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The Budget Needs A Machete, Not A Nail File


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THE BUDGET NEEDS A MACHETE, NOT A NAIL FILE

It was the angora goats that did in George Bush. And if Bill Clinton isn't careful, those same woolly critters could destroy his Presidency, too.

You see, the federal government subsidizes mohair, which is angora goat wool, to the tune of $48 million a year. That's because, back in 1954, when military uniforms were still made of wool, Washington declared the stuff a "strategic material." Just like, say, plutonium. Bush tried halfheartedly to kill the program, and his failure symbolized the fis-cal sclerosis that wrecked his Administration. Now, it's Clinton's turn. But instead of ending the boondoggle, he just wants to shear it a bit. He'd limit the annual subsidy to a mere $50,000 a rancher, down from $150,000.

And that's what's wrong with Clinton's proposed spending cuts. It's not just that they are too modest. The real trouble is in the way they were designed. Instead of slicing here and snipping there, Clinton should have tried to make sense of government: decide what Washington ought to be doing, pay for it, and eliminate the rest. "The federal government is trying to do too much," says former Congressional Budget Office Director Rudolph G. Penner.

BITTER PILL. Here's one of several approaches Clinton could have taken. First, end subsidies for consumption, such as the interest deduction for home-equity loans. Second, slash programs that benefit specific industries or regions of the country rather than broad national interests. Third, limit middle-class subsidies and aid only those who can't get along without federal help.

It's tough medicine, but the payoffs would be great. Without subsidies, executives would have to focus on the market. And spending could be cut even more, producing lower taxes and interest rates for everyone.

It's not enough to argue that Congress wouldn't let him get away with it. By asking for so little from the Hill, Clinton is sure to come away with even less. Why not ask for twice the cuts Congress can stomach, then settle for half that amount?

Instead, the current budget is loaded with goodies for favored industries. Airlines, for example, enjoy the benefits of the air-traf-fic control system, which is paid for by the taxpayers. The system badly needs upgrading. But why shouldn't airlines and their passengers pay the cost?

NONSENSE. It's the same story with regional subsidies. Washington pays for cheap water in the West and helps restore eroded beaches in the East. It bankrolls mass transit in big cities and inland waterways in the South. There's no good reason why a New York bank teller should pay to help water a Phoenix golf course or why an Iowa farmer should pay to keep subway fares low for a Wall Street bond trader.

Clinton seems to recognize the problem. In the text of his economic plan, he writes: "Part of the effort to remake government means eliminating spending that is unnecessary or wasteful, that provides unjustified subsidies to particular industries or areas or that goes to programs that simply do not work."

That's exactly the right idea. And in fairness, Clinton has chipped away at many of these programs. But he has boosted others. For instance, he proposes massive new spending for research and development in aircraft and energy technology. That inconsistency undermines Clinton's claim to be the "change" President. And it could doom his deficit-fighting efforts as well.Howard Gleckman Washington Correspondent Gleckman covers budget matters.


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