Budget Funny Business in Washington

There it sits, like an 800-pound gorilla perched on a fence, its haunches enveloping the top rail, beckoning to us invitingly -- the surplus. Is it real, or is it an apparition? We want it to be real, since it represents the only hope for future government spending (or tax cutting) in light of the austere, self-imposed restrictions of the 1997 balanced-budget agreement devised by the White House and Congress.

You remember the budget compromise (full name: Balanced Budget Act of 1997), the stringent bipartisan legislation calculated to eliminate evil deficits once and for all. Why periodic deficits of manageable size were so threatening, when they had existed, off and on, for most of the twentieth century, was never quite fully explained. They were blamed for everything but the weather; mostly, they were blamed for the sluggish economy of the late 1980s, which unaccountably turned around in the early 1990s, despite the persistence of deficits for another half-decade. Obviously, other factors were at work.

No matter; the balanced budget had become a secular religion, its enactment enshrined in the Contract with America. Our elected officials resolved to eliminate annual deficits no later than the year 2002, and they did -- or rather the economy did by expanding and providing unexpected tax revenues for government coffers. As a result, technical balance was achieved in 1998, four years ahead of schedule, by natural economic means. Yet, the unnecessary (as it turned out) political machinery set up to achieve it still exists, and there's the rub.

Washington is now imprisoned by future spending caps that are mandated by law, irrespective of what the economy does. Not only are there caps, but the caps become more restrictive as time passes. Lawrence Mishel of the Economic Policy Institute points out that Clinton administration projections foresee annual cuts in non-defense domestic spending of 13 percent by fiscal 2009, if established limits are truly observed. Republican plans for a massive tax reduction in the meantime would cause those cuts to balloon to 29 percent of the yearly budget by then. Either way, the big squeeze is on, and it will get tighter as the out years approach and politicians struggle to keep the federal government from imploding for lack of funds.

Meanwhile, the sharp thinkers in the congressional GOP have found a temporary way around their own legislated budget straightjacket. They won't give up their dream of a permanently balanced federal budget, even if it becomes a nightmare; neither will they consider a sensible tax increase. Their sole reason for existence, as conservative pundit Robert Novak likes to say, is to cut taxes. The solution: emergency appropriations.

In an exercise that would be comical if it wasn't so cynical, Republican budgeteers have decided to declare outlays for any and all necessary or popular programs they can't eliminate -- from the constitutionally mandated 2000 census to Head Start, farm aid, and winter heating-oil assistance -- as "emergency spending" not subject to budget caps. How they managed to overlook the federal census in setting their funding priorities is particularly mind-boggling; it's only been taken every decade for 200 years. Those things apparently happen when you're between a rock and a hard place. The farcical budget charade can't go on much longer, however. Under existing guidelines, all discretionary government spending must be reduced by a real 10 percent by 2002 -- 18 percent if defense expenditures are exempted.

So, the first thing to know about the gorilla on the fence is that it may be a figment of our collective imagination. Predicted future surpluses are premised on the economy continuing to boom (always an iffy proposition) and the federal budget continuing to be cut, year after year. Yet, if spending caps are not repealed and replaced by a reasonable tax increase, there will be no surpluses anyway; they will almost certainly go towards subsidizing in some fashion shrinking government programs the public has said it wants. This will come as disconcerting news to the men running for president; they are the ones who see the gorilla most clearly.

Assuming continued economic growth and progressive implementation of the draconian reductions required by the 1997 budget accord, anticipated non-Social Security surpluses are now expected to total $1 trillion over the next ten years. Former Senator Bill Bradley expects to use that windfall to cover the medically uninsured in America -- at a projected cost of $65 billion a year. Vice President Al Gore wants to spend it on a variety of educational, defense, environmental, and health initiatives. Both men would use some of it to finance prescription drug coverage for the elderly under Medicare. George W. Bush, who read his father's lips, wants to give most of the money back in the form of a Reaganesque income-tax cut, two-thirds of which would go to the top 10 percent of income earners as a stimulus to "entrepreneurship."

Bradley and Gore at least want to do something worthwhile with the surplus; Bush would throw it at the already rich in a reinvented version of trickle-down economics. That's really beside the point, however. The point is that the money may not be there at all. It certainly won't be there unless Congress ceases practicing budget nonsense and undoes the damage of 1997. Failing that, the surplus gorilla will clamber down from the fence, wave goodbye, and be gone.

Wayne O'Leary is a writer in Orono, Maine

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