WHEN BILL CLINTON unveiled his deficit-cutting plan in February, he challenged opponents to come up with specific alternatives. As it turns out, that was an empty gesture. His loyalists have squelched every alternative that departs
from his high-tax strategy.
In March, for example, House Democrats dismissed out of hand Republican Rep. John Kasich's plan to cut the deficit entirely through spending cuts. Last week, administration officials did it again: First they blunted a move by conservative House Democrats to cap entitlement spending. Then they warned of dire consequences if the Senate seriously considers a plan that gets rid of Mr. Clinton's energy tax.Treasury Secretary Lloyd Bentsen said the alternative plan, proposed by Sens. David Boren and John Danforth, should be deep-sixed because it can't pass Congress - a curious bit of circular reasoning. And at a news conference called specifically to denounce that proposal, Mr. Bentsen also proclaimed the administration unworried by it.
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But worried they are. The Boren/Danforth plan undermines the administration's thesis that deficit reduction can be accomplished mainly by massive tax hikes, and that all the new tax revenue will go to deficit reduction even if entitlement spending is not reined in.
There are growing signs that voters aren't buying that argument, and for good reason. Spending on entitlement programs - especially Social Security, Medicare and Medicaid - is the budget's Achilles heel. Such spending already is $40 billion above the levels projected in the 1990 budget agreement, and is the fastest-growing federal outlay. Yet the administration has no credible plan to limit it.
The Boren/Danforth proposal addresses this weakness. It would restrict entitlement spending to population growth plus inflation plus a percentage that declines over time. The proposal also reduces the administration's tax credits for low-income workers; but that's because it knocks out Mr. Clinton's inflationary and regressive energy tax, which the credits were intended to offset.
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Without controlling entitlements, there's no hope of balancing the federal budget. Almost everyone acknowledges that. Yet Congress has been unable to do anything about entitlements beyond hand-wringing. Whenever limits are proposed, a bit of cowardly reasoning takes hold: Ceilings on spending would hurt beneficiaries and are therefore politically impossible, so let's not even try.
What's really behind that cop-out? A deep institutional flaw in Congress: Beneficiaries are relatively small in number, but concentrated; taxpayers are diffuse. Political fallout is certain if lawmakers reduce the benefits of vocal and active interest groups; they are more likely to get away with raising taxes on the public at large.
So it was that the Boren/Danforth plan immediately was attacked for allegedly robbing the poor and the elderly. Certainly, any plan that tries to restrain runaway entitlement spending is going to affect the elderly, who are the chief beneficiaries of Social Security, Medicare and Medicaid. (The poor would be protected by a provision immunizing the first $600 a month in benefits against inflation.) The reason is plain: The entitlement programs that benefit the elderly are where the runaway spending is.
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The cost of those programs, the Congressional Budget Office makes clear, will continue to rise. Medicare spending will grow at about 11 percent a year this decade; its share of all health-care spending will rise from 17 percent in 1990 to 19 percent in 2,000. Federal spending on Medicaid increased 21 percent in 1990, 29 percent in 1991 and about 26 percent in 1992.
In the face of surging costs, Congress has put these programs on auto pilot. The Boren/Danforth plan deals with that problem head-on. It would create a situation in which Congress - which, after all, is paid to manage public spending - eventually would have to limit the entitlement outflow. By agreeing to caps, Congress ultimately would have to face the music.
When spending approaches the cap, lawmakers would have three choices: Cut all benefits pro-rata, change the underlying rules on eligibility and benefits, or be confronted by what Carol Cox-Wait of the Committee for a Responsible Federal Budget called the "red-face" alternative: chicken out and raise the entitlement ceiling.
The Boren/Danforth plan is certainly not the only way to tackle out-of control entitlement spending. But at least it confronts the problem that is most to blame for the deficit. Willie Sutton once said he robbed banks because that's where the money is. A responsible deficit reduction plan must go after entitlement spending for the same reason.