Commentary: The Budget: It's Where You Chop That Matters

Washington pols have faced the fiercest budget-busting beast in their domain--and blinked. Despite election-year vows to end the deficit, it's now clear that neither the Republicans nor President Clinton have the will to confront the only solution that will get them there: curbing the explosive growth of Medicare, Medicaid, and Social Security.

The President's fiscal 1997 budget, released on Mar. 19, would trim the growth of Medicare spending by about $124 billion over seven years. But that is little more than cosmetic surgery to a program that would cost $1.8 trillion through 2002. With Election Day looming, Clinton wants to have it both ways: He'd like to take credit for balancing the budget while hammering Republicans for "slashing" a program he's too timid to reform himself.

These days, Republicans aren't doing much better. True, they tried for a year to enact serious changes in Medicare and Medicaid. But bloodied by Clinton's charges that they would gut seniors' benefits, Republicans now want to expand entitlements. In their own election-year pandering, they are proposing to increase benefits for the wealthiest Social Security recipients. The cost: $1 billion a year.

DANGERS. This collective wimp-out will have major consequences. First, the long-term solvency of Social Security and Medicare remains in jeopardy, and the time left to deal with both is shrinking. Second, if big entitlement cuts are out, all the pressure to eliminate the deficit will fall on the rest of government.

Balanced budgets in both the Clinton and GOP plans come largely on the back of "discretionary" spending--those programs that are subject to annual appropriations from Congress. While domestic discretionary spending would account for about 17% of all federal outlays in 2002, it would have to absorb nearly half of all budget savings under the Clinton plan and roughly 40% under the GOP alternative.

Put another way, under the Clinton budget, overall spending in 2002 would be about $300 billion higher than it was last year. Yet a staggering 82% of the increase would come from the Big Three--Social Security, Medicare, and Medicaid. In 2002, spending on the three would be 50% higher than in 1995. Outlays for nearly everything else the government does, from national defense to national parks, would be held at 1995 levels. After inflation, that translates into a drop of more than 20% in purchasing power.

Over the next year or so, Clinton would increase spending modestly for some pet programs, such as education and job training. But as the deficit crunch hits in later years, Americans would face huge cuts in programs they take for granted. Aid for construction of roads, bridges, and public transportation would fall by 11% by 2002. Despite Clinton rhetoric about the federal role in protecting the environment and natural resources, overall spending for those programs would be frozen for seven years. Community development funds would be slashed by 9% next year and by one-third by 2002. The Clinton plan would be a Republican dream. "We'd cut the hell out of domestic spending," says Frank Shafroth, chief lobbyist for the National League of Cities.


JUST WAITING. But that's just the beginning. Because most of the "savings" in both the Clinton and GOP proposals won't take effect until 2000 and beyond, the pols don't have to say precisely where future slashing would be done. The sums are too big to come from trimming waste, fraud, and abuse. Instead, whole programs would have to disappear--the entire Energy Dept., say, or export assistance. "We are waiting until the end for the tough decisions," says Senator Paul Simon (D-Ill.).

Washington's dirty little secret is that neither Democrats nor Republicans have the votes to make these kinds of cuts in government services. So the dismal game continues. The pols don't have the courage to trim entitlements. They propose to slash other spending--later. And while those cuts would be painful for many Americans, they wouldn't balance the budget. What will give? The deficit, of course.

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