More Spending Cuts For the President
WHAT is wrong with President Clinton's economic plan is that it is namby-pamby. After all this fuss, he comes up with a budget deficit that is still $206 billion in 1997. That is not good enough.Skip to next paragraph
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The president has properly challenged critics to specify where more spending cuts could be made. Here are some suggestions that offer billions in savings now, without waiting until 1997:
* The Strategic Defense Initiative. Depending on how you count (and on who's counting), wiping this out would save $3 billion to $5 billion in fiscal 1994 and more in future years. The president has cut SDI, but that is simply an invitation to Congress to add on to what's left. What he ought to do is to get rid of it.
* The space station. At best, this has dubious merit. Its time may come after (and if) we learn how to do it without unreasonable cost overruns, but that is sometime in the future.
* The Superconducting Super Collider. This is a $30 billion or $50 billion (who knows?) racetrack in Texas for subatomic particles. It is a genuinely good idea, which promises to pay off in mindboggling scientific breakthroughs; but we cannot afford it now. The president's gentle treatment of the SSC may be more closely related to a special senatorial election in Texas in May than to budget priorities. If the president wanted a Democratic senator from Texas, he should have left Lloyd Bentsen in the Senat e and found another secretary of the Treasury.
The president wants to tax 85 percent of Social Security payments to couples with incomes of more than $32,000 a year (individuals, more than $25,000). He should tax 100 percent of Social Security payments at all income levels. Other pensions are taxable; what makes Social Security so special? The argument is made that taxing Social Security hits the elderly poor. But the poor do not pay taxes anyway, at least not very much.
THE president has rightly said that reducing the deficit depends on controlling health-care costs. It is reasonable that the president should await the report of his task force on health care before making his own recommendations. Here are a few preliminary thoughts:
Much is made of the fact, and rightly so, that 37 million Americans have no health insurance. This means that 216 million do have health insurance. For a great many of these, all or part of the premiums are paid by their employers (or, in the case of some pension plans, former employers). This is a valuable benefit. It amounts to a significant addition to income. It ought to be counted as income, and the recipients ought to pay taxes on it. This would produce substantial revenue for the government. It wo uld revive the principle that people generally ought to pay for what they get. And it would be fair: Beneficiaries in low-income brackets would pay less; those in high brackets would pay more.
Consideration should also be given to treating health insurance claim payments as income. The government would benefit twice - once when the doctor paid tax on the insurance he received and again when the beneficiary paid tax on the same insurance. This would not only produce a great deal of money for the government; it would also give patients an incentive to hold down the costs of treatment, and perhaps more important, of diagnosis. People are commonly heard to brag about how many expensive tests they had "and it didn't cost me a penny." Taxing insurance benefits would reestablish the principle that insurance is not a giveaway. There would have to be a limit on the amount of insurance benefits counted as taxable income. One would not want to see a a catastrophic illness inflate somebody's taxable income from, say, $40,000 to $90,000.
Mr. Clinton has said that he wants his economic plan considered as a whole. He is concerned, with reason, that if Congress picks at it, it will unravel. But in dealing with Congress the more you ask for, the more you are likely to get. The president has another source of strength: The more groups he offends, the stronger the impression he gives of fairness.