CHOICE IS ZERO

The estimate last week from the Congressional Budget Office that President Bush’s budget proposals would swell the federal deficit by $1.8 trillion over the next decade demands a forceful response from Congress. It demands that continued talk of major tax cuts be held against the reality of a nation about to encounter steep costs that current budgets have not anticipated and demands for domestic programs yet unaddressed.

Certainly, the president’s tax cut would have some stimulative effect, perhaps measurable enough to counteract some of the costs of war in Iraq, occupying and rebuilding that country afterward, new costs for homeland security and the estimated $750 billion cost for extending relief from the alternative minimum tax, a sure bet in the next couple of years. The CBO didn’t count for any of those, so its estimate of the deficit may be too modest even if the economy grows under the president’s plan.

The consulting firm Macroeconomic Advisers, which developed the economic model used by the President’s Council of Economic Advisers, recently concluded that the slight growth from the president’s proposal would be offset by its long-term slightly negative effects, so these new costs probably should simply be added to the $1.8 trillion. The total still does not equal more than 2 percent of the economy, a modest amount under most measures but enough to stop real discussion of Social Security and health care reform.

Senate centrists, worried about all this, are proposing to halve the president’s tax cut by removing its dividend-tax cut and leaving the rest at a cost of $350 billion over 10 years. That is an encouraging start, but the centrists began their discussions before the CBO released its new deficit numbers, and while it is difficult to get a group of strong-minded senators to move anywhere but to the middle, their proposal should be expanded to consider the costs of essential support for states and senior citizens.

Sen. Susan Collins joins a couple of other centrists who have concluded that a $350 billion tax cut would be too small to jolt the economy, but still drain federal revenues. Her choice is to either approve the $725 billion slated for the president’s growth package but redirect it at more immediate relief for more taxpayers and for states to get the economy moving, or approve no breaks until the nation has a better sense of the war and related costs. Given the slim hope of approving the full amount of the tax cut then persuading both Senate colleagues and House members to abandon the details of the president’s plan, the better choice, for now, is zero.

Here is why: The chairman’s mark for the House Budget Committee, which includes a total of $1.4 trillion for tax cuts including the president’s $725 billion growth package, pays for the tax cut by making cuts in programs to veterans, in Medicare, Medicaid, food stamps and farm programs. Talk of privatizing Social Security or even protecting the current system is purely academic because there is no money left to do either. Reconciling this budget plan even with a more generous Senate proposal (which nevertheless envisions killing 45 education programs, including those “more appropriately supported by state, local or private resources”) could still result in cuts to these essential services.

Centrists, when organized, hold the balance of power in the Senate. They understand the impact of the rising deficit and the impending costs of war and its aftermath. To be fiscally responsible, they know running up deficits without the promise of substantial growth is folly. They can support the president by putting the costs in Iraq and homeland security ahead of the tax cut and looking toward strengthening valuable domestic programs.