By Gene Sperling and Franklin D. Raines
Monday, June 9 1997; Page A19

In a town where the goal posts move quicker than anyone can kick the ball, the favorite new game is to find what is lacking – or "flawed" – in a budget agreement that completes the task of bringing the deficit from $290 billion in 1992 to zero in 2002. The commentary is provocative, mostly well-intentioned, but all too often built on myths that – simply put – just ain't so.

Myth No. 1: The minimalist budget.

The success of the president's 1993 economic plan has cut the deficit from $290 billion in 1992 to an expected $57 billion this year. While 77 percent of the work has been done, this agreement adds $900 billion in net deficit reduction over 10 years. Even by Washington standards, that's a lot of money.

On entitlements, some have criticized the plan without acknowledging its long-term savings or structural reforms. The entitlement savings – more than $400 billion over 10 years – represent an effort to modernize Medicare and protect the trust fund for at least a decade. More important, the plan makes structural changes to prepare Medicare for the 21st century. It provides more choice and competition, revamps payment systems in the fastest growing components of Medicare to constrain costs and creates incentives for managed care, while extending coverage to preventive measures like screening for breast and colon cancer.

Myth No. 2: A budget built on a windfall.

Another myth is that the agreement was cemented by spending an extra $225 billion that the Congressional Budget Office (CBO) found at the last minute. That is not the case. About 80 percent of the $225 billion already had been assumed in the agreement or was used to reduce the deficit.

The real issue is not what CBO changed, but whether the final assumptions are conservative. They are. First, look at our record on projections. For the last five years, growth has been higher and the deficit lower – an average of $50 billion lower – than we projected. Second, look at the numbers. The assumption of 2.2 percent real growth over the next five years is lower than the blue chip private-sector consensus, and well below the 2.9 percent average since the president took office. We use conservative assumptions to reflect average growth over the normal ups and downs in the economy. And this projection is actually lower than the average growth rate since 1973 – through several business cycles.

Myth No. 3: It's 1981 all over again.

The 1981 tax cut had a devastating impact on the nation's fiscal health. Critics have said that this agreement repeats that error. Not even close. While the tax cut in the agreement amounts to $250 billion over 10 years, the 1981 tax cut cost the Treasury $2.1 trillion over a similar time period. Adjusted for inflation, this tax cut is less than 10 percent of the 1981 tax cut. What's more, this tax cut is paid for, and Sen. Trent Lott (R-Miss.) and House Speaker Newt Gingrich (R-Ga.) have committed to the president that it will not explode beyond the 10th year.

Myth No. 4: The deficit is balanced only for a nanosecond.

Another myth is that the budget achieves balance for an instant, then immediately returns to deficit. That's plain wrong. The budget agreement achieves balance in 2002 and then goes into a surplus of $5 billion in 2003 that grows to $34 billion in 2007. Now that we have balanced the budget, we must tackle the generational imbalance we face – particularly in the areas of long-term Medicare and Social Security reform. This agreement, however, is a crucial step to prepare for the retirement of the baby-boom generation.

Myth No. 5: We could have supported Hatch-Kennedy without breaking our word.

The crux of any bipartisan deal is the commitment of both sides to honor their word. President Clinton insisted that this agreement include $16 billion to expand health coverage for up to 5 million uninsured children. We are proud of that commitment. It is no secret that we support the goals of the Hatch-Kennedy bill. But we are insisting that Republicans hold to their part of the bargain on education, tax cuts, legal immigrant and Medicaid. How could we make that demand if we had backed-off a vital component the first time a proposal came along that we liked?

Myth No. 6: Gridlock is better than budget agreement.

Implicit in many of the critiques is an assumption that the status quo would have been preferable. Conservatives have criticized Republicans for accepting most of the president's request for investments in our future, while others rebuke the administration for accepting a deal that would allow a capital gains tax cut. Those who argue for a budget with no tax cuts or harsh domestic cuts are setting standards that would have made a bipartisan agreement impossible. Do the critics believe that holding out for the purest position and certain gridlock is preferable to an agreement that puts the deficit on a path to zero while investing more in education, the environment and children's health?

That view is wrongheaded. Top financial experts, including Alan Greenspan and Paul Volcker, have specifically credited the 1993 plan's deficit reduction with leading to lower interest rates, higher private sector investment and a stronger economy. Line-drawing by either side would have created the specter of gridlock, dampening confidence, raising interest rates and weakening a remarkable expansion. We chose a better path: leaving our differences to be resolved outside this agreement and sacrificing our sense of the perfect to accomplish the common good of a balanced budget. That plan will strengthen Medicare, invest $16 billion in health care for poor children, protect the environment, provide the largest increasing in education funding in a generation and make our nation's fiscal health the envy of the world. That can't be all bad.

The writers are, respectively, head of the president's National Economic Council and director of the Office of Management and Budget.