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Moynihan Shakes Budget Process

Senator's proposed Social Security tax cut earns little support, but gets everyone's attention. FEDERAL FINANCE

By Robert P. HeyStaff writer of The Christian Science Monitor / February 13, 1990


WHO do you think has had the greatest effect thus far on this year's annual budget agony in Congress - the chairman of a powerful budget committee? A world-renowned economist? Neither one: It's been the Senate's only six-foot leprechaun, Daniel Patrick Moynihan (D) of New York, who has proposed trimming Social Security taxes to unmask the real size of the federal government's annual deficit.

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The Social Security tax debate, together with maneuvering to cut the defense budget, may call into question the Gramm-Rudman-Hollings law that has shaped the budget process since 1985.

Senator Moynihan has become to this year's federal budget process what now-retired outfielder Reggie Jackson used to say he was to baseball's New York Yankees: ``the straw that stirs the drink.'' Although few in Congress are likely to support Moynihan's plan, it has stirred up counterproposals from several members of Congress and President Bush. A group of House Democrats chaired by majority leader Richard Gephardt (D) of Missouri is trying to come up with a unified position on Social Security and the budget.

The New Yorker's proposal ``does an important service,'' says House Speaker Thomas Foley (D) of Washington, by focusing attention on the use of surplus Social Security revenue to hide some $59 billion in the annual debt. The amount masked will grow each year, matching the rise in the trust fund, which is supposed to be storing money to pay social benefits to baby boomers when they retire well into the next century.

`Bush has all the cards'

Congress won't be able to decide how much it must trim from the budget - or how much new revenue must be raised - until it decides whether to let some or all of the Social Security surplus continue to mask the deficit. According to the Gramm-Rudman law, the budget deficit must be cut from this year's supposed $100 billion (most experts think it's at least $30 billion higher) to $64 billion by Oct. 1.

If Congress and the president can't agree on a plan by then both domestic and defense programs will be cut by $18 billion each. This process, called sequestration, may well occur this October.

Alternatively, Congress may decide to stop counting some of the Social Security fund surplus against the deficit targets, then change the Gramm-Rudman law to permit a higher deficit in the coming fiscal years.

Unless Congress takes that step, ``Bush has got all the cards'' on the budget, says Stuart Butler, director of Domestic Policy Studies of the Heritage Foundation.

``The Gramm-Rudman sequestration process is probably now working to the benefit of those who previously feared it,'' the president and conservatives, Mr. Butler adds.

That is because sequestration would trim only $18 billion from defense expenditures, whereas many on Capitol Hill would like to trim more.

``I would like to see us take $20 billion out of the [defense] budget,'' says Rep. Patricia Schroeder (D) of Colorado, a member of the House Armed Services Committee. ``I don't know whether we can.''

Members of Congress now are debating whether a defense trim of more than $18 billion would lead the president to veto an overall budget bill in order to hold defense cuts to $18 billion.

Rep. Leon Panetta (D) of California, chairman of the House Budget Committee, says he does not think sequestration would actually be to the advantage of the president and other defenders of maintaining a large military budget. He says the cuts would come in the wrong places, from their point of view.

The defense cuts would ``come out of personnel, readiness, and maintenance,'' affecting the military's capability to swing into action if needed, says Mr. Panetta.