This year's federal budget exercise dramatizes how much basic fiscal and tax reform are needed as opposed to the hectic backing and filling exemplified in recent weeks.
To be sure, President Carter's belated effort to follow through on his original campaign promise of a balanced budget is an indication of proper concern for surging inflation. So is the congressional push to bring the budget under control. The congressional results so far are generally in line with Mr. Carter's latest revisions, though a deepening recession could dictate a different approach. It is good to see the White House and Capitol Hill getting together in a display of fiscal responsibility. Since working people are being asked to accept wage restraint and reductions in federally subsidized jobs and unemployment compensation, it was a nice touch for the President to propose a freeze on basic salary increases for senior officials in the executive branch. Individual citizens ought to get in the spirit of things and balance their own budgets -- as if most of them had any other choice.
But the current Washington money scramble ought to be made just the prelude to more fundamental action. In itself it appears to offer less than meets the eye. Publicized for its $15 billion cut in spending from the 1981 budget proposed in January, the new White House budget also includes increases that bring the net decrease to something like $4 billion for a total of $611.5 billion. The "balancing" of the budget is accomplished through adding to the January revenue estimate of $600 billion the sum of $11.6 billion in added revenue caused by inflation -- in effect, a hike in taxes. A "surplus" is promised through the import fee on gasoline of $12.6 billion and withholding taxes on interest and dividends bringing in $3.4 billion.
Meanwhile, the 1980 budget, despite a publicized $2 billion-plus cut, has also had upward revisions. The result for the two years is a total representing virtually no net cut in outlays between the January and present versions. At the same time there is a fairly whopping increase in revenues.
All this simply fuels the controversy over whether it would be more prudent to balance the budget through cutting spending enough so that taxes could be cut , too, or cutting taxes first in order to spur investment and create revenues -- let alone the controversy over whether the President's particular cuts are the best ones.
The appearance of harried improvisation ought to give way to addressing long-term fiscal and tax policy. The whole question of tax expenditures, for example, should be gone into. These are the various tax breaks and subsidies that keep out of the Treasury funds that could be used to balance the budget. In the 1981 budget itemized deductions account for $44.5 billion in lost receipts.
The Office of Management and Budget and the Congressional Budget Office have taken strides toward making the fiscal operation work better. Their efforts have to be built on when the country is as much alerted to the need as it is now -- or when willm basic reform ever be undertaken?