Congress Lacks Will to Cut Budget : Sacred Programs and Fear of Tax Hikes Spur Deficit

Times Staff Writer

For most Americans as well as many of their elected representatives, nothing epitomizes the apparent impotence of Congress more than the massive federal budget deficit.

Disappointment with the fiscal stewardship of Congress increased sharply last month when--even after a 500-point plunge in the stock market and more than four weeks of high-level negotiations between congressional leaders and the White House--the House and Senate could agree to trim only about 20%, a mere $76 billion, from the projected fiscal 1988 and 1989 budget deficits.

"It was indicative of how little progress could be made, even under the most excruciatingly pressured conditions," said Rep. Vic Fazio (D-Sacramento), a member of the House Budget Committee and a veteran of the congressional process. "Over time, the system has been producing less and less."

Even Ronald Reagan, who campaigned for the presidency eight years ago on a pledge to balance the federal budget and then pushed through tax cuts and defense spending hikes that sent the deficit to unprecedented heights, has not received as much blame as Congress for failing to cut the deficit. As Reagan himself gladly points out, it is the primary constitutional function of Congress--not the President--to decide how tax dollars are to be raised and spent.

Frequently blamed for Congress' persistent inability to cope with deficits is the complex machinery by which it writes its annual blueprint for federal spending--a multitiered legislative process that includes such procedures as authorizations, appropriations, budget resolutions, reconciliation and continuing resolutions.

At the heart of the stalemate, however, is a deeper political reality that members of Congress are unwilling, perhaps even unable, to ignore: Reducing the deficit requires cutbacks in federal programs and increases in taxes that the voting public has thus far shown little willingness to accept.

"You could have the simplest, most rational budget process in the world--which we don't have, but let's assume for a moment that we did--and the budget deficit would be exactly as large as it is now or maybe a couple of million less," said Rep. Anthony C. Beilenson (D-Los Angeles).

Against Tax Hikes

Norman J. Ornstein, political scientist at the American Enterprise Institute, argues that, as much as many members of Congress would like to end the budget problem, sentiment in the country has not crystallized enough to allow them to make the far-reaching choices required. Polls show Americans want Congress to balance the budget but not raise taxes or cut programs--creating a Catch 22 that their political leaders cannot overcome.

"I believe there are only two circumstances under which government can act swiftly and sweepingly in changing the status quo," Ornstein said. "The first is when you have a crisis of sufficient magnitude that the public says to policy-makers, 'We're going under for the third time, do whatever is necessary,' and the second is when you have a President, Congress, the business community and the academic community declaring, 'This is terrible and we've got to act.' "

Not only has the deficit failed to create a nationwide consensus or sense of crisis, but the budget debate has become the centerpiece of another monumental political struggle: With voters becoming increasingly independent, the Reagan era ending and the Democrats still searching for a credo to replace New Deal liberalism, both Republicans and Democrats are vying for the loyalties of an enormous number of uncommitted voters.

"Both parties see the long-term majority as up for grabs," Ornstein noted. "There's every incentive to stoop to whatever tactics are necessary to get a little tactical advantage. Neither party trusts the other, as a result."

Members of Congress are also quick to point out that a political solution to the deficit problem is impossible to achieve without active leadership from the President. They insist that Reagan has failed in his responsibility as a national leader by taking an uncompromising position against new taxes.

'Then You're Stuck'

"He is the only person who can speak to the American people and educate them, tell them what the situation is," said Beilenson, one of several members of Congress who not long ago participated in a major House inquiry into the weaknesses of the budget process. "If you have a President, as we have had, who doesn't worry about deficits . . . then you're stuck."

What has been missing from the process is a key element--compromise--that cannot be supplied by reforming the congressional budget-making procedures.

"The budget process can be debated and we can theoretically improve it," Fazio said, "but it really is more fundamental than that. It really requires people to compromise and to get a little dirty and make enemies of some of their friends and all that sort of thing. The fundamental structure of our government--a tripartite system--when populated by people who are rigid and antagonistic, unyielding, uncompromising and overly ideological, just doesn't produce results."

