Several hundred leading business executives, financiers, academics and former government officials call for sizeable tax increases and spending cuts in fiscal 1985 and beyond in an advertisement in today's Washington Post.
The advertisement, "a bipartisan appeal to resolve the budget crisis," was addressed to the president and Congress and says that the budget is "out of control" and that "immense deficits . . . threaten to lock the economy in stagnation for the remainder of this century."
Its list of signatories resembles a Who's Who in American business and public life, with the six founding members of the group headed by Peter G. Peterson, former Commerce secretary under President Nixon. Peterson said the signers include heads of 14 of the top 15 Wall Street firms, as well as about 300 chief executive officers, 50 former government officials and several academics and lawyers.
Others among the founding members were former Treasury secretaries W. Michael Blumenthal, William E. Simon, John B. Connally, Henry H. Fowler and C. Douglas Dillon.
In order to cut the deficit, the advertisement recommends for fiscal 1985:
* $25 billion of cuts in defense spending.
* $60 billion of cuts in entitlement programs, particularly those--such as Social Security--which are not aimed directly at helping the needy.
* $60 billion of tax increases, principally from consumption-based taxes rather than income taxes.
At a news conference in Washington yesterday, Peterson said the prospective deficits are "grotesque." However, he added that the current deficit was largely a reflection of recession, and stressed that the emphasis of the appeal was on out-year budgets and not on the short-term.
Peterson later said that high interest rates were clearly a product of tight monetary policy as well as excessive budget deficits. The advertisement says "the present recession has clearly been aggravated by a collision between tight money and loose budget." Measures to reduce deficits in later years should enable a better balance between fiscal and monetary policy, Peterson said, adding he could "in no way" imagine raising taxes "in this environment," although "a signal" is needed that the deficits will be reduced in the future.
On Social Security, Peterson cautioned that the plan just worked out by a bipartisan commission and backed by President Reagan and House Speaker Thomas P. O'Neill (D-Mass.) was a "first step" rather than a final solution.
The 500 participants in the appeal had not had time to work out a collective view on the Social Security package, but organizers had a preliminary analysis that showed the benefit to the overall federal budget would total only about $8 billion or $9 billion a year, he said.
The total savings from 1983 to 1989--estimated at $169 billion for the Social Security system--will cut the overall federal deficit by only about $90 billion, he said. This is because some of the money that goes to fund Social Security under the plan will come from general revenues. And it is unlikely that further cuts can be made in Social Security this decade, congressional sources said yesterday.
The bipartisan appeal stressed the need for more investment in order to raise productivity and growth in later years. Deficits of the size now projected would absorb "a stunning and unprecedented 100 percent of the net savings generated by individuals and families in the U.S.," the advertisement says.
Peterson also said that the poor had borne more than their share of the burden of spending reductions so far, and future savings should be aimed particuarly at programs which subsidized the consumption of middle and upper income groups.