At long last we have a budget agreement, only a half-step in the right direction. The nation still faces a deficit of about $254-billion this fiscal year _ up $34-billion from last year, despite a $41-billion reduction from what it otherwise would have been. The final budget-deficit count of $220.4-billion for last year is more than double the $91-billion originally forecast by President Bush, who indulged in his notorious "no new taxes" deception, pretending that the deficit could be kept under the Gramm-Rudman-Hollings $100-billion target.
Moreover, each and every one of the above deficit results or projections is understated by about $100-billion. That's the amount of the annual coverup derived by tapping Social Security and other government trust funds. Thus, the prospective deficit for fiscal 1991, "reduced" to $254-billion, is really over $350-billion.
Meanwhile, the defense budget remains bloated despite the end of the Cold War. And Congress still meekly bows to powerful lobbies, as witness $2.5-billion in new tax breaks Sen. Lloyd Bentsen, D-Texas, won for independent oil and gas drillers.
Overall, the Omnibus Budget Reconciliation Bill passed on Oct. 27 is modestly improved over the one approved by the budget "summit" leaders, but wisely voted down by the House on Oct. 5. Democratic leaders, stung by the criticism from rank-and-file members, showed they could place more of the burden for reducing the deficit where it rightfully belongs: on taxpayers of means. They didn't succeed fully in that goal because Bush made clear he would not sign a tougher bill.
Significantly, the new legislation doesn't open up vast new tax loopholes. The original package deserved to be defeated because it created an entire new category of tax shelters that would have cost the Treasury at least $12-billion, benefiting only top-bracket taxpayers. Meanwhile, middle-income families were threatened with the triple whammy of higher Medicare costs, boosted Medicare payroll taxes, and regressive excise taxes.
On balance, the tax structure will be more fair.
But where the first package was too tough on Medicare recipients, this one is probably too lenient. Senior citizens should bear a larger share of the total entitlements burden, preferably by paying a full tax load on their Social Security income (over some threshold, to assure that the elderly poor aren't hit).
While American voters may exact a high political price from some incumbent congressmen next week _ and ultimately from Bush _ the main cost to the country can be measured in a down-rating of America by its allies and investors abroad.
Washington Post Writers Group