I DIDN'T shed any tears when the Supreme Court struck down the so-called Gramm-Rudman-Hollings law as unconstitutional. I've come to the conclusion, however, that the only way to force the president and Congress to enact a realistic deficit-reduction package is to reinstate the automatic trigger under G-R-H in a constitutionally valid manner. This week House and Senate negotiators should agree on a plan to do this and a simple goal should guide our negotiations: real deficit reduction.
G-R-H establishes fixed federal deficit targets and requires that automatic spending cuts take place if the targets are not met through the regular legislative process. The idea that we have to rely on automatic spending cuts is offensive to me. Our budget priorities should be developed after debate, negotiation and compromise between Congress and the president. But I'm convinced that, unless the president and Congress are faced with substantial and, frankly, unpalatable spending cuts, we will never make the tough choices required to reduce the deficit.
I think I have a unique perspective on this issue. I chaired the House-Senate conference committee that drafted the final version of G-R-H, so I know how strongly its supporters and opponents feel about it. I also chair the House Ways and Means Committee, so I know how hard it is to reach consensus, especially on a tax bill.
My idea for restoring the "trigger" in G-R-H is pretty straightforward. In order to make the process constitutional, I would vest final authority for making automatic cuts with the Office of Management and Budget, an arm of the executive branch. But I would give OMB virtually no discretion in determining the cuts. I would reinstate the trigger for two years. That would allow the next president to make recommendations on continuing the trigger and give Congress time to see how OMB complies with the law.
I would revise the deficit targets to a level that would be painful but not disruptive to the economy. Deficit reduction on the order of $36 billion per year would satisfy that test. I would continue the current 50-50 split between defense and non-defense programs subject to the cuts, but I would exempt military personnel accounts. This balance would protect our combat readiness, while putting pressure on the president's defense buildup. Finally, I would double the cuts in the Medicare program from two percent of program costs to four percent. This would prompt the medical community and the elderly, two powerful groups, to insist on a budget compromise rather than G-R-H cuts.
I want the G-R-H fixup to be simple, understandable and -- unlike much of what we've done in past deficit-cutting efforts -- real. I want Congress to pay a price if it fails to pass a balanced deficit-reduction bill -- the price of having to explain to constituents why essential programs, such as air traffic control or bridge repair or medical care for the disabled suffered cuts that could have been avoided. And I want the president to pay a price if he insists on vetoing such a balanced bill -- the price of a significant reduction in the defense buildup that he has refused to pay for.
By restoring the trigger under G-R-H, we make the price of failure to reach a budget compromise very high. It's a risky strategy. But the risk to our economy is much greater if we don't get action on the deficit. And without the G-R-H gun pointed at all of us, I don't think we will. The president's recent stump speeches and veto threats on revenues indicate that he's willing to simply walk away from the deficit. It's bad enough that he's content to leave the next president with a built-in deficit of $200 billion per year. But he's seems to be enjoying himself doing nothing about it!
But just as troubling are calls from members of my own party to be "constructively irresponsible" and pass a "soak the rich" bill that has no chance of becoming the law, just so we'll have political "cover" when the bill is vetoed.
To use the president's words, this is "our watch." Leaving the deficit unresolved until the next election is just plain gutless. Admitting that reduced spending must be combined with more revenue is the necessary first step. Then we've got to develop a bill that can become law. Tough as that will be, I'm convinced that passing a tax bill that Democrats can support and the president can sign is not as impossible as many legislators seem to think.
The history of major tax laws is one of Republican presidents cooperating with a Democratic Congress. The major exception to this rule of cooperation was the 1981 tax bill. It is also the best example of why Congress and the president should work together in writing tax laws. Democrats got rolled by the president on that bill and it started a $900 billion revenue drain on the treasury. But passage of the 1982 and 1984 deficit reduction bills and the 1986 tax reform virtually repealed the worst revenue excesses in the 1981 act. It took us six years, but we did it. And we did it with President Reagan's support.
How did we do that? How did we pass, and the president sign, not just these big tax hikes but also hefty boosts in gasoline and Social Security taxes without either side taking political heat for it? By working together and making sure the president was on board. The tax increases since 1981 have been signed by the president for two reasons. One, they were necessary to achieve important policy goals -- deficit reduction, highway improvements and long term solvency of the Social Security system. Two, they did not threaten the president's primary tax policy -- lower income tax rates.
The 1982 and the 1984 acts had common characteristics: "Base broadeners" to distribute the tax burden more equitably, "loophole closers" to make the tax code fairer, "user fees" and some excise taxes. Now we have to use the same approach, starting with the revenue proposals in the president's own budget: further "base broadeners," the closing of "loopholes," "user fees" and adding, only if necessary, modest excise taxes.
If we try to raise income tax rates, however, we give up any chance of getting the president to the bargaining table. President Reagan is a formidable opponent even when he's wrong. And he is wrong when he says we don't need new revenues to reduce the deficit. But wait until you see him when he's right. And when he objects to raising marginal tax rates, he is right.
Tax reform promised two things. First, lower rates in return for the repeal of tax preferences. Second, stability in the tax system for both individuals and the business community. We have had four major tax bills since 1981. Although the deficit demands yet another major tax bill, the need for stability argues against disrupting the 1986 act.
I've worked with this president on a number of major bills over the past 6 years -- two deficit reduction bills, social security solvency legislation, trade reform and tax reform. In fact, I've been criticized by Democrats for being too concerned about getting the president's support for legislation. But don't get me wrong. No member of the House is more disappointed and angry with the president's refusal to face up to the deficit.
Like many of my colleagues, I wish we could convince the American people that this president -- who has never submitted anything remotely close to a balanced budget, who in six years has more than doubled, to over $2 trillion, the federal debt -- is the biggest deficit spender in history. He is. But the American people just don't believe it.
It is even harder to convince the American people the president is the biggest peacetime tax raiser in our history. But he is. He has signed laws raising $400 billion in taxes over five years. His own budgets have recommended $220 billion in new taxes. But again, the people just don't believe it.
The president's political posturing doesn't sit well with me, but neither does a $180 billion deficit. To reduce that deficit, Congress must pass and the president must sign a deficit reduction package. Our goal should be to get that presidential signature. We can get it by reinstating the G-R-H trigger and by sending the president a bill that cuts spending responsibly and raises revenues without raising income tax rates. Let's stop the name-calling and finger-pointing and get the job done.
Dan Rostenkowski (D-Ill.) is chairman of the House Ways and Means Committee.