Don’t Play Games; Cut a Deal

One week from today, if a federal budget deficit accord is not reached, a lot of bad things might happen. You’ve already been hit with some of the scariest headlines: Air traffic controllers forced to take time off, prompting the cancellation of many flights; the curtailing of federal meat and poultry inspections, causing who knows what (widespread vegetarianism, maybe), and on and on.

That some way will be found in Washington to avoid these calamities seems a good bet. What is far less certain is whether Congress and the Bush Administration will produce the kind of responsible budget package that will contribute perceptibly to the lowering of the federal budget deficit and send a signal to world financial markets that America is finally serious about getting its financial house in order.

That task is all the more important as the economy teeters toward recession and the buildup in the Persian Gulf creates new uncertainties. To make matters worse, a cloud is settling over the ordinarily sunny confidence of the consumer about the economy.

Alan Greenspan, chairman of the Federal Reserve, says he is unable to take seriously demands that the Fed ease up on credit until a budget agreement is a done deal.

If the nation’s central bank were to take steps to make more money available to lenders, interest rates would lower and the flagging economy would be stimulated. Mortgage rates would lower somewhat, for example, making housing more available to loan applicants and spurring production. But without a good run at the deficit right now--so that all can see America well along toward the needed $500-billion reduction over a five-year period--the Fed takes the view that easing credit would be fiscally irresponsible.

Given increasing consumer prices and soaring gas and oil costs, that’s a fiscally responsible view. But a measured amount of credit easing would be almost certainly warranted if a $50-billion-or-so budget-deficit package is achieved for the next fiscal year. The President must expend some political capital to bring about an agreement. Democrat and Republican partisans must stop playing politics. They are playing with fire.