Senate Finance Committee Chairman Daniel Patrick Moynihan, D-N.Y., calls his panel's version of deficit-reduction legislation "the most progressive change in taxes since World War II."
In truth, Moynihan's description of his plan, with its back-door tax breaks for New York companies doing business in Puerto Rico, may qualify as the most overblown praise that any budget proposal has received since the War of 1812.
Moynihan's self-serving hyperbole is understandable enough, but the Senate committee's plan doesn't begin to match the rhetoric that accompanied its approval. More important, neither it nor any of the other plans offered by the White House and Congress matches the magnitude of the problem it is supposed to cure. If the deficit truly is the most serious economic crisis that the country has faced since the Depression, the proposals all amount to weak medicine for a virulent disease.
Of course, a little bit of medicine is better than none at all. And considering how difficult it has been to make many powerful interest groups swallow even this small dose of fiscal sanity, the rest of us probably shouldn't be surprised that the prescriptions are so watered down.
Under the Senate plan, the relentless arm-twisting of influential oil-state congressmen has succeeded in turning President Clinton's proposed comprehensive energy tax into a considerably less fair and less effective transportation tax. Even its modest 4.3-cents-a-gallon increase may be tough to get through Congress. Many of the individuals and groups that nodded approvingly last fall when Ross Perot advocated a 50-cent-a-gallon gasoline tax are now appalled at the prospect of an average driver's paying an extra dime a day to help balance the budget.
The best that can be said of the Senate plan is that it is faithful to the president's promise to make the wealthiest Americans, who reaped most of the benefits of Washington's borrow-and-spend policies of the 1980s, bear the greatest burden of deficit reduction in the mid-1990s.
The top tax rate for individuals would increase from 31 to 39.6 percent. That's slightly more than half the top rate 15 years ago, but if lawmakers can avoid the temptation to restock the budget bill with additional loopholes, the new rates could help to restore an element of fairness to the tax code.
The Senate proposal also promotes fairness in another respect. It would raise the top rate on capital gains for taxpayers with incomes above $250,000, thus reducing the unfair disparity in the treatment of capital gains versus earned income in the president's plan.
The strongest medicine in the Senate plan comes, appropriately enough, in the form of reduced Medicare spending. By cutting $70-billion over the next five years, or $20-billion more than the president proposed, the Senate plan would force medical providers and patients to make up much of the revenue lost as a result of the demise of the president's energy tax. In this respect, the Senate plan does not spread the deficit-reduction burden as broadly or fairly as the president's would.
In any case, neither the president, the House nor the Senate has proposed anything more than a palliative. Even if one accepts the projections of Washington's notoriously overoptimistic forecasters, these plans do little more than keep future deficits from running even further out of control. Perhaps the fragile national economy couldn't withstand a more radical attack on the deficit, but the president and congressional leaders should quit pretending that their respective Band-Aids constitute serious surgery.