Perot Reveals Budget Ideas: Cut Spending by 10 Percent, Raise Taxes on the Wealthy

ROSS PEROT has put a big bowl of spinach in front of the American people, and said, "Eat up!"

The spinach, which is Mr. Perot's long-awaited plan to erase the federal budget deficit, might be hard to swallow for many Americans. It could be especially tough for the wealthy, who would face higher taxes, and the middle-class, whose benefits would be cut.

Perot's ideas, released through US News & World Report magazine, are especially unpalatable in politically sensitive Washington. They include a 50-cent-per-gallon tax on gasoline, a 10 percent cut in discretionary federal programs, higher premiums for medicare, steeper taxes on those in the top tax bracket, and new taxes on some employer-provided health care benefits.

In several areas, Perot's plan would push up government spending, including aid for cities, for education, and for highways and bridges. Capital gains taxes would be reduced for long-term holdings, and more money would be poured into research for critical technologies.

If Perot were still a presidential candidate, his plan would have created "an enormous firestorm," says political scientist Larry Sabato at the University of Virginia. "Special interest groups would have screamed."

Stephen Hess, an analyst at the Brookings Institution, concludes: "If Ross Perot had had the guts to stay in the race, we could have possibly had the most substantive presidential election in American history."

Analysts say Perot's plan would have forced Bill Clinton and George Bush to squarely confront the tough decisions needed to tackle the nation's $4 trillion debt.

With Perot now out of the race, President Bush and Governor Clinton "are going to do everything possible to avoid dealing with Perot's plan," which is simply too tough to sell to most voters, Dr. Sabato suggests.

The proposals by Perot to cut the federal deficit are in sharp contrast to those of Bush and Clinton.

Perot claims that unless federal spending is drastically slowed at once, and unless taxes are raised to close any remaining gap, the nation won't have the investment funds to boost the standard of living.

In contrast, Bush puts the emphasis on growth first - by bringing entitlement spending under control and enacting tax breaks that will stimulate private investment. As the nation's economy grows, the deficit will shrink, Bush argues.

The Clinton plan would pump considerably more money into public investments. But Clinton avoids Perot's drastic cuts in other programs to pay for for it. Clinton, like Bush, relies on growth first, deficit reduction later.

John White, a former budget official in the Carter White House, masterminded the Perot plan. He rejects both the Bush and Clinton approaches. Democrats and Republicans alike are trying to delay the day when they face the debt problem squarely, he says.

"We keep putting off this fundamental problem because of short-term problems [like the recession]," he noted in a television interview.

ROBERT REICH, a political economist at Harvard University and an adviser to Clinton, calls Perot's plan "provocative." However, Dr. Reich worries that Perot's blueprint fails to put enough funding into education and infrastructure.

Sen. Phil Gramm (R) of Texas, the keynoter at next month's Republican National Convention, also takes issue with parts of the Perot document. He doesn't see a need for higher taxes and more investment in public works projects.

Will Perot's plan simply fade away? Clearly, that's what many Bush and Clinton supporters expect. But Perot told US News & World Report that he would "do whatever I have to do" to promote his plan. He insists that it's possible that both parties could adopt a version of his plan "within three weeks."

However unlikely that may be, Perot has at least put some hard-headed proposals on the table.

And he could get moral support soon from a new, bipartisan coalition being formed by former Sen. Paul Tsongas (D) of Massachusetts, Sen. Warren Rudman (R) of New Hampshire, and former Commerce Secretary Peter Peterson. The trio is raising $1 million to fund their efforts to bring public pressure on Congress and the White House to cut deficit spending.

As for Perot, what will never be known, because he quit the race, is whether he could have gotten elected with his proposed budget.

Sabato says that in a three-way race, with both his opponents damaged, "this plan could have been what boosted Perot to victory."

In the long run, Sabato argues the problem America faces is that "a substantial majority do not want us to come to grips" with the federal deficit.

Sabato cautions that Perot's plan, however unpalatable, has comparatively little pain and sacrifice compared to the "long national nightmare of a shrinking job market and lower standard of living that we face if we don't deal with this debt problem."