(FORTUNE Magazine) – The subject of On Borrowed Time (ICS Press, $24.95) is of the utmost importance. It is the so-called entitlement programs of the federal government: Social Security, Medicare, and pensions. Are we committed to spend more in the future than we can afford? Will the young people of the future be taxed unmercifully to pay for the comforts of the new elderly? Is much of our entitlement spending unnecessary and, perhaps, immoral? Investment banker Peter G. Peterson, former commerce secretary and chief of Lehman Brothers Kuhn Loeb, now head of the Blackstone Group, and Neil Howe, a senior fellow at the Retirement Policy Institute, vehemently argue ''yes'' to all the above. We are far down the path to social and economic disaster, they say. Unless we as a people begin to practice ''self-denial and collective discipline'' we will be forced to endure ''cuts in progressive public spending, a decline in our international influence, and a growing cynicism about our collective historical destiny.'' They make David Stockman look like an optimist. What is to blame? Well, ''wrong-headed economic thinking'' by pretty much everybody. Peterson is ''increasingly distressed by the ideologues of the 'New Right,' '' who have relied on ''such trendy palliatives as tax cuts, easy money, and a return to the gold standard,'' and who practice ''the politics of pleasure and consumption -- with the notable exception of programs for the poor, where they have sanctioned real cuts.'' Liberals don't fare much better. They are ''tragically misguided,'' assuming ''that any critique of domestic spending is merely camouflage for an attack on America's longstanding commitment to progressive social goals.'' In the end Peterson accuses the liberals of ''opting for the politics of bribery.'' But lest we all despair, Peterson and Howe have the answer: ''The formation of a new political consensus that is, at once, conservative in its approach to economic issues and compassionate in its approach to social problems, tough-minded on foreign policy but not mesmerized by each new * proposal for a costly weapons system. This new politics must forge a coalition for investment that is willing to trade present consumption for future prosperity; it must be a bipartisan grouping prepared to endure some pain today in order to avoid future economic calamity.'' NOW THAT IS a platitude that most right-wing Republicans and left-wing Democrats, not to mention all those in between, could live with easily. The difficulty occurs when you get into the details. What do these words mean? Precisely what actions do Peterson and Howe recommend? Not many. This book is very long on preaching and very short on specific suggested solutions. For example, in the concluding chapter we are told that ''What Americans must appreciate is that the historic ideologies of the left and right are now irrelevant to the issues at stake.'' The tone of the book is almost unrelievedly anti-Reagan. Here are some of the choicer culls: ''The unreality of the Administration's economic program . . . a very real chance that the 'happy-time Republicans,' Ronald Reagan chief among them, will be consigned to the obloquy of Herbert Hoover . . . the supply-side fallacy of the 1980s . . . we cannot continue to soak the poor as a matter of public policy.'' Most good left-wing activists would buy those charges, but not even the Democratic National Committee would be likely to go along with their assertion that ''Reagan has co-opted the substance of Democratic policy.'' PETERSON AND HOWE clearly imply that in addition to spending too much on Social Security, Medicare, and government pensions, we are spending too much for national defense and should be raising taxes, especially if we want to increase spending on the poor and public works of all sorts. Weapons purchases are ''extravagant.'' Buying big ships for the U.S. Navy is criticized as ''consumption,'' an interesting label for purchasing equipment that can easily last 30 or 40 years. If this be consumption, then what, pray tell, would qualify as an investment in our national security? While the main theme of the book is the general notion that we must control and limit the growth of federal entitlement programs (with which I, and perhaps most Americans, heartily agree), there is a hidden agenda in the tone and inferences of the book -- an agenda of raising tax rates, raising spending on welfare and public works, and cutting spending on national defense, all key elements of the ideological agenda of the left. But remember, we are told such | ideology is ''now irrelevant.'' THE BEST PARTS of On Borrowed Time are the detailed tables, graphs, and analyses of past and projected spending on such federal entitlement programs as Social Security, Medicare, and federal pensions. We are spending too much, and we will have to cut back, and Peterson and Howe are right to urge us to do so, while we can do it rationally and calmly and not be driven by some economic crisis. But exhortation is no substitute for specific policy. We will have to depend on others for that. The worst parts of On Borrowed Time are the errors and omissions. The book is most seriously misleading in the very premise on which it is built. Peterson and Howe clearly prompt the reader to believe that we are firmly