A market for Fritz's freeze
IF Sen. Ernest (Fritz) Hollings is smiling a little extra these days, the reason is not hard to fathom. Back when the South Carolina Democrat was running for president, he proposed a federal budget freeze as a way to hold down massive annual budget deficits projected in the range of $200 billion and up for the years ahead. Now, the momentum for some form of budget freeze is developing in Washington, with President Reagan reportedly joining the bandwagon.Skip to next paragraph
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A budget freeze - that is, holding the level of federal spending for fiscal year 1986 as much as possible to the level of spending for the current year, fiscal year 1985 - has many advantages. It provides an appearance of fairness, something that lawmakers would eagerly welcome, as they contemplate the unhappy prospect of having to cut spending levels for politically popular programs. It fits in with the current budgeting approach of Congress in general, which is to fund programs by enacting ''continuing resolutions'' that set spending levels for a number of departments, rather than passing individual appropriation bills for each department, as Congress is supposed to do under its own budgeting rules.
As Robert Gough, senior vice-president of Data Resources Inc., points out, the idea of a federal budget freeze for the coming fiscal year represents a ''beginning'' step in attacking the deficit: It ''buys time'' for the United States. Still, it does not obviate the need for Congress and the White House to put together a comprehensive long-range deficit reduction program that deals with such issues as funding levels for entitlement programs, means tests, revenues, and so on. In short, a freeze represents a ''way into'' dealing with the deficit issue, not a ''way out'' of the problem.
A long-range deficit reduction program is still essential.
Would a freeze make it through Congress for fiscal year 1986? Given firm support from the White House, quite possibly. A proposal to freeze the fiscal year 1985 budget (introduced by Senator Hollings) garnered some 38 votes last May. And that was without any active backing by the White House.
Several caveats are in order:
* Defense spending would have to be included in a freeze, if it is to be acceptable to lawmakers. There is a strong rationale for including defense in such a freeze. The Reagan administration has already gone far in rebuilding the nation's defenses.
Thus a one-year freeze, at this juncture, would not undermine the longer-range military buildup now in progress.
* There would be legitimate exceptions to a freeze, such as in the social-security and welfare area, where some programs are linked by law to the cost of living. Interest-payment levels would also rise. But such increases could be offset by reductions elsewhere, such as in veterans and farm programs. The test for lawmakers, as the Hollings view holds, would be to ''keep the freeze from becoming a slush'' - in other words, so loading the freeze with exceptions that it became just a continuing resolution by another name.