Are There Limits to Compassion?

By GEORGE J. CHURCH

A growing debate over the Government's obligation to help

"The idea that has been established over the past ten years, that almost every service that someone might need in life ought to be provided, financed by the Government as a matter of basic rights, is wrong. We challenge that. We reject that notion."

--Office of Management and Budget

Director David Stockman

That characteristically blunt comment sums up the Reagan Administration's side of an intensifying national debate about the President's plans to slash federal spending and taxes. As the draconian nature of the program has begun to sink in around the country, newspaper stories, TV shows and liberal critics in and out of Congress increasingly have portrayed the program as one that redistributes income from poor to rich--specifically by reducing benefits the needy have come to rely on while reserving the program's greatest tax savings for the already well-off. Implicit in much of this opposition commentary, at least in the Administration's view, is the premise that any such attempt is inherently unfair because the poor have a right to federal help financed by taxes that fall most heavily on the middle-class and affluent.

In reply, the Administration and its allies contend that no citizens poor or not poor, have any right to a given level of federal help. Taxpayers do have a right, the Reaganites say to hold on to as much of their income as the Government can spare while it collects enough in taxes to gradually eliminate the federal deficit and accommodate huge increases in defense outlays. In this view, a compassionate Government should continue to assist the disadvantaged, but the proper level of help has to be determined by the interests of society as a whole. Besides, the Administration says, the present level of spending is imposing costs, in inflationary deficits and taxes that hold back growth, which hurt everyone, including the poor themselves. Says White House Press Secretary James Brady: "There is an obligation by society to provide a floor for people, but as to writing into law legal entitlements on every possible service that is provided by the Federal Government, you have a policy that could bankrupt the country."

Oddly, this case to date has been made more explicitly and effectively by Reagan's journalistic and academic allies than by the Administration itself. Government services to the poor, editorializes the Wall Street Journal, "should be described by their proper name, charity." Writes Columnist William F. Buckley Jr. of the tax cuts: "If someone is paying 70% of his, repeat his, income to the Government, and you propose to reduce taxation from 70% to 63% [which would be the first-year effect of Reagan's tax plan], you are not 'giving' that man something. What you are doing, of course, is taking less than what you were taking."

The Administration, in contrast, has kept a discreet distance from those rather breathtaking assertions. Even Stockman's contention that the Government has no obligation to help Americans was quickly disavowed. Said Treasury Secretary Donald Regan: "I think Dave went a little too far in that statement. When people are in need or unemployed, they can expect that the Government will help them." Indeed, the Administration has concentrated on more reassuring defenses of its program: that its budget cuts preserve a "safety net" for the "truly needy," and that its proposal to slash all income tax rates by 30% over three years confers roughly equal percentage reductions in all brackets. Critics point out that the savings in dollar amounts are much greater, and more valuable, in the higher brackets than in the lower. Conservative economists argue that only higher-income people can do the saving and investing needed to renew noninflationary growth, though that case has not been made effectively by the Administration.

As to the "truly needy," the critics note, they usually pay no income taxes, and thus would get no benefit from the tax-reduction program. Nor does the "safety net" of seven programs that are exempt from budget cuts--primarily Social Security pensions, veterans' benefits and Medicare for the elderly--help them much. A study by the Field Foundation's Project on Food Assistance and Poverty found that 80% of the $210 billion now being spent annually on the seven programs go to people with incomes above the "poverty line," defined by the Government as $8,450 a year for an urban family of four.

In contrast, people with incomes below the poverty line would be affected by several spending cutbacks. The University of Chicago's Center for the Study of Welfare Policy gives this example: a working mother in Missouri with two children who earns $390 a month from her job now also receives $122 a month from the federal Aid to Families with Dependent Children program, $91 in food stamps and $39 in earned-income tax credits, leaving her family's total income 10% below the poverty line. Under the Reagan program, her food stamps would be cut to $75 and after four months her AFDC grant would be wiped out entirely, reducing her income to 31% below the poverty line. On top of that, she would no longer qualify for Medicaid benefits, and any assistance she might get from a federal program to help the poor buy fuel to heat their homes would be reduced.

Says the Chicago Center: "Taken alone, each cut seems to be small enough to allow a recipient to absorb it with other income. Taken together, the effects of the cuts are great enough that many families will be unable to meet their monthly living expenses."

Ultimately, the Administration's justification for such cuts is that reducing spending and taxes will pep up the economy enough to help everyone, including the Missouri mother. Says Secretary of Agriculture John Block: "The end objective is to provide a healthier economy in this country, to reduce inflation, reduce interest rates, improve job opportunities and provide more jobs for our people. In the final analysis, in spite of these different smaller areas where people feel they are being put upon, everyone is going to be better off." That contention is itself debatable: there are many economists, legislators and private citizens who doubt that the Administration's program can produce the noninflationary growth it aims at. But the more pertinent question is not whether the poor have a right to benefits, but whether some other way could not be found to achieve the lowering of spending and lightening of the tax load that almost everyone agrees is necessary.

Unfortunately for the purpose of informed public debate, the opposition Democrats have yet to produce much of an alternative. Wisconsin Democrat Henry Reuss, chairman of the Joint Economic Committee, last week did unveil a program to shrink the budget deficit about as much as Reagan proposes, but without cuts in food stamps, welfare or other programs for the needy. Reuss and the JEC staff suggested less generous cost of living increases in Social Security and federal military and civilian pensions, an end to spending on new construction for the interstate highway system and a deep cut into pork-barrel dam and water projects. However, the JEC alternate budget relies too heavily on tax increases --for example, doubling excise taxes on liquor and cigarettes, increasing gasoline taxes and ending the income tax deduction for interest paid on consumer debt --to seem realistic in the present political climate.

Other Democrats are mounting only feeble opposition to Reagan's program. The Senate Budget Committee two weeks ago voted to cut spending even deeper than the President had requested, and a united Republican majority should be able to pass the budget bill on the floor this week. The Senate voted last week to restore $200 million to a school lunch program, but that was a successful Republican move to prevent the Democrats from restoring twice as much. Even in the Democratic-controlled House, the only strategy seems to be delay: while still promising to pass a budget bill by July, the leadership is holding up on votes in hopes that lobbying coalitions can drum up more grass-roots opposition to social spending cuts than has appeared so far. One problem for the liberals is that the balance of power is held by some 40 conservative Democratic Representatives who are also eager to whack away at spending.

Thus Democratic opposition is focusing on Reagan's tax cuts, which even many of the conservatives fear will deepen inflationary deficits. Illinois Democrat Daniel Rostenkowski, chairman of the tax-writing Ways and Means Committee, went so far last week as to proclaim Reagan's tax program dead. He counseled the G.O.P. to cooperate in devising a compromise measure to reduce taxes less broadly and deeply, for one year only. That drew a threat from Stockman, after a White House meeting, that Reagan would veto such a measure. The outlook today is much what it has been from the outset: the President will get most of the spending cuts he wants, but his tax bill is in serious trouble.

--By George J. Church.

Reported by Gisela Bolte and Neil MacNeil/ Washington

With reporting by Gisela Bolte, Neil MacNeil/Washington

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