For much of the last seven years, the debate over how to cut the deficit has pitted those who would raise taxes against those who favor trimming programs such as Social Security that entitle certain people to federal benefits. Defense spending has been a largely peripheral matter, especially after a consensus developed several years ago to end Reagan's military buildup.

On the remaining gut issues, neither party is willing to take a political risk. As Sen. William S. Cohen (R-Me.) put it: "You've got an unhappy situation where the Democrats are not going to talk taxes without Republicans' joining them; the Republicans will not talk entitlements without the Democrats' joining them, and the President is saying no to both. That sort of summarizes the dilemma that we're in."

Resigned to Deficits

As a result, the overwhelming majority in Congress--Republicans as well as Democrats--appears resigned to potentially disastrous deficits until the inauguration of a new President in January, 1989. Most feel that virtually any of the candidates running for the presidency--with the possible exception of Rep. Jack Kemp (R-N. Y.), who adheres to Reagan's view--are committed to work closely with Congress to slash the deficit as quickly as possible.

Nevertheless, Congress still is under strong pressure from all sides to solve the deficit problem without waiting for a new President. Robert Holland, president of the Committee for Economic Development, a business group, argues that agreement on a deficit-reduction plan in 1989 may be too late to stem an economic disaster.

"The big United States federal budget deficits stand out as the biggest economic problem in the free world," Holland recently told Congress. "I'm hearing about more and more business decisions that hedge the possibilities that the budget process will never get right and we'll never get our budget deficit down . . . . They (business leaders) have given up hope for our whole budget system."

Few members of Congress deny that the deficit problem has become more intractable the longer they have fiddled with it. Beilenson, for example, who has written a newsletter to his constituents in each of the last five years outlining a plan for reducing the deficit, confesses that even he has given up trying to devise such a program.

"In the beginning," he recalled, "you could come up with a plan that within three or four or five years at most could bring your deficit down to zero just by making very modest changes in taxes and in spending which would have affected an individual American just a very tiny amount. That's no longer possible. It's sad, but we just let it go too long."

Even a two-year freeze on federal spending--as has been proposed by several presidential candidates--would trim only about $50 billion from deficits that are expected to be in the $200-billion range in each of the next five years, according to congressional analysts.

Members of Congress have been disillusioned about the prospects for deficit reduction ever since 1985, when the President refused to go along with a plan put forth by the then-Republican majority in the Senate that called for cuts in entitlement programs. It was a politically risky step for the GOP, and Reagan quickly nixed it on the grounds that he had made a campaign promise never to cut Social Security benefits.

'Colossally Stupid Decision'

"I think we're going to look back on that as perhaps the most colossally stupid decision of the Reagan Administration," Ornstein said. "It would have meant at that time $65 billion in real deficit reduction and we wouldn't have a problem today as a result, but Reagan said no."

"It was a monumental error," Sen. Cohen agreed, "and I think high-level people in the Administration would agree with that . . . . We were undercut by the President."

Out of this bitter experience sprang the Gramm-Rudman deficit reduction law, which, despite an adverse Supreme Court ruling that struck down the automatic mechanism for slashing spending, still establishes goals and deadlines for cutting the deficit.

"Gramm-Rudman was an effort to create an artificial crisis in the absence of a crisis in the economy," Rep. Leon E. Panetta (D-Monterey) recalled. "It was intended to create a legislative crisis. You put that automatic pilot in place, and that will force these guys to get together."

Although 47% of the members of Congress interviewed by the Center for Responsive Politics, a bipartisan research organization, asserted that Gramm-Rudman had not improved the process, there have been some modest benefits. It was the threatened imposition of Gramm-Rudman spending ceilings as much as the stock market crash that forced Reagan and congressional leaders to negotiate a deficit-reduction agreement last November. Both sides saw a need to come up with a more sensible plan for cutting the deficit to avoid the meat-ax approach of Gramm-Rudman.

