Alan Greenspan, the nation's economic helmsman, suggested last week that Congress and the White House dust off their fiscal toolbox. Warning of a drift toward higher deficits, he said Washington needs to "reestablish budget discipline." He endorsed a budgetary gadget - the "paygo" - as a way to do this.
That's "pay as you go," a requirement that additional spending on federal entitlement programs or new tax cuts be offset by other spending cuts or tax increases.
So, for example, spending on a Medicare prescription-drug benefit would have to be made up elsewhere, as would lost revenue from the president's proposal to end double taxation of stock dividends.
In 1990, untamed deficits became such a political liability that Democrats and Republicans crafted paygo as a way to help force budget restraint on entitlements and tax cuts. They also used "budget caps" in the '90s - fiscal clippers that helped control the other part of the budget - discretionary spending.
Both paygo and budget caps were allowed to lapse amid the budget surpluses of just a few years ago. But deficits are back, at least through 2008, according to the White House forecast. Lawmakers and the president should take the Federal Reserve chairman's advice and use these tools.
For now, the budget deficit as a percentage of the entire economy remains relatively low. But as Mr. Greenspan cautions, it's easy to get "entrenched" in deficits. Expensive costs are coming for the retirement years of the baby-boom generation. The budget also makes no provision for a possible war with Iraq, or unanticipated costs of a long war on terrorism.
If the deficit trajectory continues higher, so will upward pressure on interest rates, which can slow future economic growth. Political will to bring back paygo and caps is lacking. This nudge from the respected Greenspan can serve as an impetus.