Behind the Budget Bluster

The Congress-Clinton fiscal debate may be over loose change

THE budget battle's been long. It's been bombastic. But as the fiscal hyperbole continues to fly here, voters might want to remember this: Whatever happens, there won't be radical change in the size of the American government.

Sure, important principles are at stake in this classic White House-Congress standoff. President Clinton wants to preserve Medicaid's guarantee of health care for all who qualify, for instance, while the GOP wants to end the program's open-ended entitlement status.

But when it comes to numbers, federal programs are so big - and their spending future so unpredictable - that the two sides may now be quibbling over the bureaucratic equivalent of loose change.

''There's been phenomenal exaggeration in this whole debate. The reality is that change in the role and size of government occurs at glacial speed,'' says Bradley Schiller, a professor of public administration at American University in Washington.

Nor are the numbers themselves solid as oak timber.

Estimating annual deficits for the late 1990s is a bit like predicting the weather years in advance. To many economists, this week's revised Congressional Budget Office forecast is little more than an informed guess about the fiscal world of 2002. Its annual error is likely to be greater than the difference between GOP and Democrat budget positions.

Still, CBO forecasts and ''scoring'' of the latest White House budget proposals could push the debate toward closure. ''Let's get through this part of the process and see if people want a deal,'' says Stanley Collander, a Price Waterhouse US budget analyst.

Procrastinating again

As of this writing, Washington appeared to be slouching toward another budget deadline without resolving underlying conflicts.

Temporary US spending authority expires at midnight on Friday, threatening another government shutdown. A new work stoppage would be less widespread than November's forced federal vacation, as five more permanent appropriations bills have passed since then, funding a number of government departments. But the overall budget ceilings for the next seven years remain a matter of fierce White House-congressional debate, and some 350,000 bureaucrats might have extra time for holiday shopping if the standoff continues.

There's widespread sentiment among Senate Republicans to extend the budget yet again via another short-term spending measure. Such a stopgap is possible, they believe, if the administration seems serious about negotiations. ''It depends on good faith by both sides,'' says Sen. Bob Dole (R).

The administration is amenable to an extension. The opinion of House Republicans is crucial, however, as it has been so often since last November. The more confrontational of GOP representatives want to use the threat of another shutdown as a means of keeping up the pressure on President Clinton to accept their position on Medicaid and other important budget issues.

Balancing the budget by 2002 is almost a holy quest for some House freshmen. Indeed, they and their party have been so adamant on the issue that Mr. Clinton himself has adopted the seven-year budget balance target for his own proposals.

A balanced budget would certainly represent an important change in Washington's fiscal picture, and improve economic prospects for future generations. What it wouldn't represent is a massive federal shrinkage. Last fiscal year, Washington spending accounted for about 22 percent of the US Gross Domestic Product. If the budget is balanced by 2002, economists estimate that figure might drop to about 20 percent.

By this measure - an important one to most economists - the federal government is about the same size relative to the rest of US economic activity as in the '60s. Nor has the percent changed much in that time, bouncing between 20 and 24 percent.

Rough estimates

It's also important to remember that the seven-year fiscal targets everyone's now waving in Washington are rough estimates at best. The GOP budget plan could be passed tomorrow, and ''I wouldn't bet a penny the budget would actually be balanced in seven years,'' says Mr. Schiller.

That's because budget projections involve complicated assumptions about how the economy will behave in future years, including guesses about how people will respond to changes. Projected welfare savings of $40 billion to $60 billion depend in large part to how low-income Americans respond to efforts to push them into jobs, for instance.

Again, that does not mean budget balancing is not worth attempting, or that government spending might not be lower than it would be absent deficit-elimination efforts. It just means voters should remember the larger context. Former CBO head Rudolph Penner, for instance, figures there's a 50 percent chance that a deficit forecast for 2002 will be off $300 billion. That's far larger than than today's deficit figure.

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