No More Money For Grand Promises

Tonight, President Clinton must confront the reality that will face every occupant of the Oval Office for the foreseeable future: He has no money to play with anymore.

When he delivers his State of the Union speech - which will double as the keynote address of his 1996 presidential re-election campaign - Clinton will not have the option of showcasing an exciting catalog of proposals. The realities of the federal budget make such a listing ludicrous.

Even though the negotiating impasse over the budget remains unbroken, congressional Republicans have won the larger part of their battle with Clinton over fiscal policy: Deficit-cutting has gained absolute ascendance over any significant effort to focus new governmental resources on the problems facing America at home.

As White House chief of staff Leon Panetta told reporters the other day, Clinton, over the last eight months, has moved from a budget with $200 billion-a-year deficits forever to one that would be balanced in 10 years under the lenient accounting standards of his own Office of Management and Budget to one that would be balanced in seven years under the stricter scoring of the Congressional Budget Office.

“That cost us $400 or $500 billion” in future spending authority, Panetta said.

That’s the money that would have paid for the promises Clinton would like to make.

Clinton was bulldozed into these concessions by the power the Constitution gives Congress to control spending and by the determination of the Republicans to exercise that power to the full.

It is true, of course, as Republicans like to point out, that even under their version of the balanced budget, more will be spent by Washington every year than the year before. But most of that additional spending will be absorbed by interest payments, inflation and a steady increase in the number of people - especially the elderly - who receive government subsistence checks.

“Discretionary” spending - the money that is available once interest payments on the national debt and the entitlement payments for Social Security, Medicare and Medicaid have been made - will be squeezed harder every year, whether the final spending plan resembles Clinton’s or Congress’ version of a balanced budget.

In Clinton’s plan, for example, discretionary spending would be reduced by $295 billion over the next seven years - almost double the $154 billion in savings he foresees in Medicare and Medicaid. (Both figures rely on the Congressional Budget Office’s December base line estimate of planned government spending for comparison.)

The Clinton cuts purposely are back-loaded, totaling just $33 billion from a projected $1.67 trillion sum in the first three years of the balanced-budget drive. But after that, the cuts would explode. In the last four years, Clinton would spend less in actual dollars on discretionary programs each year than the year before. And that is without factoring in inflation or the increase in the population being served by these programs.

Because Clinton agrees with Congress that defense spending, which currently makes up almost half of discretionary spending, has been cut about as far as is prudent, the cuts presumably would come mainly from domestic programs.

What this means in practical terms is that Clinton’s second term (and Vice President Al Gore’s first term, should he be his successor) would see a steady impairment in the government’s capacity to finance transportation, housing and environmental and human service programs.

Clinton is unlikely to acknowledge that reality in his speech tonight. But it is an inevitable consequence of his political decision to resist savings of the scale Republicans are seeking in Medicare and Medicaid.

Panetta argues that Clinton is being honorable and foresighted in balking at “structural changes” in Medicare and Medicaid, even at the price of severe cuts in discretionary domestic spending in the future. Certainly, the president has been helped politically by posing as the protector of those two popular medical entitlements.

Clinton also has been shrewd in postponing the real pain of discretionary spending cuts until almost the end of the century. That way, he can claim to have “protected” his education and environmental and crime-fighting priorities.

But because these programs depend on annual appropriations, the Republicans can - and likely will - force Clinton to deal with the money squeeze sooner rather than later.

The reality is this: The president has run out of discretionary funds. The more he promises tonight, the less of it he can deliver.

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