New year. No budget. Good news.

US fiscal year begins with no spending blueprint, but some argue

By , Staff writer of The Christian Science Monitor

It's one day before the fiscal new year, and America's budget-and-spending process is running as smoothly as Beltway traffic, at rush hour, in the rain, after a collision between a moving van and a poultry truck.

Spending bills are languishing in Congress. President Clinton is waving his veto pen so vigorously that ink could spatter passersby. Lawmakers are fighting over everything from Air Force jets to medicinal marijuana. In short, it's a mess.

But lest you think this is just another "budget clash" story, consider this twist: Today's fiscal chaos may be a good thing.

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In the past, budget problems kept Washington from dealing with the great problem of the deficit. Gridlock in this era of surplus may halt hasty actions that threaten recent progress, say some analysts.

In other words, both major parties are still learning the new politics of black ink. "They're kind of stumbling into the right economic policy by default.

That's the irony," says Stan Collender, director of the Federal Budget Consulting Group at Fleishman-Hillard, Inc.

The right economic policy, in Mr. Collender's view, is to use the surplus to pay down as much of the nation's debt as possible.

That means no GOP tax-cut package - a move President Clinton blocked when he vetoed it last week. It means no expensive prescription-drug coverage for Medicare - a Clinton proposal that the GOP-led Congress is highly unlikely to pass.

Paying down the debt is what voters want to use the surplus for, polls show. It is what Federal Reserve Chairman Alan Greenspan has urged the Congress to do.

In today's new economy, paying down the national debt has a direct benefit to consumers.

It reduces national demand for borrowing money, which helps keep interest rates low. That means everything from credit-card debt to adjustable rate mortgages cost less than they otherwise would.

"Anything that lowers interest rates is worth more to the average taxpayer than any tax cut you could give them," says Collender.

Of course, the belief that it's good to pay off the debt by default, due to budget gridlock, is far from universal in Washington.

For one thing, many Republicans believe that giving taxpayers back their own money, via tax cuts, is the fairest fiscal policy the nation could undertake.

With the cost of prescription drugs rising, an expansion of the Medicare drug benefit is highly popular among Democrats.

From a process point of view, the chaos that now accompanies the end of every fiscal year is extremely inefficient. Yet it's common. Congress has passed all 13 spending bill by its Oct. 1 deadline only twice this decade, noted Senate majority leader Trent Lott (R) of Mississippi on Tuesday.

"There should be some greater level of concern about this," says Bill Frenzel, a former GOP congressman from Minnesota who is now a Brookings Institution government studies scholar.

Back-loading the budget process increases the power of the president at the expense of Capitol Hill. Lawmakers, trying to cram months' worth of work into a few days, become tired and eager to leave home for vacations or campaigns. Yet a president, via veto threats, can hold them hostage.

Last year, Mr. Clinton used this "superlegislator" status to pry $20 billion of additional spending out of Congress. Mr. Frenzel worries the same thing is going to happen again this year. "Republicans are going to have a hard time convincing people that they are different than Democrats on appropriations, which used to be what distinguished them," he says.

The slow process may have prevented a grand bargain that would have used up big chunks of the surplus, say other experts. But on a micro level it invites last-minute pork-barrel spending - and it becomes all-consuming.

"Congress gets stuck on the budget and never gets any other work done," says Ralph DeGennaro of Taxpayers for Common Sense.

(c) Copyright 1999. The Christian Science Publishing Society

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