Eliminating the Debt

One party claims that the budget surplus will be small and that the most important goal is to eliminate the debt. The other says the surplus will be big and we can do ambitious things with it. You'd be forgiven if you thought that the first party was the Democrats and the second the Republicans. But it's actually the reverse. The Democrats are marching under the banner of fiscal austerity, and the Republicans proclaim this the era of large ambition.

"Here's the facts," says George W., pointing to the latest estimate from the Congressional Budget Office (CBO) showing that the nation could well afford his plan to trim income taxes by $1.3 trillion over 10 years and still have enough money to fund social programs.

The White House claims the surplus is far less. And it says retiring the debt should be the nation's first big priority. "Let's make America debt-free for the first time since 1835!" the president exuded in his State of the Union, offer-ing up a plan to pay off by 2013 the entire $3.6-trillion federal debt. He provided a buffet of attractive policy hors d'oeuvres, but debt elimination was the main course, reiterated twice for emphasis.

Meanwhile, Al Gore has been running around the country blasting George W. and Bill B. for counting on the surpluses to fund big tax cuts or spending plans. Debt reduction is Gore's first order of business. The veep says he'll pursue it even if the economy slows, "just as a corporation has to cut expenses if revenues fall off," adding that a recession "should be viewed as an opportunity to push [cuts] further before any other options are considered."

Even House Democratic Leader Dick Gephardt is sounding like Calvin Coolidge these days. "Until the money is in the Treasury," he says somberly, Congress shouldn't make new prom-ises. "If and when it materializes," we should use the surplus for Social Security and Medicare.

And what of the non-Social Security surplus that Republicans are drooling over? Use that for "paying down the debt and honoring our existing commitments to health and education, says Gephardt." Those existing commitments aren't much to write home about, Dick.

It would be one thing if the new fiscally austere Democrats were speaking out of strong conviction backed by sound numbers. But the conviction is paper-thin. And besides, no one knows how big the budget surplus will be. Every time it's recomputed, the projection gets bigger because noninflationary economic growth keeps escalating faster than anyone had assumed possible.

So why are Democrats sounding like Coolidge Republicans? Because they're spooked by Republican plans to cut taxes, and they haven't the confidence to build public support for an equally ambitious program centered on health care and education.

When the surpluses first began ballooning, the president dealt a body blow to Republican tax cutters by telling the public the choice was between cutting taxes and saving Social Security. ("Social Security first!") But when the surpluses continued to mount and the Republicans pledged not to touch the portion from Social Security revenues, the White House felt it had no alternative but to play the debt card if the tax cut-ters were to be stopped. The rest of the Democratic Party establishment is falling into line.

The Democrats are wrong on three counts. First, the public isn't nearly as eager for a Republican tax cut as Democrats fear. During the 1990s, incomes soared only at the top rungs of the ladder, meaning that most tax revenues are now coming from the well-off. Every Republican tax-cutting plan gives most of the money back to the wealthy, leaving peanuts for most other Americans--and voters know it.

Second, it's plain dangerous to make the elimination of the national debt a core goal of public policy. Not only is it dumb on economic grounds ("He should wash his mouth out with soap," said Nobel laureate Robert Solow, on hearing of Gore's plan to continue to pay down the debt even when the economy slows), but it puts the Democrats in a straightjacket when it comes to any future proposal for universal health care or universally good schools.

Which brings us to the third and, at this juncture, most important problem with it. In case anyone hadn't noticed, this is an election year, where the real issue isn't whether you believe the Office of Management and Budget or the CBO budget projections, but what we as a nation should be aiming to do. "Eliminate the debt!" is not the sort of rallying cry likely to inspire many loyal Democrats to vote in November or even to ignite the passions of independents.

In order to get people to the polls, you've got to give them a reason to vote. That reason isn't hard to come by. Yes, the economy is booming. But worries about the costs of health care and about the poor quality of public schools top everyone's list. Political consultants who look only at the suburban "swing" voter who's relatively well-off, and disregard the much larger number of people who have been sitting out the last few elections, are making a big mistake. Next November's outcome will be determined by who shows up.

If the Democrats stand for anything, it should be for helping the little guy who's gotten relatively little out of this buoyant economy so far. Not incidentally, little guys include most voting-age Americans. Little guys could get passionate about good health care and good schools. But faced with a choice between tax cuts for the big guys and fiscal austerity, the little guys will stay home. ¤


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