IN WASHINGTON, a city of one game at a time, the only game in town these days is Cut the Deficit. It's a new version of an older game called Balance the Budget, which was tossed out after proving too difficult. No one could win.
Cut the Deficit has the advantage of being about as ambiguous as an Ezra Pound poem. This vagueness appeals to a lot of people in Washington who are not eager to be pinned down. The game can be fun because the player gets at least the illusion of power, playing with the big- ticket items in the world's biggest enterprise, the American government.
The trouble is, the game involves only taking money away from people. The only winners of Cut the Deficit are the gnomes of Wall Street and Zurich who are meant to respond positively to reduced federal indebtedness, and the national economy if it responds positively to lower deficits. The losers, potentially, are all the recipients of government spending: the poor people who get health care under Medicare and groceries with food stamps; the military men who want new weapons to keep up with the Russians, etc.
As a practical political exercise, this one raises all manner of impossible questions. Take the matter of where to start the game: There are numerous choices. One can start with David Stockman's 1983 deficit projection of $96 billion, but that assumes a lot of good economic news and miraculous cooperation from Congress in making further spending cuts. So you might want to start with the Congressional Budget Office's prediction of a $157 billion deficit, or with the House Budget Committee's latest guess, which is $167 billion. In the end these will all turn out to be wrong guesses, but any one will do as a starting point.
Take next the matter of who will play Cut the Deficit. President Reagan is already in for sure, though there is room for an accusation that he is playing to lose. About a dozen members of Congress, led by the ranking members of the Senate Budget Committee, Sens. Pete Domenici (R-N.M.) and Ernest F. (Fritz) Hollings (D-S.C.), have produced formal entries.
Senate Republican leaders are struggling to come up with an entry, and the Democratic leaders in the House are debating whether or not to try.
Or take the matter of the stakes of the game. What happens if the U.S. government runs up half a trillion dollars in new debt during the next three or four years? Would that shake the Republic's foundations? Bring on a depression? Bring on a new Democratic president in 1985? Your guess is as good as Ezra Pound's.
The attempt here is to reduce Cut the Deficit to a game anyone can play. The choices that follow are among the ones now being discussed most actively on Capitol Hill, where the game eventually must be played out. With the help of a pencil and paper, every player can construct a scheme for restoring some balance to the nation's accounts.
A couple of rules should be explained. First, there are no dice to throw in this game; each player can move to whatever spot on the board strikes his or her fancy. On the other hand, every spot on the board involves painful political and/or economic headaches. As Rep. Les Aspin (D-Wis.) put it, "the easy ones don't save you much money, and the ones that get you much money aren't easy." In other words, for politicians, this game is no fun.
Second, this year's version of the game does not include opportunities for further large cuts in "discretionary" federal spending programs -- aid to education, aid for highway construction, etc. All the signs in Congress in this election year point to increases, not cuts, in these programs, nearly all of which were cut significantly last year.
Okay, on with the game.
CUT THE DEFENSE BUDGET
This ought to be easy. The president has pumped up the Pentagon's budget so far that it is bulging, right? Why not, say, go back to a rate of growth in defense spending of about 5 percent a year -- something like Jimmy Carter had in mind?
Here's why not: If you do that, you have to cut proposed defense spending $8.6 billion for fiscal 1983, $15.5 billion for 1984, and 28.1 billion for 1985. To accomplish even those modest cuts, you have to make painful reductions in the one aspect of President Reagan's program which -- according to opinion polls -- the public still supports. You have to take a lot of money away from the armed services for basic items like ammunition and general readiness, or you have to go after some of the big weapons systems that Congress itself has repeatedly endorsed to compete with the steady increase in Soviet military spending that has been going on for 20 years.
Do you want to cut out the B1 bomber? Okay, but you save a piddling $200 million in the fiscal 1983 budget if you do so. That's because the big costs of the new B1 don't begin to be felt until 1984. In fact you could radically modify downward the administration's plans for procuring B1s, new ships, new tanks, new armored personnel carriers, new tactical airplanes, new nuclear submarines and more, and still save less than $1 billion in fiscal 1983. (According to the CBO, such a set of cuts would reduce the Pentagon's authority to obligate funds by a substantial $13.9 billion in '83, but because the Pentagon spends its money so slowly, only $900 million would show up as reduced fiscal '83 outlays.)
There is one procurement program that could be cut with significant consequences for the deficit right away: the MX supermissile. Kill that program now -- an idea pushed by many arms controllers -- and you'll save $2.4 billion in '83 and $6.5 billion in '84. You'll also take away what the Reagan administration and the House and Senate armed services committees consider a crucial new contribution to American stratetgic power and a much- needed bargaining chip for future arms control talks with the Soviets.
How could you save, say, $10 billion in defense outlays in 1983 without killing the MX? Only by significantly reducing the actual military capability of forces in being at a time when Americans seem uneasy already about the strength of their military establishment.
Go ahead and try. Keep your mind off the fact that this is an election year, a fact that might discourage Congress from raising taxes. Keep your mind off the fact that the economy is in its worst recession, probably, since the Great Depression, which also might discourage the House and Senate from deflating the economy further with new taxes.
Why don't you wipe out the scheduled 1983 reduction in personal income taxes? This would save $7 billion in fiscal '83, and $33 billion in '84. Of course, this is the one step you can take that will hurt every taxpayer in the country. Don't worry; you originally earned your reputation by being courageous.
