Deficit reduction: no pain, no gain - Column

Discount Store News, Jan 15, 1996 by Bob Verdisco

In recent months we have witnessed perhaps one of the most grueling and important debates in our nation's history, one that will define our vision of America for generations to come. At this moment, the very nature of government itself--its scope, breadth and influence--is under scrutiny. This country is steering a new course powered by the concept of a balanced budget in seven years. Out of this debate comes several important lessons for our national leaders, the business community and all Americans.

First, let's remember that balancing the federal budget is the nation's top economic priority. Ultimately, everyone in the debate--independents, Republicans, Democrats, liberals, conservatives and moderates--has a stake in keeping the threat of overgrowing federal deficits from mortgaging our children's future and crippling the economy into the 21st century. Immediate partisan consideration pales in light of what could happen to our country if we fail.

It is simply unacceptable not to act now to eliminate the deficit. We must curb the size of government, control skyrocketing entitlement programs and stop the costly over-regulation of our business. Can we afford to sit back and accept "business as usual' en the national debt is now $4.8 trillion and will (if current trends continue) rise to $7.53 trillion in just nine years? Interest on the debt alone is $235 billion a year, and by 1997 it could surpass total expenditures for national defense.

Balancing the budget will lead to a revitalized economy and more cash in Americans' pocketbooks. For example, the House Budget Committee projects that interest rates are 2% higher than they would be if the federal budget were in balance, and ending the budget deficit would create an additional 4.25 million jobs over the next 10 years. For homeowners, it would mean $37,000 less in house payments on a 30-year mortgage of $75,000. According to the General Accounting Office, Americans' real incomes would rise 36% by 2020 if the budget were balanced in seven years. For the retail industry, the benefits of a balanced budget--more jobs, a stronger economy and customers with more disposable income--are readily apparent.

Next, let's remember that balancing the budget involves tough choices, but along with the pain come some real gains.

For example, Medicare is a hot potato issue, but overhauling the giant health program will prevent it from becoming bankrupt within just seven years, while giving senior citizens more health care choices. Repealing business tax breaks is also controversial (especially with mass retailers since they are already heavily taxed), but could wind up in a package that strengthens the economy, increases consumer confidence and achieves a more positive business climate.

Lawmakers are elected to solve major national problems, not engage in partisan mud wrestling. The Administration and Congress must also recognize that the public is perfectly capable of distinguishing rhetoric from fact. As public servants, their mandate should be to protect America's best interests and secure the future for future generations.

The final lesson of the budget debate will become clear when the votes are counted in the November elections. The most successful candidates will be those who demonstrated that they sensed the direction that this country needs to take, contributed to a real solution to the deficit, talked straight to the American people and committed themselves to not tax and spend America into oblivion.