Deficits: Taboo No More

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Have deficits lost their political sting? This Administration apparently thinks so. The budget proposal released by President Bush last week projects a deficit of more than $300 billion for each of the next few years. That's a far cry from Bush's election-year pledge to avoid red ink — though he now insists he made an exception for times of war, recession or national emergency. "A balanced budget is a high priority for this Administration," says Mitch Daniels, Bush's budget director. "It is not the top or the only priority." Republican consultants are betting the White House will not have to pay for this position. "The public still doesn't like red ink," says Frank Luntz, a G.O.P. consultant who advised Ross Perot, the independent candidate who made federal deficits a potent issue in the 1992 presidential campaign. "But they're willing to pay now for national security and an economic recovery and deal with deficits later."

But voters may not be quite so amenable. In a TIME/CNN poll conducted last week, 73% of those surveyed are either "very" or "somewhat" concerned about the deficits that could result from the Bush budget proposal. More than a third--36%--think the Bush plan would make the economy worse. Bush is also facing a rough road in Congress, even among Republican friends. Key G.O.P. Senators like Finance Committee chairman Charles Grassley of Iowa and Olympia Snowe of Maine have suggested that the crown jewel of Bush's tax-cut proposal — the $300 billion elimination of dividend taxes — is either too large or too slow acting to goose the economy. "It's one of the weaker links in the President's proposal, in regard to what's politically possible," says Grassley. Another element of the Bush plan — his proposal to create tax-free savings accounts — has also been opposed by such important Republicans as Representative Rob Portman of Ohio. Bush aides are plowing ahead, pointing out that * Athe deficits, as a percentage of GDP, still don't match those faced by Ronald Reagan and Bush's father. "Nobody likes deficits," says a Bush adviser, "but the public will give this President the benefit of the doubt."