THE BUDGET fight goes next to a House-Senate conference committee -- that is, back to the summit by another name -- and this time the parties need to be very careful. They've had two weeks since the House defeat of the last agreement to broadcast their competing views. The Republicans want the burden of deficit reduction borne more by spending cuts than by tax increases, and the Democrats want it borne more by the rich. In fact there are limits on how far the burden either can or is likely to be shifted in either direction, and the conferees need to remember why they're in the room. The deficit is a greater threat to national well-being -- and to the ability of either party to govern -- than are any of the means that have been proposed to reduce it.
The Democrats do seem to have regained the courage of their nominal convictions. What a difference a year can make. Last year the new House Democratic leadership tried to block, on grounds it was too regressive, a deficit reduction plan that included the president's proposed cut in the capital gains tax. They urged an increase in the top income tax rate instead -- and had their heads handed to them when a fourth of their members defected.
This year the opposite occurred. The same leaders lost when they joined the president in supporting a summit agreement that the Democratic members rejected as regressive. Now the House Democrats have united instead behind an even larger income tax increase than the one that previously divided them.
We wish that in drafting their plan the Democrats had shown a litte more courage in relation to the demands of the middle class. The gasoline tax may be regressive, but an increase would be a discipline to conserve; the Democrats backed off entirely. They yielded too much to the elderly as well; the nonpoor elderly ought to be made to pay a larger share of Medicare costs (or pay income tax on a larger share of Social Security benefits).
But mainly, on the merits, the Democrats are right. There does need to be a tax increase (the Republicans have never been able to come up with all the spending cuts their rhetoric requires), and it ought to be mainly in the progressive income tax. The big income tax cuts of the 1980s, particularly at the top, were a major cause of the deficit, and their beneficiaries should have to make a comparable contribution to the cure.
The problem is that the president, who by the recent standards of his party has already come a long way on taxes, is holding out against an income tax increase -- a large one in rates, in any case; he says he'll veto it. The Democrats are having a good time in the fairness meadow that this has opened up for them, and some Democrats may believe they now win either way -- if he vetoes a tax increase for the rich (in which case they get the issue) or if he signs one (they get the money).
But they don't win if he vetoes it, and deficit reduction goes down in the process. They will share deservedly in the blame for another failure of the political system. The social deficit that they also profess to care about will continue to increase for lack of funds. Both parties have some tricky ground to cover in the next few days, and we hope they get it right.