committed to a path of increasing deficits that will simply make it impossible to pay for future federal entitlement programs. They assert, ''Now, as before, we look forward to endless years of federal mortgages on our nation's future: deficits in the $130 billion and $170 billion range by the early 1990s.'' This may have been true when they began to write, but unfortunately for the premise of their book, those awful deficit forecasts of a few years ago have changed dramatically. In the summer of 1988 the economic forecasts of the Administration, with no policy changes, show the federal deficit dipping sharply to less than $50 billion by 1993. Even the congressional budget office expects a steady decline in the federal deficit, year by year, down to $121 billion in 1993. (Both estimates include the effects of a widening Social Security surplus.) While these absolute numbers are still too large, the relative impact on the deficit gets mighty small under either projection when it is compared with the size of our steadily growing economy -- a vital factor completely overlooked in the Peterson and Howe analysis. Today the deficit is expected to fall to somewhere between 1% and 2% of our gross national product by 1993. That is the range we were in during the Kennedy, Johnson, and Nixon years and substantially less than we experienced during the Ford, Carter, and Reagan years. The authors assert that during the 1980 campaign President Reagan promised ''trade surpluses'' (not that I can recall) and that the 1981 supply-side tax cut was supposed to ''generate increased federal revenues'' (nonsense, every tax cut proposal during the campaign and every tax cut proposal sent to Congress clearly showed substantial tax revenue losses). They accuse the United States of having the ''industrial world's highest rate of infant mortality.'' Well, not exactly. Italy, New Zealand, and Israel have higher rates, and if you consider the Soviet Union part of the industrialized world, theirs is more than twice as high. And in those nations where rates are lower, they aren't much lower. The United States is still a very nice place to have a baby, thank you, and not, as Peterson and Howe would have the reader believe, something to be ashamed of. Peterson and Howe repeatedly assert the notion that ''over the past two decades, younger Americans as a group (under age 35) have been experiencing a continuous and unprecedented decline in real income.'' At best this is sophistry. There has been a decline in family size, but real per capita income has risen substantially during the past 20 years. True, in the 1970s there were some real declines in workers' incomes, but Peterson and Howe somehow neglect to tell us what happened during the 1980s. For example, the median income of households headed by young people age 25 to 34 was $20,513 in 1981. Five years later, after all those terrible economic policies of Ronald Reagan, the median income of these young households was $25,898 -- a 26% increase, while inflation increased less than 21% in the same period. They talk about the ''rising poverty rates among children,'' and confidently assert -- citing as their source a study by the Children's Television Workshop -- that by the year 2000 ''in each classroom of 20 children . . . five will be living in poverty.'' Letting pass the reliability of poverty projections by the Children's Television Workshop, their statement about rising poverty among children is flat wrong. The poverty rate among children did rise significantly during the last year or so of the Carter Administration, and it continued to rise until Reagan's new economic policies began to take effect in late 1982. Since 1983 the poverty rate among children has fallen, not risen. At least one of their implied policy descriptions is going to be highly controversial. They summarize the view of ethicist Daniel Callahan, writing that ''heroic medical interventions on behalf of the aged constitute an unaffordable and unjustifiable claim on society's resources.'' They relate his argument that ''the elderly, after all, have already accomplished and enjoyed most, if not all, of what they can reasonably expect in life,'' and that we should ''stop devoting resources to the discovery and use of medical ! technologies whose primary purpose is to prolong life beyond its 'natural' span.''

ALTHOUGH PETERSON and Howe are quick to concede that we ''still have no idea . . . where the 'natural' life span ends,'' the implication is clear -- we should stop spending so much money keeping old, sick people alive and let them die a little earlier. And then we will have more money to spend on the young, the poor, and public works. Having recently turned 52, I find their suggestion somewhat chilling. In the introductory chapter, Peter Peterson recalls that when he joined President Nixon's White House staff in 1971 as the assistant to the President for international economic affairs, he had ''the enthusiasm of an amateur (and the naivete of a noneconomist).'' He hasn't changed.

BOX: EXCERPT: A central theme in this book is that the American concept of ''entitlement'' is inherently prejudicial against the young . . . We are now passing them the bill for some $10 trillion in unfunded federal benefit liabilities above and beyond our official national debt . . .