Dueling Deficits

THE United States is deep in the era of government budget deficits. The federal deficit is old news. Now state governments across the country, from Rhode Island to California, are awash in red ink. At the local level, harsh words were exchanged last week between New York Gov. Mario Cuomo and New York City Mayor David Dinkins over the city's latest fiscal crisis. In Massachusetts, cities debate whether to lay off police officers, or teachers, or close libraries to balance the books.

What is happening?

One answer is that, as part of Ronald Reagan's ``new federalism,'' Congress transferred to the states responsibility for several social programs - and stuck the states with the bill. In addition, Washington often forces states to implement new programs or standards without funding them. So the costs of state government have skyrocketed.

And while governors and legislators complain mightily about the injustices done them by Washington, they have no hesitation in doing the same to the levels of government below them. Because the economy was booming during the time these transfers took place, revenues grew rapidly, and this helped states absorb the new costs without raising taxes. But now that the economy has slowed, revenues have plummeted and that reality is catching up with statehouses.

Opinion polls indicate that the public's views on these matters are contradictory. It wants social services and aid to those in need. It also wants the best possible emergency police, health, and fire services. At the same time, however, people nationwide believe that their taxes are too high and want them cut.

The contradiction is only partial. The public is also convinced that if only the waste and mismanagement could be eliminated from government, there would be enough money to pay for services and roll back taxes. The savings and loan debacle, stories of $100 hammers, and government workers who put in six-hour days don't inspire confidence.

Whether it is best for social programs to be administered at the local, state, or federal level is debatable. But to resolve the fiscal crises at all levels of government, elected officials and the public will have to face a few facts:

1. Services cost money. If the public wants a program, it has to pay for it. And there is only so much that can be saved by eliminating fraud and inefficiency.

2. You get what you pay for. If the public wants competent and efficient judges, police officers, and welfare administrators, it will have to pay a salary that will attract such people. Mediocre salaries are more likely to attract mediocre employees.

3. Not all programs are equal. Some government programs are desperately needed and just as desperately underfunded. At the same time, other programs are overgrown, wasteful, and inefficient. Governments need to learn to evaluate programs on their merits and eliminate those that no longer serve the purpose for which they were created.

The meat-ax approach, in which every agency and program gets cut an equal amount regardless of merit or current funding, is wrong.

Congress set a bad example with the Gramm-Rudman-Hollings act, which has not balanced the federal budget, but which has allowed Congress and the White House to evade responsibility for failing to get spending under control.

None of this is going to be easy. Tough choices will have to be made about which programs have priority. But the sooner the public and government get down to it, the better off we will all be, and the sooner public confidence in government will be restored.