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- NATION, Page 42Time for Tough Choices
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- The White House presents a sober-minded budget that could shrink
- the deficit and end the annual bidding war
-
- By MICHAEL DUFFY -- With reporting by Nancy Traver/Washington
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- Despite his sometimes shirty demeanor, Richard Darman,
- George Bush's Budget Director, is known around the White House
- as an accomplished comedian. After all, a knack for cutting up
- goes naturally with the job; last year when Bush asked for the
- impossible -- a budget that lowered the deficit without raising
- taxes -- Darman responded with a 15-page essay rife with
- references to Wonderland, Pac-Man and Cookie Monster. Given the
- cooked books that were expected of him, humor was Darman's best
- defense.
-
- This year silly stratagems have been set aside. Darman's
- budget for 1992 is a more sober reflection of the nation's
- fiscal health than most budgets of the past decade. Its
- economic assumptions, with some exceptions, are unusually
- flinty eyed. Its priorities, if not always laudable, are clear.
- And for Bush and Darman, both of whom were wounded in last
- fall's budget fight, it is a smooth political recovery act that
- last week met with generally favorable reviews from both right
- and left.
-
- The main reason for the new candor is last year's much
- maligned budget agreement, which sets firm caps on
- discretionary spending for the next five years and prevents
- meddling with all but the details of federal programs. The new
- rules render preposterous budgets unnecessary and encourage
- negotiators to make hard choices. When total spending levels
- are fixed, there is little point in inflating revenue estimates
- through rosy economic assumptions. Moreover, the caps will
- force both parties to make spending decisions carefully.
- Democrats who want to spend more on, say, housing must carve
- the money from another program. This programmatic triage alone
- should help shrink the deficit. As Bush said in his State of
- the Union speech, "Future spending debates will mean a battle
- of ideas, not a bidding war."
-
- Happily, the new rules make a repeat of last year's bloody
- budget summit unlikely. Both parties now largely agree that
- despite the gulf war, defense spending should continue to
- decline; that domestic spending should rise only with
- inflation; and that mandatory entitlement programs are still
- too sacrosanct for deep reductions. All that's left to debate
- is how much should go to individual discretionary programs.
- Explains Robert Grady, a top Darman aide: "The amount of money
- spent is set, so what it comes down to is a question of
- priorities."
-
- The most intriguing element in the budget is Darman's
- romance with means testing. By reducing federal handouts for
- middle- and upper-income Americans, Darman hopes to begin to
- wean them from their expensive -- and subsidized --
- life-styles. Farmers who make more than $125,000 a year in
- outside income will be ineligible for federal commodity
- subsidies. The monthly Medicare premium of $31.80 will be
- tripled for seniors whose adjusted incomes exceed $125,000.
- Darman said the five new means tests, which would save $200
- million next year and $3.7 billion through 1995, are a first
- step toward "a better focus on the poor."
-
- In fact, the Administration's flirtation with means testing
- is as political as it is fiscal. Having badly mishandled the
- "fairness issue" last year, Bush is asking the rich to make
- some small sacrifices to defuse the issue as he nears
- re-election. Besides, the White House knows that many Democrats
- will reflexively balk at the idea of asking seniors (or parents
- of kids who get but don't need subsidized school lunches) to
- pay more. House budget chairman Leon Panetta, a California
- Democrat, seemed to stumble into this trap last week when he
- warned Darman that the elderly will "raise hell" if the
- Medicare proposals stand. In political terms, it doesn't really
- matter whether the means tests find their way into law; for
- Bush and Darman, the readiness to propose them is all that
- counts.
-
- The budget is an attempt to mollify the restive right, whose
- members are still steamed about the way Bush orphaned his "no
- new taxes" pledge last year. Darman met nearly a dozen times
- in recent weeks with House Republicans and included in the
- budget a number of items -- enterprise zones, incentives for
- tenant ownership of public housing -- that are dear to
- conservative hearts. But Administration officials admit
- privately that some of these, such as Bush's inevitable pitch
- for lower capital-gains taxes, are included simply to keep the
- right quiet. Said a senior Administration official: "We're
- trying to fool them as long as we can."
-
- Both Republican and Democratic experts agree that the new
- budget rules should lead to a lower deficit in a few years. But
- they add that unexpected costs, like those from the gulf war
- and the thrift bailout, could again postpone that day
- indefinitely. Last week Bush told several thousand businessmen
- and -women in New York City that the deficit would be
- "virtually eliminated by 1995." The audience reaction was a mix
- of scattered applause and derisive laughter. As one of Bush's
- predecessors put it, you can't fool all of the people all the
- time.
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