The time is right for a budget freeze

WHEN President Reagan announced sometime before Christmas his support for a federal budget freeze, I thought: Really 'tis the season to be jolly. Indeed, I have been forwarding a budget freeze since the winter of 1982. In May of 1984 I won 38 votes for it in the US Senate, without White House support. And if we are to be serious about doing away with $200 billion deficits, a freeze is the only politically viable way.

What does every mayor and every governor have to do when they face a budget crunch? They freeze spending. They can't print dollars.

And a freeze doesn't pit one special program or one special constituency against another.

We cannot ask for sacrifices of some, we must ask for sacrifices from all, across the board. A freeze cannot stand if watered down by presidential and congressional exceptions. We can't leave social security untouched, or defense spending untouched -- despite what the secretary of defense wants.

Social security, defense, and interest payments on the national debt make up more than 60 percent of our $932 billion in federal spending this year. These three mammoth expenditures will account for 75 percent of the growth in government spending for the next year.

The discipline of a freeze would be broken with arguments of: ``Since we made one exception. . . .''

Understandably, some exceptions will be unavoidable due to legal requirements and commitments to allies abroad. But the basic freeze must stand, or its political viability will turn to slush.

My proposal from the very beginning in 1982 called for a one-year freeze, with the few exceptions mentioned above, and then limited increases in all government spending to 3 percent for the next two years. That plan would have given us a balanced budget by fiscal year 1986.

Today, I forward the same basic plan, but after the first-year freeze we must hold increases in government spending to 3 percent for the next four years in order to reach a balanced budget by 1990.

Some will say: ``Why worry about the deficit? We're in a recovery.'' The answer is clear cut: We may not feel the full effect of these deficits now, just as a gambler doesn't feel poor while he's spending borrowed money. In the end, bills must be paid.

The federal government's bill will be paid in a number of ways:

One, deficits soak up capital that businesses need to finance new investment. Every dollar the government borrows is one dollar industry cannot borrow to invest in new factories and new jobs.

Two, sending the government into the credit markets to compete with private investors, the deficit pushes up real interest rates.

Three, the high interest rates caused by high deficits drives the value of the dollar to monumental levels. That makes our exports more expensive for foreign buyers -- and works like a tax on our businesses, factory workers, and farmers trying to compete in world markets. Commerce Secretary Malcolm Baldrige announced recently that the US trade deficit would exceed $100 billion for the year. The ultimate impact? That translates into a loss of more then 2 million American jobs.

At this start of a new year, let us secure a better future by facing up to our fiscal crisis, even if that means a little sacrifice. Let us share the burden for deficit reduction with an across-the-board freeze, if nothing else, as a gift to our children.

Sen. Ernest F. Hollings (D) of South Carolina promoted a budget freeze as a centerpiece of his recent Democratic presidential primary bid.