Unfortunately, the November budget agreement satisfied virtually no one. Critics argue that much of the expected savings--such as $1.5 billion due to be collected from beefed-up enforcement by the Internal Revenue Service--may never be realized.

"It's too bad the stock market made a kind of a rebound," Cohen said. "Basically, if it had stayed low or dropped lower, it would have forced us to do more."

In addition, House Speaker Jim Wright (D-Tex.) complained afterward that, by participating in the negotiations, Congress had ceded too much power over the budget process to the President. Republicans, meanwhile, were miffed that, in agreeing to some revenue increases, Administration officials had failed to squeeze out as many budget cuts as they might have from the Democrats.

'Too Many Scars'

The results of the budget summit talks were disappointing, according to Panetta, because Reagan and Congress are still too suspicious of each other. "It was like bringing two boxers together to fight for eight rounds and, in the ninth round, saying: 'Would you guys come out and shake hands?' " he said. "It's not a very forceful handshake because they are carrying too many scars."

In fact, members of Congress have been disappointed so many times in their efforts to solve the deficit problem that they no longer believe it is possible, according to Sen. Daniel J. Evans (R-Wash.). He recalled what happened several years ago after he and a group of senators proposed a modified budget freeze, which received the support of only 25 senators:

"Many, many other members came up to us and said, 'You've got the right idea, I'd like to be with you, but . . . .' And the buts ranged all the way from 'I'm up for reelection' to 'Well, I've talked to my advisers and they say, gee, if it doesn't have any chance of becoming law, why get out in front on it?'

"It became a self-fulfilling prophecy. Everybody said, 'The President won't buy it, it can't become law, it isn't worth supporting.' We even had some people high in the Administration who said, 'Your package is the right one, but of course it won't pass.' "

Nevertheless, there may be more room for compromise than most members of Congress realize.

Some Republicans such as Rep. Henry J. Hyde (R-Ill.) contend that Reagan is not as intransigent on taxes as most people believe--that he is only using taxes "as a tactic to try and squeeze some real cuts out of the Democrats." Likewise, Fazio suggested that Democrats are increasingly embarrassed about "buying into middle-class entitlements like there's no tomorrow, and not taking care of people in the society who need it most."

Despite their lack of success in finding a solution, members of Congress clearly are spending much more time on the deficit problem, if only because of the increasing complexity of the budget-writing process. Gone are the days when the government was funded in a simple, two-step process beginning with authorization bills, which outline government programs, and ending with the enactment of appropriations bills, which specify exactly how much money will be spent for each program.

Overall Targets Set

Under the 1974 Budget Act, Congress now must set overall spending targets every spring for the fiscal year that begins the following Oct. 1 and then, in the fall, bring spending and revenues into line by passing a law known as a "reconciliation" bill. Until this procedure was created, spending was approved piecemeal and there was no over-all mechanism for controlling the budget.

Although the Budget Act never proved to be the panacea that some had hoped it would be, political scientists and budget experts think the deficit would be much worse today if that law had not been enacted. Without it, for example, there could be no Gramm-Rudman and no negotiations between the Congress and the White House over spending ceilings.

"Because an earlier Congress passed and President Nixon signed into law the Budget Act of 1974, we have in fact spent less money and kept the deficit smaller than it otherwise would have been," Beilenson said. "I can't imagine how bad the situation would be now, had we not had this Budget Act."

Yet the most controversial aspect of the current budget process is Congress' tendency to appropriate almost all of the money for the government in one mammoth spending bill known as a "continuing resolution," usually long after the fiscal year begins on Oct. 1. Such measures are necessary whenever Congress has failed to pass the 13 separate appropriations bills that historically were used to fund the government.

Rep. Mickey Edwards (R-Okla.) complains that continuing resolutions--once reserved only for emergencies--are now viewed as such an integral part of the system that the appropriations committees begin discussing early in the year what will be in them.

