Balancing Budget: A Good Case for Skepticism

Amid all the bickering in Washington about whose plan would balance the budget and whose would not, it’s worth remembering the lesson of recent congressional history: Even the best-laid plans to balance the budget have gone awry.

Politicians repeatedly have sworn off deficits, passed plans to balance the budget, only to come up years later with bigger and bigger deficits. Budget-balancing dreams have foundered on the political reality that any year’s tough fiscal decisions can be reversed by a future Congress.

And even if there is no deliberate reneging on budget-balancing promises, long-term fiscal plans are always in danger of being thrown off course by unexpected economic developments, such as recessions, war, natural disasters and minor blips in the economy.

Ronald Reagan’s first budget as president in 1981 called for eliminating the deficit by 1984, even as he proposed big defense spending increases and tax cuts. In fact, the deficit rose to $185 billion by 1984.

In 1985, Congress passed a law designed by Sen. Phil Gramm (R-Texas) and then-Sen. Warren B. Rudman (R-N.H.) that was intended to balance the budget by 1990. The Gramm-Rudman law set declining deficit targets for each of five years and called for automatic, across-the-board spending cuts any year that Congress failed to meet the targets.

It didn’t work that way. The law was struck down by the Supreme Court in 1986 and then rewritten. That put off the deadline for balancing the budget until 1993. But the law was riddled with loopholes that politicians happily drove through, critics said, by meeting budget goals with accounting gimmicks rather than fiscal discipline.

The Gramm-Rudman law was repealed as part of yet another budget deal in 1990. That plan envisioned that the budget would be nearly balanced by now. But economic growth did not live up to expectations and a host of other factors intervened so that the budget deficit for the fiscal year that just ended was $164 billion.

Against this backdrop, Republicans on Thursday looked with skepticism upon President Clinton’s suggestion that the White House and Congress include in their budget plans an “enforcement mechanism” that conjured up memories of the Gramm-Rudman law.

“Using this kind of gimmick gives smoke and mirrors a bad name,” said House Budget Chairman John R. Kasich (R-Ohio).

“We’re not doing Gramm-Rudman,” he said in Thursday’s budget talks. “We’ve seen that movie. We don’t want to see the sequel.”