TO CUT next year's budget by $50 billion is possible -- in principle. $1It is possible even while raising military spending, and without gross inequities or the destruction of valuable social protections. But it remains very much to be seen whether President Reagan and Congress can actually agree on cuts that meet those standards.
Over the past week, in this space, we have offered a few suggestions about tightening the budget. But what if even the most dubious kinds of spending turn out to be sufficiently well defended by their armies of lobbyists and beneficiaries that they are, as a matter of practical politics, beyond reach? That would threaten to throw the whole burden onto the least influential and most vulnerable Americans. In that case, higher taxes would be preferable. There are always two ways to cure a budget deficit. If Mr. Reagan can't achieve a consensus on cuts in spending, he will have a duty to let taxes rise.
As the president and Congress gather their forces to push the budget down, it might be useful to recall what's been pushing it up. In the mid-1960s, Congress and President Johnson decided to provide medical insurance to the people receiving Social Security benefits. There was little real thought about the future cost. The economy was growing extremely rapidly, and people spoke of the growth dividend that was being generated in federal revenues. The growth dividend would pay for Medicare.
In the early 1970s, Congress and President Nixon collaborated on an enormous expansion of Social Security benefits. It meant a rise in payroll taxes, but the Vietnam War was coming to a close and military appropriations were rapidly being released for social programs including, indirectly, more generous Social Security benefits. Over the years many other programs also grew, but among the major ones none went up so fast as Social Security and Medicare.
But in the mid-1970s, the economy ceased to grow as rapidly as it had previously done, and the growth dividends faltered. At the same time, it became clear that military spending had been pushed too low for safety, and presidents, beginning with Mr. Ford, began to put some of the peace dividend back into defense -- a process that Mr. Reagan means to accelerate.
The American population is growing older, and the cost of health care is rising rapidly. Together, out of the current budget of $663 billion, Social Security and Medicare get $178 billion -- more than the current allotment for defense -- and they are now rising by more than $25 billion a year.That's why the revenues from the payroll tax are under strain again, despite the large increase in the tax rate last month.
Since Mr. Reagan said last week that he will not try to restrain the rise of either Social Security's basic retirement benefits or Medicare, savings will have to be found somewhere else.
The Defense Department, as the other center of high growth, will have a special obligation to prune its budget. There's no particular reason to think that this department has been more efficiently run, over the years, than the others. The danger in setting spending levels as measures of military effort, as both the last administration and the present one have done, is that waste counts as much as the shrewdest investment. Secretary Weinberger will owe the country a better indicator of the country's military capability than merely the rise in the appropriations. But defense spending is still much lower, in relation to the size of the economy, than it was in the early 1960s before Vietnam. It is the pensions and the medical benefits that are larger.
When Mr. Reagan addresses the Congress on Wednesday evening, laying out in greater detail his plans for the budget and taxation, he is likely to get a highly sympathetic response. Clearly, most Americans share his visceral feeling that the budget has got too big, too loose and too ready to expand itself mindlessly. But the budget is, after all, little more than a catalog of the promises that Americans as a society have made to each other over the years. Some of those promises are now obsolete, and some have been fulfilled. But many remain entirely valid -- as Mr. Reagan has explicity recognized -- and they deserve to be defended.
Over the past 15 years the country has got itself into trouble by making very generous commitments while refusing to pay the full costs of them. It won't be until the end of the congressional session, 10 months from now, that the country will know what actually can be cut from the budget -- and at whose expense. But then it will be up to the president and Congress to set taxes to meet public responsibilties, and not the other way around.