"It's a bad way to legislate," Beilenson said. "It's much easier and better, and you end up with a better work product, better legislation in the long run, if each of these bills is before you individually on the floor. You have a chance to amend them, you have a chance to get bad stuff out, to add some good things, or whatever."

Panetta noted that the continuing resolutions are also slowly becoming a substitute for authorizing legislation as well as appropriations. For example, the $600-billion omnibus spending bill that was passed by Congress last Dec. 23 included an extension of the Clean Air Act, which ought to have been accomplished with separate authorizing legislation.

Distracting Congress

Examining the problems in the congressional budget machinery itself, the Center for Responsive Politics found in a recent survey that nearly half of the members of Congress now believe the process has weakened policy-making and distracted from the other functions that ought to be performed.

"I think that the whole budget process has failed us miserably and that probably the thing ought to be scuttled at the first opportunity," said House Minority Leader Robert H. Michel (R-Ill.). "I think it has taken us down the wrong road."

Widespread criticism of the budget process has led to innumerable proposals for change--most notably the President's demand for a balanced budget amendment and power to veto individual items of spending bills. Reagan supporters argue that these powers, which many state governors already have, would permit the President to impose discipline on the process of funding the government.

Democrats generally oppose these proposals, however, on grounds that a constitutional amendment requiring a balanced budget would be impossible to comply with, and an item veto would give too much power to the President to establish spending priorities.

In fact, Ornstein argues that an item veto would backfire on those who want to trim spending. He cites as evidence a study showing that per capita spending is higher in states that have an item veto.

Instead of an item veto, many political scientists and budget experts have proposed that Congress should set up a mechanism whereby both the House and Senate are bound to vote promptly on so-called "rescissions"--or decisions by the President not to spend specified amounts of money appropriated by Congress for certain programs. Under current law, rescissions must be approved by both chambers, and Congress seldom acts on them.

Splitting Omnibus Bills

Another particularly popular proposal among Republicans would ban omnibus spending bills or require that such big bills be broken down into separate appropriations measures before being sent to the White House. This would enable the President to veto bills he opposes without having to risk shutting down the entire government by vetoing the whole measure.

Eighty-six percent of the members of Congress surveyed by the Center for Responsive Policy said they favor moving from a one-year to a two-year budget process--an idea that is likely to be debated seriously this year. Although the survey found also that there is considerable sentiment for abolishing the appropriations process and using annual authorizations to provide government agencies with the funds they need, the powerful and highly respected Appropriations Committee members could probably block such a step.

Yet none of these ideas have received as much attention recently as the decision to create a bipartisan commission to devise a solution to the deficit crisis. The panel, which was created by the fiscal 1988 reconciliation bill passed last December, would be patterned after the 1985 commission that devised a political compromise for bolstering the Social Security system. Its report is due in early 1989.

"What a commission really would do would be to put the imprimatur of a political mandate on a bunch of unpalatable proposals and give you a sum total that would be something you could take credit for while you gloss over the details," Fazio said. "It would be a great method of covering everybody's behind while they do what they know they have to do."

Skeptical of Commissions

But many members are skeptical that a commission can succeed. "Commissions tend to be ignored," Cohen argued. "It seems that every time we run into a problem we say, let's create a commission. We (Congress) are the commission. That's what we were elected for. I think we ought not to fob this off onto a high-profile commission and fail to measure up to our responsibilities. If we can't do it, we shouldn't be in office."

Indeed, none of these proposals will succeed without a willingness to compromise.

"The bottom line is that, whether you have a balanced budget amendment or whether you have a line-item veto or whether you have a commission, you've got to deal with three very controversial issues--defense, entitlements and taxes," Panetta said. "If you don't have the courage to cast the bottom-line vote, no matter what the gimmick you set up to get there, it is not going to do much good."

Next: globe-trotting members of Congress dabble in diplomacy.

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