As Bill Clinton is learning, there is no such thing as a painless presidential promise. In August, just minutes before the win-or-die budget vote in the House, Clinton cut a deal to gain the crucial support of freshman Pennsylvania Democrat Marjorie Margolies-Mezvinsky. The price seemed paltry: the President agreed to appear this week at an entitlements summit in her suburban Philadelphia district to discuss the role of government benefit programs in fueling the deficit.
Now it's payback time, and Clinton probably longs for the days when Presidents could buy congressional votes with old-fashioned pork. Entitlements are the true Nightmare Before Christmas, especially since Clinton's Democratic predecessors put most of them in place. The Bryn Mawr summit brings into the open a potentially divisive closed-door debate within the Administration -- whether to support new limits on the government benefits that millions of middle-class Americans get.
The fixation of budget cutters on entitlements reflects the Willie Sutton rule of fiscal politics -- that's where the money is. Guaranteed-benefit programs currently eat up 49% of the federal budget, a whopping $738 billion. The largest chunk is Social Security ($319 billion), but entitlements also include Medicare, Medicaid, veterans' benefits, government pensions, unemployment insurance and farm subsidies. Only one-sixth of this money goes to Americans below the poverty line. A significant fraction of government benefit checks are cashed by the comfortably middle class. The Progressive Policy Institute estimates that families with taxable incomes above $50,000 receive 19% of federal entitlement money.
These daunting numbers give rise to a series of related questions: Can the Federal Government afford to continue to subsidize middle-class and upper- income Americans? At what income should any benefit cuts begin -- $40,000? $50,000? $100,000? Is it equitable for Washington to take tax dollars from 20- year-olds earning the minimum wage and redistribute some of the money up the economic ladder to $100,000-a-year pensioners collecting Social Security? And will the Clinton Administration risk offending potent constituencies like ! the elderly in the quest to reform government benefit programs?
These are no longer theoretical problems. The once taboo topic of means testing -- linking government payments to income -- was debated at a recent high-level White House meeting. The President mostly listened, but proponents of some kind of limitation included Vice President Al Gore, Budget Director Leon Panetta and presidential counselor David Gergen. Their rationale: only by restraining entitlements can the Administration afford new programs and further deficit reduction. "Everyone agrees this is something to be looked at," confides a senior White House official. "Even a novice looking at the budget can't help seeing what's happening to entitlement spending."