The US budget -- so near yet so far
Senate Budget Committee Chairman Pete Domenici was frank in saying what must have been in a lot of lawmakers' thoughts this week; namely, that he was amazed Senate and House conferees finally "reached" an agreement on the fiscal 1984 budget.Skip to next paragraph
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What conferees came up with after two weeks of intense political horse-trading was an $860 billion budget that projects a deficit of $170 billion to $179 billion, a 5 percent real increase in defense spending, and a $12 billion tax increase.
The compromise should be approved by both houses of Congress as quickly as possible.
In this regard, while one can understand the distaste of the White House for the plan -- the budget is substantially larger than requested by the administration, and provides fewer funds for defense -- one would be hard pressed to agree that the budget should be scuttled on the floor of Congress. Such an approach seems shortsighted given the need to reach final agreement on a budget that holds down future deficits projected at upward of $200 billion and more.
What the administration cannot help but realize is that the compromise by itself represents -- as noted by Senator Domenici -- a not inconsiderable accomplishment. Congress is already running well behind the budgeting process mandated in the Budget Act of 1974. Under that law, Congress should have agreed on a budget plan a month ago.
It might also be noted that for the past several years lawmakers have tended to run the US government on a series of continuing resolutions, not formal budgets as required by the budget act.
The administration, according to reports floating out of Washington, would prefer no budget this year to a budget that raised taxes, boosted domestic spending, and provided less than requested for defense. Yet, is that really the way a business-oriented, management-conscious Republican administration would prefer to administer the nation? Congress, by law, is required to hammer together -- that means reach a compromise on -- a budget. That being the case, and a compromise having at last been reached, it would hardly seem in anyone's best interest to scuttle the proposed budget now.
Two final points seem in order here:
* First, the budget proposal is one that the White House could live with. The 5 percent hike in defense is a real increase, coming after additional dollars to offset inflation. Again, the tax hike could be undertaken in a number of alternative ways, including the closing of tax loopholes as well as reducing slightly the $30 billion personal tax cut scheduled for next month.
* Second, the administration could still seek cutbacks in various authorization and appropriation proposals in individual committees after the budget targets are approved.
But allowing a budget target to be put in place is reasonable since such a target provides an umbrella that lawmakers and the public can use in seeking to achieve the lowest possible deficit.
Lowering deficits -- and thus holding down interest rates -- is absolutely essential for sustained economic recovery.