Solvent - but not yet

PRESIDENT Clinton's recent budget, like his campaign for re-election, is a supple deceit. The rhetoric is solidly Republican, the actions quintessential Clinton. Some modest targeted cuts in capital-gains taxes and reductions in Medicare spending offer a sop to the Republicans that they seem willing to grab -- even though the overall budget is a warmed-over version of last year's offer that the Republicans rejected, with spending increased to $1.7 trillion.

The President promises a balanced budget by 2002. Even if that goal could be achieved, it would be a hollow accomplishment unless it reined in the growth of spending permanently. But the budget doesn't even pretend to do that. It will be in deficit after 2002, and the deficit will rise year after year to record peacetime levels unless much more is done about entitlements. Yet the President, his budget director, and Congress all know that the problem is long-term fiscal discipline -- something the President has made no move toward. Indeed, the initiatives he proposes include a new entitlement that would worsen the problem.

Many of the President's proposals are the kind of gimmickry that gives Washington a bad name. Since a Congress cannot bind its successors, the Congress elected last year will approve only the 1998 and 1999 budgets. Deficit reductions that the President proposes for later years are a cynical wish list -- not really wished at all. Planned reductions will not begin until 2000; half the reduction comes in 2002; and the deficit will be larger in 1999 than in 1996.

The big spending programs are barely touched. Indeed, spending grows by $250 billion in the next four years -- about $1,000 per capita. Part of the increase goes for new programs to subsidize housing, reward the teachers' lobby, and create a new entitlement for two years of college education for families with up to $100,000 in annual income. But the President also blows past Social Security as if there were no problem. He proposes $10 billion of new health-care spending to cover new groups and new free services for current beneficiaries.

The main reduction is a proposal to put tighter price controls on doctors and hospitals. Although everyone would like to see lower health-care costs, price controls are not the way to get there. They sacrifice the long-term quality of health care by pretending that the nation can get more and better service while paying less. The result will be more waiting and poorer service. But this reduction in quality won't be noticeable right away. President Clinton leaves this problem, too, for his successors.

Otherwise, the promised deficit reduction is achieved mainly by selling assets, abruptly ending some government programs in the annus mirabilis of 2002, and ending some subsidies and tax benefits for business.

The Republican leadership has apparently decided to act as if the President's proposals made a responsible start on a plan for fiscal balance. The Congressional reformers, elected in 1994 and re-elected last year, have lost both their courage and their way. If the President gives them a modest capital-gains tax cut, they appear ready to sign on and rush home to crow about their achievement. They may even wink at $1.5 billion for the United Nations, the World Bank, and the International Monetary Fund.

Once again, Bill Clinton seems to have taken the Republicans' measure. A Congress that came to power promising to close the Departments of Education and Commerce is now ready to vote big increases in the budgets for those departments, including new programs to send more half-educated students to the college of their choice.

This budget was drafted by a President who believes that you can fool most of the people most of the time. Will the Republicans help prove him right?

COPYRIGHT 1997 National Review, Inc.
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