Bentsen sees high wire act for Bush on federal budget. Deficit cut without new taxes called a marvel
Washington — Senate Democrats can read George Bush's lips, too - ``No new taxes.'' Now Democrats, including Lloyd Bentsen, chairman of the Senate Finance Committee, are waiting to see how President-elect Bush pulls off what they say would be an economic marvel: meeting federal budget targets without higher revenues.
Senator Bentsen, at a breakfast with reporters, said Mr. Bush must act quickly and firmly to avert serious economic problems. (Confusion on the deficit, Page 19.)
The Texas senator notes that the prime rate charged by American banks is headed up - most recently to 10.5 percent - while the West German prime stands at 6 percent and the Japanese rate is 3.375 percent.
Those lower rates abroad are fueling rapid economic expansion and domination by America's top competitors, while the high rates here handicap industries that want to expand.
The big United States budget deficit, which requires heavy government borrowing, forces federal officials to keep US interest rates high in order to attract foreign capital to this country.
American voters, anxious about economic competition from abroad, clearly are concerned. A three-month project by the Roosevelt Center for American Policy Studies found that the federal budget deficit stands at the top of the agenda for most voters.
The Roosevelt Center researchers asked about 1,000 citizens nationwide to list their three top priorities for the new Bush White House. The leading choices: the federal deficit, selected by 71 percent; education, 49 percent; energy and the environment, 32 percent.
Under the Gramm-Rudman deficit-reduction law, the federal deficit in the 1990 fiscal year must be reduced to $100 billion. But Bentsen warns that the actual deficit will be closer to $137 billion without serious action on either spending, taxes, or both. Rising interest rates threaten to push up the deficit even higher - to $152 billion.
If Bush and Congress fail to cut the deficit to $100 billion, it will trigger automatic cuts under Gramm-Rudman, including $20 billion to $25 billion out of Pentagon spending. That would ``cause havoc,'' Bentsen warns.
Bentsen, who felt the sting of Bush's read-my-lips pledge on taxes during the presidential campaign, draws consolation from the President-elect's predicament.
``This is a test of his leadership,'' Bentsen says. ``I look forward to seeing how he does it,'' he adds wryly.
Like Bush, the public remains wary of new taxes. But voters have some clear ideas about where the bite should come if tax hikes are necessary, according to the Roosevelt Center study.
Top choice: ``sin'' taxes on tobacco, beer, and wine. In its study, the Roosevelt Center found that 78 percent favored such increases, if they are deemed necessary to meet budget targets.
Other taxes found acceptable by more than half those interviewed by the center:
Business taxes. About two of every three favored tougher limits on the deductibility of business meals and entertainment.
Tax rates. Some 61 percent would OK a hike in the top rate for personal income taxes to 33 percent for the wealthiest Americans.
Fees. Higher user fees for national parks, for river traffic moving through government-owned locks, for use of federal grazing land, etc., were favored by almost 60 percent.
Corporate rates. Steeper taxes were favored by 57 percent.
Gasoline taxes. Fifty-six percent favored increases of 10 to 25 cents per gallon, with most favoring the smaller increase.
On the political front, Bentsen predicts that the negative campaigning of 1988 will bring about even more of the same in 1992.
The senator suggests that Democrats made progress back toward the White House in 1988, even though they lost. Unlike 1984, local Democratic politicians all over the country, including the South, publicly supported the national ticket.
But Bentsen acknowledges that some changes in strategy are needed. For example, the early Iowa primary, dominated by party activists, drives Democratic candidates leftward, he says. That hurts the ticket in the general election.
One possible answer: Moderate candidates could skip the Iowa primary entirely, Bentsen suggests.
Such advice might have appeal after this year's race, when both Iowa winners (Bob Dole and Richard Gephardt) were easily defeated by their rivals in later primaries.