BALANCING FEDERAL BUDGET IS HIGH-WIRE ACT WITHOUT ANY NETS

The agreement between President Clinton and Republican negotiators to bring federal revenue and spending into balance by 2002 for the first time in 40 years is good news. It is an indication that top leaders in Washington are serious about finding a way to end mounting deficits, which would, left unchecked, have disastrous consequences for taxpayers and for those who are looking forward to such entitlements as Social Security and Medicare.

However, there is good cause for a note of caution. Why? Take a look at the recent history of Washington's efforts to produce a balanced budget:

-- In 1985, The Gramm-Rudman-Hollings amendment raised the federal debt ceiling to an all-time high of $2 trillion, set declining limits on the deficit, required spending cuts and projected a balanced budget in 1991.

-- In 1987 following the stock market crash, new deficit targets were set, and a balanced budget was projected for 1993.

-- In 1990, difficult negotiations between the White House and Congress produced a five-year plan of spending cuts and tax increases.

-- In 1993, President Clinton successfully pushed another package of tax increases and spending cuts.

-- In 1995, the Republican Congress passed a spending plan aimed at ending the deficit by 2002. The president vetoed the package, shutting down government twice.

-- This year, the president and Congress have agreed on a new plan to end the deficit by 2002, including tax cuts.

Is there a pattern here? The nation's taxpayers deserve to be wary about any attempt to solve so huge a problem. Moreover, economists tend to agree that even this latest plan -- if all the details can be worked out -- only brings the federal budget into line for one year. Beyond that, the future remains as cloudy as ever.

During the past four decades, Washington has supported a growing entitlement base. The fact that Social Security payments are generating annual surpluses of $80 million to $100 million skews the so-called balance in the budget plan, because these surpluses are counted as federal revenue rather than an obligation to pay future benefits.

And the demand on those benefits will become enormous soon after the 2002 benchmark for a balanced budget. Baby boomers -- all those Americans born between 1946 and 1964 -- will be eligible for retirement by 2030, when only two working Americans will be paying into the system of benefits for senior citizens, down from five workers per senior citizen in 1960. Moreover, the average economic growth rate has slowed to near 3 percent a year since the early 1970s -- or about half the pace of economic growth in postwar years when many of the entitlement programs were generated.

And, it must be remembered, the balancing act clearly will produce some losers as well as some winners. For example:

-- The winners will benefit from lower interest rates, increased savings and investments, smaller trade deficits and a faster pace of economic growth, all of which are expected by economists to occur if the federal budget is every truly balanced.

-- The losers would be those who rely on government services and income programs, because the balancing plan calls for cuts in some areas.

But here is the real kicker in the agreement announced last week: So far, it is only an outline. Before it happens, the ideas contained in the agreement must go through 26 different appropriation committees, two tax-writing committees and both houses of Congress before arriving on the president's desk for a signature. Along the way, special interests will be doing their dead-level best to change the plan.

Will parents really get a $500-per-child tax credit? Will college students really see a $10,000 tax deduction for tuition? Will investors really see as reduction in the capital gains tax to 19.6 percent from the current 28 percent?

All of these questions -- and others -- should not deter Congress from the task of balancing the budget. But these are issues that will have to be dealt with openly and honestly if the American taxpayers are ever to find relief and confidence in their elected officials to get the job done.