The flap over budget director Alice Rivlin's memo on options to lower the national deficit demonstrates that you can take Alice Rivlin out of the academic atmosphere of the Brookings Institution _ but you can't take the Brookings Institution out of Alice Rivlin.
She is too honest and straightforward to abandon a lifetime as a sound economist and budget expert merely because she's part of the Clinton administration, now forced to confront an awesome build-up of the deficit over the next several years.
At the same time, it must be said that to dish up, just before the congressional elections, a list of the hard choices that Clinton faces was not the most astute political move of all time. But Rivlin can't take that political hit alone.
As head of the Office of Management and Budget, she was commissioned by the the White House to start thinking about the decisions that must be made soon for fiscal 1996 budget and beyond.
Rivlin drafted an 11-page document for distribution to the president and key Cabinet aides on Oct. 3, and marked it "for handout and retrieval in meeting." She should have known better _ and so should have her colleagues. Such a candid document was bound to leak. It did, via Republican consultant William Kristol, to the Washington Post.
Gleefully, Senate Minority Leader Robert Dole, running hard for the Republican nomination in 1996, said: "This is a juicy piece of red meat for the Republicans." The Republican National Commitee attacked the administration as hypocritical, because it had correctly argued that the GOP "Contract with America" to balance the budget would require higher taxes and slashes in entitlements.
And here, the Republicans were saying, Rivlin secretly was planning to do the same thing.
But it is an outright falsehood for the Republicans to allege that Rivlin suggested higher taxes or cuts in Social Security payments. In fact, a reading of her memo shows that she all but rules out higher taxes or Social Security payments as impractical.
On the other hand, it is duplicitous of the White House to label the Rivlin memo merely a "catalog" of ideas on how to reduce to deficit. Vice President Al Gore, at a Godfrey Sperling lunch Monday, denied that Rivlin had cranked any policy recommendations of her own into the memo. He insisted that the White House position is that the deficit will continue on a downward path with no changes in policy _ if economic growth continues, and a health reform bill is passed.
A reading of the Rivlin memo and the accompanying tables demonstrates it was highly misleading of Gore to say what he did. Rivlin starts by showing that merely to hold the deficit at the $168-billion baseline now forecast for fiscal 1995 constant through the end of the decade (much less reduce it), an aggregate of $184-billion in new spending cuts and/or tax increases will be required.
To accelerate the process modestly, so that the fiscal 2000 deficit would edge down to $140-billion, would require an aggregate of $274-billion in cuts and/or taxes. To get to a balanced budget in fiscal 2000 would require a staggering $689-billion _ a concept that the GOP ignores totally in its phony "Contract with America."
Rivlin then repeats what everyone knows: There are only three ways to get the money: discretionary spending cuts; tax increases; and entitlement cuts. She then ticks off the difficulties with each:
Discretionary spending cuts: "There is unlikely to be much more room here."
Tax increases: "The anti-government mood probably precludes any general-purpose tax increase." Specific initiatives, (e.g. a tobacco tax tied to health reform) are possible. So is a neutral bill reducing tax breaks for upper income families to make room for a middle-income tax cut.
Entitlement cuts: ". . . Everyone looking for budget savings points to entitlements. But the specifics are daunting." She adds the warning: "Moreover, 90 percent of savings would come from Social Security and Medicare, and would probably be labeled by opponents as tax increases."
In a truly wicked distortion, the RNC in a press release headed "The "Big Lie' Exposed," tried to make it appear that Rivlin and the administration favored getting 90 percent of spending cuts from Social Security and Medicare.
Rivlin's preference, all things considered, comes through clearly for anyone who can read: Don't rely on across-the-board tax hikes or unpalatable entitlement cuts to lower the deficit, but choose an option initially offered by former Clinton adviser Robert Shapiro called "cut and invest."
This option, Rivlin said, "would build on our commitment to make life better for the average citizen in New Democrat style by taking on the special interests and eliminating tax loopholes and spending giveaways that favor the few while hurting growth." She puts the savings, by this route, at about $100-billion over the next five years.
We, as a nation, need to do much more than that. We have to accept some of the unpalatable options. But at the moment, as Rivlin notes, the political consensus for hard choices doesn't exist.