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A No to Tax Cuts

Monday, January 26, 1998; Page A22


HOUSE WAYS and Means Committee Chairman Bill Archer isn't one to beat about the bush. He wants to reduce the size and influence of the federal government. "I believe in a balanced budget and fought to enact one," he said in a speech the other day. "But mere balance must not be society's highest goal."

The chairman therefore would insist on a balanced budget, but at the same time enact a further tax cut and phase into place a cap on federal taxes as a percentage of the gross domestic product. The cap he has in mind would require still more tax cuts. Eventually, to keep a deficit from reappearing, the tax cuts would have to be offset by spending cuts, and Mr. Archer would have achieved his objective.

Less government is a hard goal with which to quarrel in the abstract. But this is the wrong way to approach it. Mr. Archer seeks to force the result by confronting future Congresses and presidents with a choice: Shrink the government, or commit fiscal folly. But the country tried that in the 1980s, and folly was the result. In 10 years the government racked up about twice as much debt as it had in the previous 200. Interest on the debt has doubled as a share of the budget; it now accounts for about one-seventh of total annual spending. The cost of the added debt is well above $100 billion a year. Think what that could buy, in terms of Medicare, highways, education, tax relief, debt reduction, you name it. Instead, we pay the mortgage.

The right approach to shrinking the government is to vote the spending cuts up front, if the votes can be found, then adjust revenues to match, instead of the other way around. Mr. Archer and others speak of the budget surplus that may lie ahead temporarily. That surplus, as they themselves well understand, will be temporary even if they don't spend it in advance. The government faces enormous costs as the baby boomers retire -- start to pay less in taxes and collect much more in benefits -- beginning early in the next century. It is absolute folly, not just the run-of-the-mill variety, to cut taxes in the face of that. The squeeze will not be just on the programs for the elderly, Social Security, Medicare and to some extent Medicaid. The rest of government, including national defense, which will be competing with these programs for scarce dollars, will be even more tightly constrained. There will be no Social Security surplus, as now, to help finance these programs. Social Security itself will have been turned into a drain by demography.

The chairman envisions a world in which the government takes less in taxes, "letting people keep more of what they earn, easing their financial burdens, freeing them to invest in themselves and their communities." He says, "We must care for each other more and tax each other less." But one of the ways in which we care for each other is through the money collected in taxes, and that will be truer not too many years from now -- the need will be greater -- than it is now. The people who want to cut taxes need to say first how they propose to deal with that. Which specific costs and programs do they want to do away with? Then, if the country agrees, will be time enough to talk about cutting taxes.

© Copyright 1998 The Washington Post Company

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