It appears that the current services deficit for FY 1987 will be about $188 billion, with current services defined as current law for revenues, the current services level for domestic programs and 3 percent real growth in defense (as agreed to in the FY 1986 budget resolution conference report). A program to produce a budget deficit of $144 billion would, therefore, need to produce $40 billion in savings, with the remaining $4 billion coming from savings in interest on the national debt.
Obviously, there is more than one reasonable way to get the budget deficit down. However, there are ways to achieve the deficit target without destroying the federal government and without resorting to taxes, as the following suggestions demonstrate:
1. Allow only a 1 percent increase in budget authority for defense over the final FY 1986 appropriation (-$12 billion) and, in addition, further implement any proposal from last year to reduce military support and civilian DOD manpower by 10 percent (-$3 billion). In this context, we may wish to reexamine the manner in which we fulfill our NATO commitment, which consumes a substantial portion of the overall defense budget.
2. Hold nondefense discretionary spending, in aggregate, at the FY 1986 level (-$6 billion).
3. Enact the FY 1986 reconciliation bill, which is currently pending in conference (-$7.5 billion).
4. Follow through on last year's tentative decision to terminate general revenue sharing (-$3.5 billion).
5. Adopt most of the administration's expected proposals on user fees. There is no reason that the general public should heavily subsidize general aviation or pay to rescue careless private boat owners. (-$1 billion)
6. Restrict the Postal Service subsidy and reduce FmHA (Farmers Home Administration) housing programs, as provided in the Senate-passed FY 1986 budget resolution (-$1.8 billion).
7. Eliminate or reduce a number of smaller, lower-priority programs, too numerous to mention here. Examples include part B of Impact Aid, the National Endowment for the Arts and Humanities, and UDAG (Urban Development Action Grants). A partial list can be derived from the budget resolution passed by the Senate last year. (-$5 billion)
These proposals total $40 billion and, with the $4 billion in interest savings, the target is achieved.
This is by no means an inclusive list of options. If Congress and the American people decided to achieve more savings than the minimum required -- not a bad idea considering the current state of the economy -- or to avoid some of the savings I have suggested, other steps can be taken. Savings can be achieved in farm price supports and certain entitlements. Revenues could be increased. Each penny increase in the gasoline tax picks up $1 billion. The House-passed restrictions on oil and gas industry deductions save almost $1 billion, and their minimum tax provisions would save $2 billion.
While achieving a deficit of $144 billion after the recklessness of the last few years will not be easy, it is not an impossible task. It can be done with a minimum of dislocation, and Congress and the president should get on with the job as quickly as possible.