Repeal the tax provision passed last year that allows struggling companies, in effect, to sell the tax breaks they are entitled to but cannot use -- because they aren't making any profits -- to companies that are doing well. This is the so-called "leasing" provision. Repealing it would clobber our weakest industrial giants, like the Chrysler Corp. But repeal would save $3 billion in fiscal '83 and $5 billion in '84.
At the moment, health insurance premiums that companies pay for their employes are tax free. What about a new law providing that the employes have to pay income tax on any medical insurance premium over $150 a month? This would save $4 to $5 billion a year.
After all the tax breaks Congress gave to corporations last year, many big companies aren't paying any federal corporate income tax at all. So why don't you impose a new minimum tax that they all have to pay, regardless of what deductions they can take? This is the Reagan administration's idea. The White House wants to raise $2.3 billion in '83 and $4.6 billion in '84 with a minimum corporate tax. Don't worry about the new Minimum Tax Coalition, an instant lobbying group of giant corporations already hard at work to defeat this proposal in Congress. You're a tiger -- you can handle those lobbyists.
How about a $5-a-barrel oil import fee? Hey, this looks pretty good; with world prices falling, you might be able to impose it without noticably affecting the current price of gasoline. And it would raise $10 billion a year, real money. Of course this would create a windfall for domestic oil producers, who could raise their prices to match the new price of imported oil with the tax. And there are quite a few gasoline buyers who vote, and who might figure out that their gas costs would be going down were it not for this new tax. What the hell.
CUT SOCIAL SECURITY.
The weak at heart should skip right to the next section. Social Security is by far the biggest domestic spending program, that is true. It is also by far the most popular spending program of any kind.
But you might take courage from the fact that although American workers' wages rose 127 percent from 1970 to 1982, Social Security benefits have risen 205 percent (according to the Senate Budget Committee). It does appear that Social Security beneficiaries have been doing better relative to inflation than working Americans. Maybe they are due for a cut.
Wait a minute: The average Social Security benefit is still only about $386 a month. An employed worker making just the minimum wage earns $576 a month. People who have to live on Social Security are struggling to survive: Is that who you want to cut?
In Congress this year, there seems to be just one possible option for reducing the cost of Social Security: Skip or, more likely, lower the scheduled, annual cost-of-living adjustment, or COLA. This would not mean cutting anyone's benefit, but it would mean denying part or all of the annual increase recipients have come to expect. Skipping the '83 COLA adjustment would save $15 billion. Delaying it three months and cutting it by 2 percentage points would save $6 billion.
Here's one for the memory drawer: If the economy recovers well this summer, according to the Senate Budget Committee, the basic Social Security retirement fund will be bankrupt by September 1983, unless the program is cut before then. If the recovery is less strong, bankruptcy will come sooner. That's next year's problem.
CUT MEDICARE AND MEDICAID.
The weak-hearted might want to skip this section, too. Most Americans now equate Medicare, which provides health care for people over 65, with Social Security itself; it is just as popular. But the costs of these programs have skyrocketed, and continue to grow much faster than the rate of inflation.
Congress has repeatedly rejected efforts to legislate controls on medical costs, as it did with the Carter administration's proposal for hospital cost containment. Without such controls, the only way to save money on Medicare and Medicaid is to take benefits away from the elderly and the poor. Of course the poor don't vote in very high numbers -- but the elderly vote more than any other segment of the population.
The monkey for Medicaid can be shifted to the backs of the state governments. The administration wants to do this, and to compel Medicaid recipients (by and large the poorest Americans) to pay a larger share of their medical costs. Altogether the president says he would like to take $9 billion out of the $88 billion the federal government will otherwise spend on health care, but Congress to date has shown no interest in making these cuts.
CUT FEDERAL PAY AND PENSIONS
Skip all pay increases for civilian and military government employes this year and you'll save $6 billion -- and activate one of Washington's most resourceful lobbies. By holding federal pay raises to 5 percent in 1983, you can save $1.4 billion that year and $3 billion in '84.
You can save $1 billion a year by delaying this year's COLA for federal retirees (military and civilian) by three months, then reducing it by 2 percentage points. You can save nearly $1 billion by closing the 30 smallest vete lorans' hospitals and eliminating pensions to veterans with a "10 percent" -- that is, relatively minor -- disability.
By now you have the idea. Cut The Deficit is a little too much like Russian Roulette for it ever to develop a wide following among politicians.
Moreover, slicing away like crazy at the deficit is still going to leave rivers of red ink. For example, if you picked every one of the deficit-cutters offered in this version of the game, you have brought the fiscal 1983 deficit down by $64 billion. If the CBO's forecasts are accurate (and they could be overly optimistic), you're left with a fiscal 1983 deficit of $102 billion, the biggest this country has ever had.
In other words, Congress is faced with agonizing choices which, even if taken, will leave an agonizing deficit to run on next November. This is why Congress is presently paralyzed on the budget issue. "What you are seeing," a Republican Senate aide observed, "is a version of catatonia," the psychological state "marked by stupor," as Webster puts it.
The only realistic objective before Congress now is to take steps this year that will lead to significant deficit reductions in 1984 and later, even though they leave a huge deficit in 1983. "If you want to get the snakes, crush the eggs," in the words of Rep. Timothy Wirth (D-Col.), a member of the House Budget Committee. But for politicians, these eggs are all rotten.