"Anybody can write a budget," David Stockman used to say. He meant: it's easy to sit down with a pocket calculator and make ends meet -- what's hard is getting the result through the political system. That's true, of course. But the Gramm-Rudman Act, now law, is supposed to ensure that fiscal responsibility doesn't founder on political reality. So this is a good moment to remember the primary meaning of Stockman's adage: for all the screaming we're about to hear, it's really not hard to cut the deficit.
The first major Gramm-Rudman target is a $144 billion deficit for fiscal 1987, which begins nine months from now. Right now, that deficit looks more like $200 billion. So we must close a $56 billion gap to avoid setting off Gramm-Rudman's nightmarish automatic chopping machine.
It sounds formidable, but it isn't. The way the government raises and spends money today doesn't reflect any coherent political philosophy, liberal or conservative. There are ways to save billions without hurting the poor or even the near-poor. There are ways to raise billions without imperiling economic growth.
It's interesting to consider this fiscal challenge in the context of the much-heralded rebirth of patriotism: "our communal fantasy life" of "a can- do America," as Newsweek's current cover story on Sylvester Stallone puts it. Personal income is expected to top three trillion dollars in 1987. To meet the Gramm-Rudman timetable, we each have to give up 1.7 cents on the dollar. If that's a hopeless goal, the new patriotism is a fantasy indeed. Which is too bad, since if we could clean up the federal budget, the growth payoff would be far more than l.7 percent.
Something for liberals to keep in mind is that one of the most regressive government "programs" is interest on the national debt. It will cost about $150 billion in 1987. That represents a transfer from taxpayers to bondholders: on average, a far wealthier group. Every year of $200 billion deficits adds another $20 billion or so to the size of this "program."
Yet the wearisome annual ritual has already begun in which inside defenders of federal spending programs leak word of proposed cuts, so that outside supporters can rally in opposition. The New York Times, Dec. 14, page one: "Reagan Proposes Selling Off F.H.A. to Private Bidder; Sale of Housing Agency Is Described in Draft of Budget for 1987." The New York Times, Dec. 15, page 39: "Opposition Is Vowed on Plan for the Sale of Housing Agency." Same day, page one: "Reagan's Budget for 1987 Seeking Medicare Savings." And so on, day-by-day.
Medicare is a good example of the difference between true compassion and simple momentum. It's a $70 billion item in 1987. Gramm-Rudman exempts Medicare from its automatic cuts, which is absurd. The main beneficiaries of Medicare are the elderly and physicians. Neither is, on average, a deprived group. The elderly are now better off than Americans as a whole. Doctors average more than $100,000 a year.
When Medicare started in 1965, the monthly fee participants pay was expected to cover half the cost of their doctor bills. (Hospital bills are financed through the payroll tax.) Over the years, that figure drifted down to a quarter. Just putting it back where it was would save $12 billion. And it wouldn't affect the elderly poor at all, since they are exempt from these fees.
Despite the recent freeze on payments to doctors, Medicare still operates in a never- never land where doctors may charge as much as they wish, collect most of it from the government and bill the patient for the rest. They are under virtually no market pressure to hold down their charges. The government hasn't even begun to use its leverage as the largest purchaser of health care to lower its costs.
While liberals need to relearn the distinction between benevolence and boondoggle, conservatives need to forget the distinction between spending programs and tax policy. Some people take unfair advantage of the federal purse one way, some the other; it makes no difference. President Reagan's stand on principle against all new sources of revenue is silly as well as futile.
Even if the current version of tax reform becomes law, there will be plenty of ways left to bring in billions without raising marginal tax rates. Taxing just a small part of fringe benefits would raise a quick $8 billion. Taxing capital gains at death (gains on inherited property now escape tax completely) would bring in $4.5 billion. An oil tax that merely soaked up the amount by which oil prices are falling could raise as much as $45 billion.
This is hardly a complete wish list. The point is that it doesn't require genius, or even ruthlessness, to bring back fiscal sanity. Just a bit of courage.