- The Washington Times - Thursday, June 29, 2000


President Clinton has offered congressional Republicans a deal they can surely refuse. In announcing this week that the projected cumulative federal budget surplus over the next 10 years has increased from $2.9 trillion, which the White House had forecast in February, to $4.2 trillion, Mr. Clinton beseeched the Republicans to agree to what he considered "a true compromise." "If Congress will pass a plan that gives real voluntary Medicare prescription-drug coverage, available and affordable to all seniors and consistent with the principles of my plan, costing roughly $250 billion over 10 years," the president proposed, "then I will sign a marriage-penalty relief law, which also costs roughly $250 billion over 10 years." For numerous reasons, this would be a bad deal.
In the first place, the "compromise" tax cut proposed by the Clinton-Gore administration is still absurdly low. The budget the administration proposed in February offered a ridiculously puny 10-year net tax cut of $170 billion, which included $44 billion of relief against the marriage penalty.
Relative to the cumulative $4.2 trillion in federal budget surpluses the administration is now projecting, the president's proposed tax relief is insulting. Even measured against the non-Social Security surplus, which the White House announced this week would increase by $1.13 trillion to $1.87 trillion over 10 years, Mr. Clinton's "true compromise" offer to add $216 billion to his earlier tax-cut proposal amounts to less than 20 percent.
What does Mr. Clinton expect to do with the rest of the new revenue? Well, among other things, he wants to set aside a cool half-trillion in a "reserve for America's future," which is Clinton-speak for a piggy bank to finance ever more increases in domestic spending.
As a general principle, Congress should be weary of trading tax cuts for expensive new entitlements. History has amply demonstrated that tax cuts are much easier than new entitlements to repeal or reduce. Indeed, partially offsetting tax increases soon followed the tax cuts engineered by Ronald Reagan in 1981; and even the revenue-neutral tax reform of 1986 was followed by major tax increases in 1990 and 1993.
On the other hand, Mr. Clinton has almost certainly underestimated the ultimate cost of his prescription-drug entitlement proposal. In the past, the federal government has repeatedly expanded Medicare services based on faulty cost projections, and there is no reason to believe Mr. Clinton's proposal is any different. Indeed, the Congressional Budget Office found that Mr. Clinton's initial, less expansive drug-prescription plan significantly underestimated its eventual cost.
Rushing to add yet another expensive, government-guaranteed Medicare benefit without overhauling the anachronistic system will only make eventual reform all the more difficult to achieve. Besides, two-thirds of the elderly already have some form of private drug coverage. If politics requires action, Congress would do well to pass a much less expensive plan that relies more on the free market.
Despite his veto threats, there is good reason to believe Mr. Clinton will sign legislation granting much greater relief from the marriage penalty than he proposed in his February budget without the Republicans' signing off on his grossly expensive new entitlement. Abolishing the marriage penalty, which requires 25 million married couples to pay an average of $1,100 per year more in federal income taxes than they would pay if they were merely living together, is very popular. After all, Mr. Gore can read the polls.

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