The Scariest Idea of All
by Walter Cronkite
For most of us, the astronomical numbers quoted for such things as the federal budget and the deficit simply numb our minds, making those numbers easy for politicians to play with - which seems to be just what has been happening. Two agencies of Congress - the Congressional Budget Office and the General Accounting Office - have recently cast doubt on either the Bush administration's ability to count or its candor. The CBO says the president's claim that he will halve the deficit in five years is off the mark. And the GAO warns of a fiscal train wreck not far down the track.
Indeed, David M. Walker, the comptroller general of the United States, has taken the unusual step of going directly to the public with his concern. The comptroller general is the head of the GAO, which was established by Congress in 1921 to serve as its investigative arm and to audit the economic performance of the federal government.
Walker said the government's gross debt - the total of all its annual deficits - was about $7 trillion last September. That translates, he said, into roughly $24,000 for every man, woman and child in the country. And those numbers climb steeply if the gap between Social Security and Medicare commitments and the money set aside to meet them is added in.
They climb even steeper, according to Walker, if we add in the projected cost of the new Medicare prescription-drug benefits.
Simulations by the GAO have established that by 2040, we could be faced with a choice of cutting government spending by 50 percent or doubling taxes to balance the budget.
Doubling taxes would cripple the economy, not to mention family budgets. Cutting spending in half would gut programs we take for granted today, such as Social Security, Medicare and other so-called entitlement programs that make up 54 percent of federal expenditures.
Say goodbye to school-lunch programs, farm subsidies, federal block grants and subsidized college loans. Altogether, one might guess that life for millions of Americans would get a lot harder and meaner than anything we experience today.
It is the contention of President Bush and his economic advisers that a rising economy will grow us out of the problem by increasing revenues and dispelling those dire predictions.
That seems to be what happened when President Reagan raised the deficit to then-historic levels. But there is a rising chorus of critics today - conservatives as well as liberals - who warn that history is not about to repeat itself. The very conditions that produced recovery then are conspicuously absent today. Those conditions included the large baby-boomer segment of the population - at its peak working years then, but going into retirement now. The dollar was strong then - it isn't now. Interest rates were high, inviting foreign investment. Today, the opposite is true.
So what can this president be thinking, with his call for even further tax cuts while he increases spending by astronomical amounts (the GAO estimates the long-term costs of the new prescription-drug law at up to $8 trillion)? Well, there's a theory suggested by some that might or might not be valid. It's called "Starve the Beast," an idea dear to the hearts of many conservatives who believe the only way to get rid of government programs is to cut off the flow of money going to them. That's a scary idea.
Of course, tax cuts always can be rescinded by another administration and a different majority in Congress. Also, any effort to severely squeeze or eliminate Social Security or Medicare would be politically undoable in the foreseeable future, given the large and growing proportion of elderly voters. But a real financial crisis that would require such draconian measures is exactly what Federal Reserve Chairman Alan Greenspan warned about just last week, and he recommended squeezing the entitlements.
There is another possibility - that Bush and his team don't really know what they are doing. That's the scariest idea of all.
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