President, Congress Back Into Budget Savings

As weary members of Congress struggle to get out of town for a three-week recess, they are leaving behind a federal budget in shambles.

A new budget cycle is about to begin, yet last year’s budget remains incomplete. Talks over how to eliminate the deficit are deadlocked, and no one knows exactly how Congress and the White House are going to rescue the government from default at the end of the month.

Yet in the wreckage--and to some extent because of it--the government has made some progress in reducing the deficit. By some estimates, the government has cut about $8 billion more from spending on domestic programs for the current fiscal year than it would have if the 1996 Republican budget had been adopted on schedule last fall.

The savings came quietly and haphazardly.

As budget talks between congressional leaders and the White House mired down in disputes over spending on big entitlement programs like Medicare and welfare, many government agencies were left without funds and were twice forced to close. They reopened only after Congress and President Clinton approved temporary funding measures--and it turns out that those measures contained less money for many programs than had been written into the GOP budget last fall.

So while the collapse of the budget talks dashed hopes of restraining spending for entitlements, Republicans reaped bigger savings in other areas. While the initial GOP budget called for cutting so-called discretionary spending--on activities ranging from the nation’s defense to education grants to mass transit--by $22 billion in the current fiscal year, the House Appropriations Committee now estimates that as much as $30 billion will be saved.

Other savings can be attributed to short-term penny-pinching by agencies fearful of running out of money in these uncertain times.

During the first three months of this fiscal year, outlays at the Interior Department and the Department of Housing and Urban Development ran 20% lower than during the first quarter of the previous year, according to the Congressional Budget Office.

While pleased with those savings, many Republicans still want to push for more and are making another pass at picking up the pieces and constructing a seven-year balanced-budget plan.

Republicans have stepped up discussions with conservative Democrats ever since the budget talks collapsed last month. A bipartisan House-Senate group met Thursday to assess the outlook and emerged cautiously hopeful that future meetings would narrow the differences between the parties.

“It’s very conceivable, in the next few weeks, we’ll develop a bipartisan budget thats a balanced budget,” said House Speaker Newt Gingrich (R-Ga.). In a move that could help facilitate agreement, Gingrich said that he would even scale back the GOP’s cherished tax cut to four years if it would persuade conservative Democrats to support the plan.

In a separate action to ease political pressure around the default issue, the House and Senate passed a bill late Thursday that would allow the government to send out March Social Security checks on time. It would give Treasury Secretary Robert E. Rubin special authority to borrow to pay those benefits without breaching the government’s debt ceiling.

Meanwhile, Clinton will unveil his fiscal 1997 budget on Monday.