating the two competing paths toward budget balance rather than either careening from one stopgap crisis to another or locking in a seven-year deal.

The longer the clock runs without a seven-year accord, the greater the likelihood that Congress will back into a one-year deal. Because the Republican plan defers the harshest cuts until the last two years of the seven-year plan, Clinton can embrace nearly all of their 1996 cuts without sacrificing much. It would be sensible for him to do just that--and take the more fundamental questions to the voters. Clinton has already signed appropriations bills representing 64% of 1996 discretionary spending. So a big part of a one-year deal has already been accomplished.

PARTY DISCIPLINE. This year's budget debate is the most consequential change in the federal role in more than 60 years. Perhaps a massive federal retrenchment is what the voters truly want. Perhaps not. But with the executive branch controlled by one party and Congress in the hands of another, the presumed mandate for such sweeping revision is in doubt. Therefore each party should take its brand of budget reform to the country, and the 1996 election should serve as a popular referendum.

More than any election in recent memory, the midterm election of 1994 "nationalized" American politics. Republicans offered a coherent party program, with Newt Gingrich's Contract With America the manifesto. The result was almost parliamentary--a degree of party discipline seldom seen in U.S. politics. In 1996, the other shoe will drop. We can expect the two parties to campaign on radically different approaches to the role of government in American life and on the route to fiscal discipline.

As the 1996 election draws nearer, the "mandate" of 1994 recedes. It is presumptuous, in an election year and with a divided government, to lock in a seven-year budget. The framers of the Constitution deliberately devised restraints on the passions of temporary majorities. We shall find out next November whether Gingrich's mandate is transient or durable.

By far the best outcome would be a clean election win for one party or the other. The voters could then hold the governing party accountable for the results. With divided government, we have the worst of both worlds--interminable wrangling, passing of blame, and escalating voter cynicism. And if voters give us divided government for the rest of the decade, God save the Republic.

Before it's here, it's on the Bloomberg Terminal.