Tax-Cut Promises

Sensible budget analyst Robert Reischauer was only half right when he termed President Clinton's proposed college-tuition tax cut "a certifiably bad idea."

The former Congressional Budget Office director (a Democratic appointee) was correct in terms of fiscal responsibility. He was wrong in terms of political appeal.

College tuitions have been rising faster than the rate of inflation for many years. Low and middle-income voters have felt increasingly pinched by them. But that's no reason to derail budget-balancing efforts by nearly $43 billion - much of it routed to families who can pay the tuition anyway. There's a better way to deal with the problem.

Education is undeniably a key to both (1) economic competitiveness and (2) citizen grasp of complex issues in a democratic society.

One of the most important of such issues is the very question of tax loopholes, national growth, national-debt costs, productivity, and future living standards.

In this era of widespread political leakage, we know that candidates Bob Dole and Bill Clinton are engaged in trying to outmaneuver each other on tax-cut promises to American voters. Senator Dole reportedly is mulling an across-the-board cut of 10 to 15 percent. President Clinton may follow his tuition-tax-cut promise with another for first-time house buyers.

Note that these cuts, rumored or announced, are only promises. Note, also, that Clinton couldn't fulfill his conflicting 1992 promises to cut taxes and balance the budget.

To his credit, Clinton chose to cut deficits (although he didn't balance the budget). So deficits are now less than 2 percent of gross domestic product. But he did so by breaking his other promise and raising taxes in 1993. Both candidates face the same dilemma today. To his credit, Dole has long had the courage to make fiscally responsible stands on budget balancing. We hope he will continue to do so. Any across-the-board tax-cut promise should be accompanied by compensating federal- spending cuts.

We continue to believe that the coming demographic squeeze on entitlements (especially giant Medicare and Social Security) means that tax cuts should come as a reward only after Congress and the White House have shown the will to stick to a budget-balancing blueprint. Given that priority, we feel that the better way to deal with tuition and house-buying strains is to aim for an expanded program of tax-deferred savings accounts like IRAs.

Such accounts would give citizens the option of use for tuition, house down-payment, or health emergencies - thus allowing individuals flexibility to match their needs.

But Congress should fund such a tax deferral with spending cuts. To do otherwise is to mortgage the future in order to reduce today's bills.