Sen. Edward M. Kennedy (D-Mass.) said yesterday the country is "reaping the whirlwind" of Democratic as well as Republican mismanagement of the economy and called for a major new deficit-reduction effort to achieve a balanced budget by 1991.
In a liberal's plea for moving beyond the New Deal, Kennedy also called for a sweeping overhaul of governmental priorities, including a major new emphasis on education starting with a national program of preschool training.
Paul Donovan, an aide to Kennedy, said the senator wanted to "add his voice to the national debate . . . over the agenda for the country at the start of a crucial election year." Kennedy's speech to the Woman's National Democratic Club came as he prepared for a one-day trip to Iowa today to campaign for Massachusetts Gov. Michael S. Dukakis.
Kennedy made a similar appeal to Democrats to discard outdated programs and "do more with less" in a 1985 speech that was widely interpreted as an attempt to move the Democratic Party and his own image toward the political center. Yesterday's speech embraced and extended these themes, with an emphasis on deficit reduction that goes significantly beyond the two-year budget agreement reached between the White House and Democratic congressional leaders late last year.
In addition to the $76 billion in deficit reductions already promised for fiscal 1988 and 1989, Kennedy advocates tax increases and spending cuts totaling $20 billion for fiscal 1989 and $30 billion for 1990.
He said this would "put ourselves on an honest path toward budget balance by the end of the first two years of the next president's first term." This would achieve a balanced budget in 1991, two years before the target date set by last year's revision of the Gramm-Rudman-Hollings budget law.
Kennedy suggested raising taxes on cigarettes and alcohol, taxing capital gains at death, capping the mortgage interest deduction for luxury estates and second homes and closing other "loopholes." He said revenue targets could be met without raising income tax rates or otherwise tampering with major revisions in the 1986 tax-overhaul bill.
On the spending side, he said defense outlays should be frozen for at least two years, without the increases for inflation contemplated by the budget agreement. He also proposed cutbacks in farm subsidies and said every other spending program should be examined for possible savings.
Without these and other moves, including new financial market reforms, "the next president may well preside over a new depression, and the next generation will inherit an America that has fallen permanently behind."
While the "towering twin deficits on the budget and trade are Ronald Reagan's most visible legacy, a perversely unconservative result of plainly ineffective policies," Kennedy said the blame for fiscal crisis is more widely shared.
"It is also fair to say that our present crisis is not a uniquely Republican failing; for the past 20 years, in Democratic and Republican administrations alike, we have sown the seeds of neglect and economic mismanagement," he said. "Now we are reaping the whirlwind."
As for the New Deal, he said it will "live in American history forever as a supreme example of a government responsive to the times" but is "no answer to the problems of today."
In foreign affairs, Kennedy said Reagan need not back off his "impossible dream" for a space-based antimissile defense to achieve strategic arms reductions so long as he adheres to a narrow interpretation of the 1972 Antiballistic Missile (ABM) Treaty.
He also said the nation should continue but not expand its Persian Gulf commitments to protect U.S.-flagged ships. But he reiterated his strong opposition to further aid to the Nicaraguan contras and called for new sanctions against apartheid in South Africa.
Donovan, asked yesterday if Kennedy was attempting to signal a bid for the Democratic presidential nomination, said, "Absolutely not."