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April 14, 1995
In a short, quiet, pre-Easter, pre-Passover week, mortgage rates held steady at their lows.
Every time the markets look as though they're about to get nervous, and do something ugly, here comes another amazing report on inflation -- or rather the absence thereof. The Producer Price Index was unchanged during March, and the Consumer Price Index rose only .2%. Materials prices have risen a lot in the last year, but wages make up 70% of all business costs, and are hardly rising at all.
Now that Mr. Gingrich has finished his 100-day mixture of substance, posturing, and ego, the whole of Washington has fallen into an anti-hunt for deficit reduction Easter eggs. Brightly colored options are littered all over the landscape, in plain sight, and leaders are avoiding them at all costs.
There is a whole rainbow of options for a grand compromise on Social Security: means testing for wealthy recipients, a gradual increase in the retirement age, slightly less than full indexing to inflation, a move to private retirement plans, and a small increase in taxes. It takes real effort by the hunters to miss all of these.
Aside from the blindfold approach, some hunters are trying to remove eggs from play. Bob Dole, in his kinder, gentler bunny suit, has just stepped on the tax increase egg. "No new taxes!" How about a tax on imported oil? (crunch) On consumption? (squish) Gasoline? (splat).
Other hunters are pretending that nobody told them to hunt for eggs. Rep. Dick Armey, who has the power to roll many a deficit-cutting egg, has decided to spend Easter (and the whole year, apparently) trying to re-invent the entire tax code. Dick likes the flat tax, or any tax that's not like the taxes we have now. Great, but couldn't we flatten the budget before re-inventing the egg?
The Big Bunny, the one who lives in the white hutch, has decided to philosophize about his empty basket. It's really full, you see. Mr. Clinton, straight faced and serious, said this week that he was the first president in whenever to balance the government's "operating budget."
The operating budget is everything government spends except interest. Can you imagine a monthly scene at home: "Hi, honey! Good news! We had enough money to pay all the bills except for that silly interest on the mortgage."
Our national interest tab is around $250 billion a year, oddly enough, about the same size as the deficit. Bill! Hey, Bill! Anybody home?
Mr. Clinton is Humpty beyond all repair. The Republicans have to lead. If they are to make anything of their majority, let alone keep it, they must insist that attention be paid to the one issue more important than all the others combined. Otherwise, the sickly sweet sulphur smell of rot is not many Summers away.
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