PRESIDENT CLINTON's new budget is based largely on the happy assumption that the present economic expansion, now in its sixth year, will go on for at least five more years until the pTC federal Treasury actually winds up with a $17 billion surplus in 2002 after 33 straight years of deficit spending.
But if recession should resurface in the interim, the president has an escape hatch. Tax cuts would be rescinded; federal spending slashed in Draconian fashion -- all this, of course, happening after he has left office and the 107th Congress looks back on the present 105th Congress as something out of pre-history.
The dirty little secret in Washington, totally unreflected in stylistic grumbling from the political opposition, is that both parties buy into this scenario. Republicans even complain that Mr. Clinton's $98 billion tax cut package is not "permanent" -- that it has the escape hatch cited above. Are they claiming the business cycle has been repealed? The GOP is more persuasive when noting that two-thirds of the president's spending cuts are backloaded to 2001 and 2002, well after he has trudged across his bridge to a new century and retirement.
If Mr. Clinton's $1.687 trillion budget for fiscal 1998 is alive rather than dead on arrival, it is because he has been riding the crest of a buoyant economy, low inflation, robust job creation and deficits way down as a percent of gross domestic product. It has produced a revenue bonanza beyond the dreams of the rosiest forecasts during his first term. And it has given him the opportunity, eagerly seized, to purloin Republican rhetoric about balanced budget.
The triumphant tone of yesterday's budget message was that of a president who now realizes his economic record -- provided it holds up during the next four years -- could be his greatest achievement. His State of the Union address made much of plans to reduce the growth of Medicare and Medicaid, expansive funding for education from pre-school through college and health care for poor children. But none of Mr. Clinton's goals can be achieved if an economic slowdown reduces revenues and mandates higher welfare spending.
Despite all the gimmickry and backloading that go into any federal budget, both political parties are encouraging the notion that this year, at last, they may be able to come up with an agreed balanced budget plan. Mr. Clinton has stopped projecting deficits as far out as one can see. And Republicans are prepared to work from his blueprint rather than from one of their own. How splendid it would be if Washington produces a prudent, realistic federal budget.
Pub Date: 2/07/97