Balanced Budget? Gop Should See How Lbj Did It

WASHINGTON - The country was talking about a skater named Peggy Fleming, laughing about a singer named Tiny Tim, raving about a college running back named O.J. Simpson. It was a time of agony and anger. The nation was paying for the Vietnam War and the Great Society programs. But it still managed to balance the budget.

Lyndon Johnson's last budget, submitted in 1968 to cover fiscal 1969, was the last balanced budget. It may be the last balanced budget of the century, or ever. But now that the new Republican ascendancy is girding to take power, and with the people around Newt Gingrich, who is to be Speaker of the House, talking with renewed fervor about a balanced-budget amendment, it's worth pausing to examine how it was done.

It was another time, and it seems like another country. There was frustration in the nation but, it is worth noting, the despair was somehow deeper then than it is now. Men were dying, political leaders were being killed, the whole system seemed on the verge of collapse. The predominant mood of the country was doubt. The special edition of Life published to commemorate the times had chapter heads of a single word. Here are three of them: Shock. Dissent. War.

The fiscal 1969 budget tells us a lot about a critical time in the life of our country. But, like most history, it tells us more about our own time.

The central figure of the time was Lyndon Johnson, a colorful figure, a striving son of the South, a man committed to leaving his mark on his time, on his country and on the capital. The central figure of this time may well turn out to be Gingrich, who can be described in much the same way. But Johnson was a devout believer in government - as an engine of social change, as a positive force in society, as a beneficial tool. Gingrich rejects those nostrums, and the public largely does, too.

Johnson's budget was balanced by a combination of tax increases and spending cuts. Neither of those tools is as easy to apply today.

The Gingrich wing of the Republican Party rejects taxation as a tool of economics and as bad social policy: Taxation, to this way of thinking, is a depressant to economic growth and an intrusion on personal freedom. New taxes are simply out of the question right now. At the same time, spending cuts - all the rage on Capitol Hill - aren't as easy to apply now as they were a quarter-century ago.

The last balanced budget probably could not have been balanced without new taxes. Total federal revenue receipts, which is the fancy way of saying the amount of money the government takes in, increased by only $4 billion between 1967 and 1968. They increased by $34 billion between 1968 and 1969, in large measure because Johnson won approval of an income-tax surcharge. At the same time, Johnson, who sometimes relished cutting spending, assured that total federal expenditures rose by less than $6 billion.

That may have been the heyday of Great Society spending and social engineering, but for the most part the federal programs were still small and their constituencies were not yet organized. Medicare and Medicaid had just begun. Social Security was still a modest slice of the federal budget, and indexing of old-age benefits was still three years away.

The social programs weren't a huge drain on the Treasury in those days. Education, training, employment and social-service spending in fiscal 1969 came to only $7.5 billion. In 1993 that category reached $50 billion, a growth rate nearly twice as fast as inflation.

Entitlements - hardly anybody used that word, a fact that in its own way shows how thinking has changed - weren't the burden they are now. This one statistic says it all: Human resources spending, virtually all the entitlements, accounted for 36 percent of total government spending in 1969. In 1993, that category accounted for 66 percent of federal spending.

Today, there's new pressure to bring the budget into balance. During the past two decades, 32 state legislatures have called for a constitutional convention to consider such an amendment, only two short of the number needed. This past March, the Senate came only four votes shy of approving a balanced-budget amendment.

History is mischievous, acting in ways that are sometimes beguiling, sometimes infuriating, almost always surprising. In this case it has delivered an unlikely hero to the Republicans, whose Contract with America calls upon the government to balance the federal budget by 2002 or seven years after the enactment of a balanced-budget amendment. The magus who delivered the last balanced budget isn't a conservative icon but the poster boy of big government, Lyndon Baines Johnson.

David Shribman is Washington bureau chief for The Boston Globe.