Who Lost The Budget?

LET'S TRY TO SETTLE THIS QUESTION BEFORE ELECTION rhetoric clouds judgments and confounds memories: who lost the balanced budget? Last fall, it seemed within grasp. Congress had passed a plan to reach balance by 2002. Though critical, President Clinton seemed to be edging toward a compromise. I thought (and wrote) that a deal would happen. It didn't. Who gets the blame? Actually, everyone. Here's how I apportion it:

President Clinton, 50 percent: At some point, a president must subordinate partisanship to policy. Clinton never did. He tried to play the game both ways. On the one hand, he posed as the protector of programs for the old and poor; on the other, he wanted credit for a balanced budget. As a result, his unsparing -- often dishonest -- denunciations of the Republicans' budgets poisoned the climate for good-faith bargaining.

Congressional Republicans, 40 percent: They snatched defeat from the jaws of victory, engaging in reckless and irresponsible political brinkmanship. Sign our budget, they dared Clinton, or shut the government. Clinton couldn't resist the chance to depict them as "extremists." Momentum toward compromise was lost.

Ross Perot, 10 percent: In 1992, he popularized the need to balance the budget. But when a deal was in sight, he was missing from action and preoccupied with advancing his own new party. Conceivably, he might have exposed the rhetorical excesses of both sides and shamed them into a deal.He should have tried.

I have painted with a broad brush. Senate Republicans were less confrontational than their House counterparts; some conser-vative Democratswere more interested in a deal than Clinton. But in the end, a deal proved elusive because Republicans and Democrats were both ultimately more interested in their symbolic positions than in an agreement -- and so, for his own reasons, was Perot. We have had competing illusions: a president who implies that all social programs (for the old, disabled and poor) can be permanently inviolate, and a Republican Congress that implies that large reductions in government spending can justify big tax cuts. Though each position is popular, neither is defensible.

The grittier practical choices are to trim popular programs (whose spending will automatically rise without changes) or to trigger higher deficits or taxes. And the difficulty will increase if world events compel more defense spending, which -- as a share of national income -- is now lower than at any time since 1940. Bear all this in mind as the year proceeds, because politicians will inevitably try to redraw this picture of messy collective failure by citing partial and partisan truths.

President Clinton will truthfully claim that the budget deficit has fallen sharply. Yes, but. In 1992, it was $290 billion; the Congressional Budget Office now thinks the 1996 deficit could go as low as $130 billion. But the improvement resulted mostly from events not of Clinton's making: the economic expansion, the post-cold-war drop in defense spending, lower-than-predicted health costs and a Congress that trimmed his spending requests. For example, the CBO says that a point drop in unemployment cuts the deficit roughly $50 billion. In 1992, unemployment averaged 7.4 percent; in 1995, it was 5.6 percent. That's $100 billion of deficit reduction.

The Republicans will say, also truthfully, that only Clinton's veto prevented a balanced budget. Yes, but. The Republican plan did reach a small surplus ($3 billion) by 2002 and, with the CBO's more recent and more optimistic assumptions, it would have been larger. But the Republicans' determination to have tax cuts forced them to fudge spending cuts. Almost half the cuts needed to reach balance in 2002 were left for future Congresses. Would they have been made? The best that can be said of the Republican plan is that it contained fewer gimmicks than Clinton's counteroffer, which also projected balance by 2002.

A president is supposed to help illuminate and resolve critical national choices. Clinton not only didn't do this, but he frustrated the process by viciously attacking those who tried. In general, the Republicans attempted to broaden the budget debate in a constructive way. They insisted on reaching a balanced budget. Clinton's initial 1996 budget envisioned perpetual deficits. Only in June, when it was clear that Congress would enact a balanced budget, did Clinton embrace the goal. And the Republicans risked suggesting changes in Medicare and Medicaid, popular programs that almost everyone agrees need overhauling.

Just how wild were Clinton's distortions? Medicare was the nadir; Clinton wrongly said the Republicans would destroy it. Here is one indicator of the exaggeration:

In October, the Progressive Policy Institute -- the research arm of the Democratic Leadership Council, which Clinton once headed -- published a study urging that Medicare effectively offer vouchers as a way of encouraging competition and managed care. This went well beyond the Republican plan, which envisioned a milder expansion of managed care. The point is not that either the Republican or the PPI proposal is "right" but that both were reasonable efforts to continue Medicare's coverage and contain its costs.

Let's be clear on two things. First, legitimate differences existed between Clinton and Congress, but they weren't so fundamental that they defied compromise. And second, a balanced budget by itself won't solve many problems. A balance with too much government spending will involve waste and burdensome taxes; a balance with too little spending will cripple government's important functions. The value of insisting on a balance is that it compels conscious choices between burdens and benefits; the trouble with the debate is that it obscured those choices.

No one can be proud of the result. The integrity of public debate might improve if someone like Perot acted as an informal ombudsman, criticizing the inaccuracies of both sides. Absent that, the budget debate foundered because the worst in our political tradition (narrow partisanship) overwhelmed the best (compromise in the public interest). An election built on similar myths will leave Americans less, not better, informed about their prospects.