Taxed and spent.

At the time of this writing, President Clinton and Congress have just finished crafting their five-year Dr. Kevorkian budget plan. Congressional Democrats have placed the gun against the temple of the U.S. economy, and it's our guess that by the time you receive this magazine, they will have pulled the trigger. It seems that gridlock has abandoned us just when we need it most.

The one minor virtue of this Clinton deficit-reduction package - and we use that term loosely - is that from the moment the President unveiled it in February, it was never even remotely a close call. This budget is devoid of even a single redeeming feature. We can be reasonably certain that it will not reduce federal red ink, if only because its prototype, Richard Darman's 1990 budget deal, did not reduce the deficit, but nearly doubled it.

The plan attempts to attack the deficit through traditional liberal channels: defense cutbacks and massive redistributionist tax hikes. The defense cuts slash military spending to below the levels of the Carter years, when America depended on a hollow Army and Navy. If history is any guide, the income-tax rate increase aimed at the nation's most productive citizens will dampen investment, reduce national savings, slow business and job creation, and most importantly will fail to add a penny of revenues to the federal Treasury. The White House assumes that these two provisions will somehow create eight million jobs over the next four years. But there aren't even any left-wing economic theories - to the best of our knowledge - which say that defense cut-backs and record tax increases lead to more employment. As Hudson Institute economist Alan Reynolds puts it: "The unemployed might as well just assume they have jobs."

One of the most deceitful White House claims about this budget plan is that there is one dollar in net spending cuts for every dollar in tax increases. Even Republicans are over-generous when they charge that there are three dollars of taxes for every dollar of net spending cuts. The truth is that even with drastic defense reductions, there are zero dollars of net spending cuts in this package. None. Zilch. In fact, eligibility for runaway entitlements - including Food Stamps, home energy subsidies, the earned-income tax credit, and Medicaid - is widened under this bill. Hence, in 1994 our $1.5-trillion federal budget will rise by $65 billion more. In 1995 it will rise by another $62 billion. By 1998 the budget will be $300 billion larger than it is today. What is depressing is that the Clintonites genuinely perceive this as a triumph for fiscal restraint.

Inside the fantasyland of Washington there is always a degree of detachment from reality when these kinds of historic economic decisions are made - as if nothing more than a political game has been played out. Sadly, this is no game: real people, hundreds of thousands of them, will lose real jobs, in real towns all over America. When Bill Clinton promised to reverse the policies of the Reagan era, for once he was being entirely truthful.

Our post-mortem on this dreadful budget package is to repeat what Representative Dick Armey of Texas told his colleagues in Congress last month: "If you're a Democrat and you vote for this package, I have two words of advice: Run scared. For my colleagues who vote against this package, my advice is: Buy gold."