The administration and Congress must consider tax increases, including income tax increases, as well as spending cuts to shrink the massive federal budget deficit, the Council on Competitiveness said Tuesday.
"We don't like taxes any more than anyone else," said John Ong, chairman of B.F. Goodrich Co. and a member of the council's executive committee."As much as we'd rather not face the prospect of increased taxes, we are convinced that financing federal spending through taxes is greatly preferable to deficit financing, which is far more damaging and insidious," Ong said.
The federal budget deficit is shaping up to be the critical issue of the first year of President-elect George Bush's administration.
The red ink totaled $155.1 billion in the 1988 spending year, and it is estimated by the White House's Office of Management and Budget at $145.45 for the current spending year and at $135 billion for the 1990 spending year.
The Council on Competitiveness, a non-profit, non-partisan group of 157 business, labor and education leaders, recommended a four-year program to reduce all federal spending, including defense, entitlements such as Social Security and non-defense discretionary programs.
It suggested cutting $13 billion from defense over four years, $26 billion from entitlements and $9 billion from non-defense discretionary accounts.
"These spending reductions, as sizable as they are, still don't reduce the budget deficit as much as we think necessary," Ong said.
The group recommended various taxes to slash the deficit by $120 billion by the 1993 spending year, noting that the true size of the federal deficit has been masked by surpluses in the Social Security account, which the government uses to offset the deficit.