In this regard, the full-throated, anti-tax cries emanating from the Republican Party (GOP) amount to no more than deceptive gibberish. Indeed, if Rep. Newt Gingrich, R-Ga., and his playmates had the parental supervision they deserve, they would be sent to the nearest corner wherein to lodge their Pinocchio-sized noses until this adult task of raising taxes is finished.
The fact is, we have no other viable choice. According to the Congressional Budget Office forecast, by fiscal year 1998 we will have practically full employment and, also, nearly a $400 billion budget deficit if nothing is done. The projected red ink would amount to 5 percent of gross national product (GNP). It would mean continuing U.S. Treasury absorption of most of our meager net national savings through the end of the century. This is hardly a formula for sustaining a competitive, growing national economy.
The root problem goes back to the July, 1981, frenzy of excessive and imprudent tax-cutting that shattered the nation's fiscal stability. A noisy faction of Republicans have willfully denied this giant mistake of fiscal governance, and their own culpability in it, ever since. Instead, they have incessantly poisoned the political debate with a mindless stream of anti-tax venom, while pretending that economic growth and spending cuts alone could cure the deficit.
It ought to be obvious enough by now that we can't grow our way out. To be sure, aversion to higher taxes is usually a necessary, healthy impulse in a political democracy. But when the alternative becomes as self-evidently threadbare and groundless as has the "growth" argument, we are no longer dealing with legitimate skepticism, but with what amounts to a demagogic fetish. Unfortunately, as a matter of hard-core political realism, the ritualized spending cut mantra of the GOP anti-taxers is equally vapid.
Ronald Reagan's original across-the-board income tax cut would have
permanently reduced
the federal revenue base by 3 percent of GNP. At a time when defense spending was
being
rapidly pumped up, and in a context in which the then-"conservative" congressional
majority had
already decided to leave 90 percent of domestic spending untouched, the Reagan
tax-rate cut
alone would have strained the nation's fiscal equation beyond the breaking point.
But no one blew the whistle. Instead, both parties succumbed to a shameless tax-bidding war that ended up doubling the tax cut to 6 percent of GNP - or slashing by nearly one-third the permanent revenue base of the U.S. government.
While delayed effective dates and phase-in's postponed the full day of reckoning until the late 1980s, there is no gainsaying the fiscal carnage. As of August, 1981, Uncle Sam had been left to finance a 1980s-sized domestic welfare state and defense build-up from a general revenue base that was now smaller relative to GNP than at any time since 1940!
In subsequent years, several "mini" tax increase bills did slowly restore the federal revenue base to nearly its post-war average share of GNP. The $2.5 trillion in cumulative deficits since 1981, however, is not a product of "over-spending" in any meaningful sense of the term.
In fact, we have had a rolling legislative referendum for 12 years on "appropriate"
federal
spending in today's society - and by now the overwhelming bipartisan consensus is
crystal clear.
Cash benefits for Social Security recipients, government retirees and veterans will cost
about
$500 billion in 1998 - or 6 percent of prospective GNP. The fact is they also cost 6
percent of
GNP when Jimmy Carter came to town in 1977, as they did when Ronald Reagan
arrived in
1981, Bush in 1989 and Clinton in 1993.
The explanation for this remarkable 25 years of actual and prospective fiscal cost stability issimple. Since the mid-1970s, there has been no legislative action to increase benefits, while a deep political consensus has steadily congealed on not cutting them, either.
Ronald Reagan pledged not to touch Social Security in his 1984 debate with Walter Mondale. On this issue Bush never did move his lips. And Rep. Gingrich can readily wax as eloquently on the "sanctity" of the nation's social contract with the old folks as the late Sen. Claude Pepper ever did.
The political and policy fundamentals of the $375 billion prospective 1998 costs of Medicare and Medicaid are exactly the same. If every amendment relating to these medical entitlements which increased or decreased eligibility and benefit coverage since Jimmy Carter's inauguration were laid end-to-end, the net impact by 1998 would hardly amount to 1-2 percent of currently projected costs.
Thus, in the case of the big medical entitlements, there has been no legislatively driven "overspending" surge in the last two decades. And since 1981, no elected Republican has even dared think out loud about the kind of big changes in beneficiary premium costs and co-payments that could actually save meaningful budget dollars.
To be sure, budget costs of the medical entitlements have skyrocketed. But that is because our underlying health-delivery system is ridden with inflationary growth. Perhaps Hillary will fix this huge, systemic economic problem. But until that silver bullet is discovered, there is no way to save meaningful budget dollars in these programs except to impose higher participation costs on middle- and upper-income beneficiaries - a move for which the GOP has absolutely no stomach.
Likewise, the "safety net" for the poor and price and credit supports for rural America cost the same in real terms - about $100 billion - as they did in January, 1981. That is because Republicans and Democrats have gone to the well year-after-year only to add nickels, subtract pennies, and, in effect, validate over and over the same "appropriate" level of spending.
On the vast expanse of the domestic budget, then, "overspending" is anabsolute
myth. Our
post-1981 mega-deficits are not attributable to it, and the GOP has neither a coherent
program
nor the political courage to attack anything but the most microscopic spending
marginalia.
It is unfortunate that, having summoned the courage to face the tax issue squarely, President Clinton has clouded the debate with an excess of bashing-the-wealthy and an utterly unnecessary grab-bag of new tax-and-spend giveaways.
But that in no way lets the Republicans off the hook. They led the Congress into a giant fiscal mistake 12 years ago, and they now have the responsibility to work with a President who is at least brave enough to attempt to correct it.