Perot: Dr. Feelbad and the Deficit

WITH HIS BITTER PRESCRIPTION FOR ELIMINATING THE FEDERAL DEFICIT BY 1998, Ross Perot likes to style himself as the straight-talking realist of American politics. Perot was at it again last week, appearing on the Today show to chide the presidential candidates for failing to tackle the deficit, and hinting anew that he would jump back into the race unless they faced the issues.

But panelists in TIME's economic forum warned that Perot's medicine would be the wrong tonic to give the economy now. "It would be an absolute disaster to have a Ross Perot program in 1993," said Donald Ratajczak, an economics professor at Georgia State. "We would probably go back into recession." Concurred Boston economist Allen Sinai: "Deficit reduction at this time, when the economy is so weak, is the wrong way to go." That's because the painful tax increases and spending cuts that Perot advocates would take money away from consumers and companies, thus deepening the country's already palpable mood of economic gloom.

Yet the panelists agreed that the deficit is a crippling burden on the economy that must be confronted in the long run. The main problem the red ink causes is soaking up savings that could otherwise be used for investments in factories and machinery and to create new jobs. Panel members said the government should move to reduce the deficit once the economy becomes strong enough to tolerate the treatment, which could mean waiting until 1994.