To read about it in theNew York Times or the Washington Postor even theWall Street Journal, you’d think that something really important had happened. Maybe even something historic.
“After Years of Wrangling, Accord Is Reached on Plan to Balance Budget by 2002,” shouted the head on the Times’ Saturday, May 3, front page. “President Clinton and Republican congressional leaders yesterday announced agreement on a plan to balance the budget by 2002 and cut taxes … setting the federal government on a path to eliminate its annual deficit for the first time since 1969,” said the Post’s lead story. The Dow Jones industrials soared to a new record, reported the Journal on Monday, buoyed in part by “Friday’s budget deal.”
Which goes to show that, at least where the federal budget is concerned, you can fool damn near all of the reporters damn near all of the time.
At least you can fool them long enough to do just what the politicians hoped: Impress the half-attentive public with the idea that the nation’s elected representatives have joined at last in sweet bipartisanship to deal once and for all with its most pressing economic problem.
A few days later, the more diligent reader may have noticed some change in the tenor of the stories–which moved to inside pages. Republicans and Democrats are “squabbling over details of the provisions affecting Medicare,” reported the Times. The big fight, said the Journal, is between those in Congress who want to focus first on the tax cuts promised by the deal, and those in the White House who want to give primacy to the spending increases. Neither one of these favored features, you will notice, has anything to do with reducing the deficit, the ostensible object of the recent celebration. The one thing Congress did settle this week was the timing of a capital-gains tax cut: right away. The financial markets, meanwhile, went back to worrying about inflation.
Which brings us to the details of the heralded accord–or it would, if there were any. Well, that’s not quite fair. We do know that there are to be $85 billion in net tax cuts over the next five years ($135 billion in new breaks, to be offset in part by $50 billion in revenues raised by renewing taxes set to expire and closing some–still to be specified–loopholes). And there will be $34 billion in new spending for health insurance for kids, and for restoring some benefits for legal immigrants. Also, doctors and hospitals are supposed to swallow about $131 billion in costs for serving Medicare and Medicaid patients over the period, though we’re not quite sure how. And we’re all to count on the bureaucrats at the Bureau of Labor Statistics to come up with a new way to measure inflation that, it is fervently hoped, will save billions more. Oh, and there are to be spending cuts. The Pentagon is to get about $85 billion less than it had planned to spend, and domestic “discretionary” programs are to be slashed by $58 billion. Details to come. Sometime.
Which raises a question: If you care at all about the deficit–and the public repeatedly tells pollsters that it does–wouldn’t it be better if Congress and the president just forgot about a budget deal? Better, say, if they just passed the few fixes (like benefits for legal immigrants) that everyone agrees on, and then went back to raising campaign money and holding press conferences and visiting with foreign leaders and declaring national Do-a-Friend-a-Favor Week? After all, left pretty much to itself, the budget deficit has been declining to a level that makes us the envy of most other nations. (Please recall that the last “historic” plan to make the world safe for more tax cuts and spending collapsed into a government shutdown.) While it’s true that the deficit is due to soar in the next century, the much praised budget plan doesn’t do anything about that, unless you think its proposal that the bureaucrats reformulate the Consumer Price Index amounts to action.
In fact, there is much in the plan that will exacerbate the deficit problem–new tax breaks and new entitlements, for two big examples, the cost of which will surely exceed the current estimates. Even if you are keen for, say, Clinton’s multibillion-dollar tax subsidies for college students (which will likely translate into tuition increases), you might ask yourself if they are more valuable than the other domestic programs they are supposed to supplant. That would be an easier question to answer if Congress and the White House hadn’t left those unpleasant decisions as an exercise for future politicians.
So there you have it: a historic, bipartisan agreement to–cut taxes and raise spending. And this is worth a headline?