Where to cut
Private economists as well as Republican and Democratic lawmakers are now beginning to suggest alternatives to specific elements of President Reagan's 1983 budget package. They are right to be concerned that looming massive deficits could pose risks to the US economy. Even if the economy posts significant growth in the years ahead, the deficits by most calculations are expected to soar well above current estimates.Skip to next paragraph
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The Congress therefore needs to reshape the budget in such a way as to forestall runaway deficits -- by making judicious cuts, by raising taxes, or by a combination of both actions. An early sensible proposal comes from South Carolina Democratic Senator Ernest Hollings, who would freeze certain benefit programs and increase defense only slightly, scrap the 10 percent tax cut scheduled to take effect this July, and halve the cut for July, 1983. This proposal, which Republican Senator Howard Baker dubs ''intriguing,'' could slash the projected '83 deficit from $9l billion to approximately $42 billion. The Hollings plan definitely warrants consideration.
So, too, does the proposal of Republican Senator Percy and ''boll weevil'' Democrats that the government sell excess government property as one way of earning revenue.
Private analysts, for their part, find substantial room for further cuts. Fortune magazine, for example, estimates that as much as $94 billion could be pared from defense budgets through 1986 by holding the real growth in defense spending to 7 percent, as originally proposed by the administration. Another analysis, by Donald Lambro in Barron's, finds billions of dollars in savings possible in both defense and nondefense areas. Both publications maintain that additional savings in the 1983 budget (and future budgets) are not only possible but absolutely vital.
What follows are some key areas that we see as inviting scrutiny by lawmakers looking for cutbacks. The list is not definitive but indicates the potential for savings.
* Defense. The administration proposes an increase of $33 billion for fiscal 1983, roughly 10.5 percent after adjustment for inflation. Holding the rate of increase to the originally projected 7 percent -- inasmuch as the US is not in an emergency defense situation -- could shave something like $5 billion from the '83 budget and another $16 billion from the '84 budget without impairing the nation's defense capabilities. Consider just these possible cuts in nonweapons programs:
- Holding next year's military pay increase to the 5 percent level recommended for the federal work force, rather than the 8 percent proposed by the administration (and coming on top of a hefty pay hike last year), could save taxpayers close to $1.4 billion.
- Reducing consultant fees by one-third could save $1 billion.
- Ending subsidy of military commissaries and requiring them to be self-supporting would save $500 million.
- Requiring a small $5 surcharge for medical services for dependents of military personnel would save $150 million. Also, some $500 million could be saved by reducing some administrative costs.
- Slightly reducing the military's billion-dollar advertising budget (at a time when the military is meeting its recruiting and retention goals because of recession) would produce savings of over $100 million. In fact, there should be a return to free public service advertising for the military.
- To take just one ''big ticket'' item, the administration has yet to make a decision on deployment of the MX missile. Postponing additional major spending on the system in 1983 would save hundreds of millions of dollars.
* Agriculture. Eliminating all price supports would save between $3 and $4 billion. Congress is unlikely to go that far, but at the least it should eliminate subsidies for tobacco. That would save $600 million.
Restructuring or even ending the US Extension Service would save up to $300 million. Scores of universities and private organizations now provide similar services, unlike the situation back in the 1930s. And why should the Rural Electrification Administration (set up in 1935) continue to make up to $1 billion in loans to utilities, even though almost all farms now have electricity? Slashing that amount in half would yield $500 million.
* Social security. The administration has largely bypassed this politically sensitive area. Yet, at a total cost of $173 billion, it is the largest of all federal entitlement programs. Reasonable reforms which would not work hardship could include updating disabled lists to eliminate benefits for able-bodied persons (a saving of $1 billion in the opinion of some experts); hiking the early retirement age from 62 to 65, as proposed by the administration last spring ($700 million); deferring the cost-of-living adjustment by even up to three months (billions of dollars).
* Veterans benefits and services invite particular scrutiny. Veterans outlays for fiscal 1983 are projected at over $24 billion. The Veterans Administration, among other things, operates the largest federal health care system in the country. To reduce VA expenditures at this time would not be to slight former military personnel, as critics charge, but rather to call upon them to join all Americans in sharing in the belt-tightening and sacrifices that are now necessary to restore the American economy to fiscal soundness
There are, to be sure, many other things which could be usefully trimmed back , and we will comment further on these as occasion arises. In general the administration has fashioned a budget which slows the growth in government spending; the percentage increase is the smallest in modern history. It is thus responding to the general American mood. But certainly the American people want the government to be efficient, fair, and fiscally prudent. It is toward this end that Congress should now direct its efforts.