No Budget Leadership

The nation is on a budgetary automatic pilot called sequestration, a mindless machine that cares not whether the Defense Department must cut troop strength by 200,000 or more, or the Federal Aviation Agency can hire replacement air traffic controllers, or there are cutbacks in the federal meat inspection program. Unless President Bush and congressional leaders can agree on a budget for a budget year that already is more than six weeks old, the Gramm-Rudman ax will just continue falling with destructive abandon.

Bush has challenged Congress to cut the pending trillion-dollar budget by $14 billion--and no gimmicks, please--or he is prepared to live with the across-the-board cuts imposed on Oct. 10 under the Gramm-Rudman deficit reduction act. Those cuts would total slightly more than $16 billion and apply about equally to the Defense Department and the rest of government. Well, some of the rest of government.

There are lots of big-ticket items exempted from Gramm-Rudman, including Social Security, interest on the federal debt, federal welfare payments and health care for the poor. Thus, a relatively small part of the domestic budget takes a hefty whack. And certain payments have to be made on time, such as contracts that have been let. The main flexibility is in personnel, so if the Gramm-Rudman cuts remain in force, many departments will have to lay off employes or not fill vacancies. At the Pentagon, the law requires all programs to take equal reductions. Defense Secretary Dick Cheney cannot juggle much spending from one office to another according to real priorities. Again, budgeting by rote.

This seems acceptable to Bush. “We are prepared to manage the government under sequester,” he said the other day. Back in April, there was a budget agreement that would have allowed Bush to slide through his first year in office without having to break his prime campaign promise--no new taxes. The agreement failed in part over another Bush campaign promise of a capital gains tax cut. It was no help that Bush’s original budget contained a “black box” of unspecified budget reductions, and that the Administration still is doing its best to keep its fingerprints off of any cuts that might prove to be unpopular.

By insisting on a “clean” budget, the Administration hopes to put off the resolution of some issues Democrats want so they can be used next year in bargaining for passage of the capital gains cut. And if Congress does not meet his demand, the President still will have Gramm-Rudman no-fault budget cutting. “Politically, they avoid the tough decisions,” said one budget specialist.

The bottom line for the Administration is that a tax increase is a bigger evil than the deficit. Some economists agree. But there is greater currency in the so-called basement termite theory of deficits, that while not seeming to push the nation to the edge of calamity, they continue to eat away at the underside of the economy. After all, Bush has just signed legislation raising the federal debt limit to more than $3 trillion, just eight years after Ronald Reagan signed legislation raising the debt limit beyond $1 trillion for the first time. The annual interest on the debt has risen from 10% of the budget in 1981 to nearly 15%, or $170 billion, in this budget year.

In the short run, however, the greatest need is for some leadership from the White House and Congress to work out a budget. The Gramm-Rudman cuts were designed to serve as a doomsday device to compel action. To willingly fall back on those automatic cuts now is to abdicate leadership, avoid responsibility and give up on a major purpose of budgeting--the setting of national priorities.