Where the Republicans aren't wrong

Washington Monthly, June, 1995 by Daniel Franklin

I have a confession to make.

There have been times when, alone in the dark of night, I have been thankful that the Republicans took control of Congress.

Don't get me wrong. I'm a good liberal and faithful Democrat. I, too, have winced at some of the proposals the Republicans are bulldogging through Congress. The flat-tax proposal being batted around conservative circles would either bludgeon the poor and middle class or balloon the deficit. Their welfare plan would give Dickens the shakes. And their proposal to revive the Star Wars missile defense program (which failed to pass the House) - well, let's just say that at first I thought they were kidding.

Still, as Democrats shake off the punch-drunkenness from the 104th Congress' inaugural 100 days, it is time to acknowledge that the Republic will not crumble under Republican rule. Indeed, as the reality sinks in that there will be at least another 500 days of Republican dominance of Congress, it might ease the hangover to acknowledge the instances where they aren't wrong.

The Balanced Budget Amendment

At a recent press conference held to attack Republican budget cuts, Al Gore, Richard Gephardt, and Tom Daschle were asked by a reporter how Democrats would balance the budget. Nonplussed, the three Democratic leaders turned to one another and stared in silence.

An aversion to balancing the budget is deeply embedded in the Democratic DNA. Since Franklin Roosevelt used deficits to defeat the Great Depression and win World War II, the party of the people has been deeply and sometimes rightly suspicious of Republican efforts to cut spending, especially spending that benefits large segments of the population. (And, of course, Republicans themselves are often less than genuine in their claim to be deficit hawks. Remember that the deficit exploded under President Reagan, and that fondness for pork projects in Congress is certainly bipartisan.)

The Democrats, however, have forgotten the other half of the lesson that deficits are justified in bad times: In good times, the red ink should be eliminated. And in forgetting, they have lost touch with the people who, as poll after poll demonstrates, believe that this country should stop living beyond its means.

The Balanced Budget Amendment offered by the Republicans has tremendous symbolic importance for the American people. They want a solemn expression of the nation's determination to get its fiscal house in order. But more than symbolism is involved. There are practical problems that make resolute progress toward a balanced budget imperative, Consider just the matter of interest. In 1995, the U.S. paid $234 billion in interest on the debt. The deficit was $193 billion. Assume for a moment, then, that there was no debt. The government would have a $41 billion surplus, which could be used to pay for social programs or tax cuts, or whatever else the body politic demanded.

But of course, there is a debt ($4.8 trillion at last count). And until the government balances its books, the interest on the debt will consume a greater and greater share of the budget. The Congressional Budget Office estimates that, if we continue spending as we have, the amount the government will pay in interest on the national debt will rise to $310 billion (or 16 percent of the total budget) by the year 2000. The country's interest payments are growing faster than Social Security.

Of course, deficit spending can be necessary in times of war or economic recession. That's why the amendment has an escape hatch. It allows a 60 percent supermajority of Congress to approve a budget that is not balanced.

Some critics say that this provision would give the minority the ability to hold hostage the government's budget and the nation's economy when deficit spending is justified. But in times of true crisis, whether economic or military, and on bills of true importance, Congress has been strikingly unified. The Social Security Act in 1935 and the Civil Rights Act of 1964 were both approved with more than 70 votes in the Senate. Declarations of war have been unanimous or near unanimous. There is no reason to believe that a clear threat to the welfare of the country would not be enough to inspire 60 percent of Congress to vote for an emergency budget. And supermajorities aren't unheard of in Congress. It takes two-thirds of the Senate to approve a simple friendship treaty. Why not require 60 percent before allowing a deficit?

The Republicans want to balance the budget by 2002. But as wise observers have noted, there is nothing magic about this date. Indeed, just as we went to press with this article, Bill Clinton was telling New Hampshire reporters that he would offer a plan to balance the budget by 2005. This plan probably makes more sense than the Republican plan, whose precipitous spending reductions could cause a severe economic downturn.

What's far more important than speed is the soundness of the budget balancing plan and the resolution with which it is carried out. Big cuts are possible. Military spending can be reduced by eliminating big ticket items such as the F-22, B-2, and Seawolf submarine that are not needed with the Cold War over. Much more can be saved by cutting civil service, military, and Social Security pensions for the affluent elderly. Retirement ages should be gradually raised from 65 to 70 for Social Security, from 55 to 65 for civilian government employees, and military retirement eligibility should require 30 years of service instead of 20. (These changes are all based on increased life expectancy.) Automatic cost of living allowances (COLAs) should be eliminated for all government pensioners whose outside earnings exceed $30,000. COLAs are virtually unheard of in private sector pensions. They became customary in the government during double-digit inflation in the seventies. It's been almost 15 years since the government got inflation under control. The COLAs are no longer justified.