THE PROBLEM all year in cutting the deficit has been that major players have wanted to exempt from the process large chunks of the budget. The president will not hear of a tax increase and has tried to protect the defense build-up. The Democrats and the president have both put Social Security off limits. Defense and Social Security, together with interest on the debt, are two-thirds of the budget. The remaining third includes such weighty items as Medicare, the farm programs, all the federal welfare programs, unemployment compensation and all federal aid to state and local governments. The entire burden of deficit reduction is too much to be borne by this third alone.
Just this week the acting director of the Office of Management and Budget warned the Cabinet that the deficit in the fiscal year now begun is likely to be not the roughly $180 billion last officially forecast, but again about $200 billion. That is not a manageable figure; its effects will be to prop up interest rates and the dollar and further squeeze both interest-sensitive and trade-sensitive industries. Yet the Senate, in connection with the debt ceiling bill, has resumed the exemption game. The bill would lift the debt ceiling -- the limit on debt the Treasury can have outstanding at any given time -- to more than $2 trillion.
Sens. Warren Rudman and Phil Gramm had drawn up a compensating amendment to stiffen the congressional budget process at the same time and reduce the deficit in equal stages to zero over the next five years. If Congress failed to meet the deficit target in any year, the amendment would empower the president to make the necessary cuts, but under a formula. Half would come from entitlements, the semiautomatic spending programs, including Social Security, in which benefits go out pretty much to all who qualify and apply. But entitlements could only be cut to the extent that inflation was raising their costs that year. The rest of the deficit reduction would come in equal cuts across the board from so-called discretionary spending, more than half of which is for defense. The idea was to force Congress to act and to legislate in advance a more or less even spread of spending cuts if it did not.
But Messrs. Rudman and Gramm then moved to plump up their proposal by exempting Social Security. One quick effect of this would be to put more pressure on other entitlements, including food stamps and other programs for the poor. Social Security, which goes to people in all income brackets, would not be cut; programs for just those in the lower brackets would be. A second effect would be to put more pressure on the defense budget than some of the sponsors may realize. This is the wrong way to adjust the amendment.
The ranking Democrat on the Senate Budget Committee, Lawton Chiles, would adjust it a different way. His proposal is to have a third of the burden borne by a tax increase, a third by defense and a third by domestic programs, except those for the poor. In many ways that is fairer -- but Mr. Chiles, too, would exempt Social Security.
The Rudman-Gramm proposal is not an ideal device. On the contrary, it is a clumsy way to legislate and, if not an abdication, at least an evasion of responsibility. The system ought to be able to produce better than prefabricated budget cuts. But apparently it cannot, and the question now is what kind of forcing mechanism to adopt. Our sense is the broader the better. The president and Congress have spent most of the year narrowing the target instead, and it hasn't worked.