The American Spectator

Special Report

(Page 2 of 3)

None of these benefit cut options would reduce future Federal spending by nearly as much as the fundamental, structural entitlement reforms discussed below. Moreover, these benefit cut options are all deeply unpopular, as are the tax increases, making the political feasibility of this entire reform approach doubtful. Most importantly, the great political unpopularity of the benefit cut options means none of them will ever be adopted without compromising with Big Government liberals for a tax increase, a huge tax increase. Enacting any of these benefit cuts would require bringing almost everyone in Washington along for political cover in a Grand Compromise including stiff tax increases as well as the benefit cuts.

Indeed, at the event at the National Press Club where the paper was released, Rudolph Penner explained more clearly the thinking of the 16 co-authors. He said that he hoped that the proposed budget process reforms "would lead to the kind of outcome preferred by this committee [the 16 co-authors] -- the 1990 budget deal." That was the deal where President George H.W. Bush broke his "Read my lips, no new taxes" pledge, which led to his defeat in 1992. That budget deal included a massive tax increase in return for spending reductions, which were soon erased in later budget years. The budget deficit, in fact, increased after that deal.

Even though another huge tax increase was enacted in 1993, the long string of budget deficits were actually not eliminated until Republican Congressional majorities were elected in 1994. President Clinton's budget proposal in January 1995 projected annual budget deficits continuing at about $200 billion for the next 10 years. The Gingrich led Congress cut taxes on savings and capital investment, producing an economic boom. Then they held down the growth of Federal spending, which along with robust revenues produced by the growing economy, turned the $200 billion annual deficits into $200 billion annual surpluses.

p>Another co-author of the paper, Ron Haskins of the Brookings Institution, published a commentary in the Washington Times on April 7, along with former Congressman Bill Frenzel, that further explained the thinking of the 16 co-authors. Haskins and Frenzel explained the proposal of the gang of 16 as follows: br> /p>

Specifically, they proposed that: (1) Congress and the President enact 30 year budgets for Social Security, Medicare, and Medicaid; (2) Congress review the budgets every five years; and (3) automatic program cuts or revenue increases be triggered if projected spending exceeds the budget.

br> The two co-authors described the expected effect of this proposal as follows: br>

The second effect of the trigger proposal will then kick in. Congress and the President will realize they cannot achieve a 30-year sustainable budget for Social Security, Medicare and Medicaid by simply reducing benefits. Rather, the solution will require a combination of benefit cuts and revenue increases.

br> Obviously, if this reform approach ever does amount to anything, it will lead to an enormous, historic, tax increase, ramping up our Federal government several notches to new realms of glory. In particular, when the alternative is benefit cuts for retirees, sick people, and sick old people, the issue is framed very poorly for avoiding tax increases. br> Those responsible for leading us to this obvious result must be held accountable if and when it occurs. No one deputized Stuart Butler, or the Heritage Foundation, to negotiate a tax increase on behalf of the conservative movement. p>

topics:
Taxes, Federal Budget, Social Security, Medicaid, Law, NATO, Socialism, Energy, Medicare