The administration has been tirelessly concerned that no detail of the budget reconciliation package be allowed to jeopardize its multi-year economic program. This fastidiousness has extended beyond the sixe of the budget cuts to the minutiae of how they are to be achieved through changes in the rules or operation of this program or that. Not so with respect to the far more massive tax proposals. With little more than an occasional grunt or raised eyebrow, the administration has allowed Congress to transform its once tidy tax package into a monstrous grab bag of gimmicks.
If, on the budget side, neither the administration nor Congress had done very well in developing a working definition of true need, their combined efforts on the tax measure are coming close to a comprehensive statement on true greed. As Michael Kinsley discusses on the opposite page, at this point no one seems too unworthy for special consideration -- not the commodity speculators with their six and seven-digit tax-free incomes, not the independant oil producers with their pockets already overflowing, not the inheritors of mulit-million-dollar estates. Every time the Republican Senate adds something to the pot, the Democratic House sees the raise and ups the bet -- and they're playing with multi-billion-dollar chips.
This spectacle is not only disgusting, but also dangerous.There are, we recall, two sides to every deficit. The budget side on which the expenditures are tallied, and the tax side on which the revenues to cover those expenditures are counted. A dollar spent on a tax subsidy adds just as much to the deficit as a dollar spent to buy something directly. Sometimes it costs a good bit more. This is because tax expenditures are hard to police and because they have a way of encouraging people to change their behavior so as to reap a good deal more from the windfall than anyone ever anticipate. Once into the law, tax-subsidies are also nigh impossible to ger rid of, since they are shielded from public srutiny by the impenetrable lexicon of the tax code.
Thus far, the administration has held back from interfering in this wide-open game for fear of jeopardizing the early package of the tax cuts that it wants so much. It cannot, however, be unaware of its own large stakes in the game. A major part of the administration's strategy for controlling inflation, stimulating economic growth and balancing the federal bedget rests on its belief that it can change the federal investors' and consumers' expectations with respect to the future. Thus far, Wall Street, at least, has been notably unimpressed. A tax package that looks like it could lead to a nearly uncontrollable loss of revenue in future years would hardly buttress the administration's always suspiciously regarded claim of a balanced budget in 1984. Nor will an accumulating set of preferences for the well-to-do build public confidence in the administration's program.
The administration had not hesitated to exercise its will on the budget side of the balance, and it has been most successful. It's time for it to start dealing in the tax game as well.