Real tax bill gains: fiscal discipline, bipartisanship

The US Congress, which once spent money with abandon and then totalled up the bill at year's end, is beginning to learn fiscal discipline.

That is the first message from last week's spectacle of a majority voting to raise taxes only 10 weeks before an election.

The second is that when the crunch comes, Republicans and Democrats can work together on the economy and set aside the partisan bitterness that has been rampant for the past year and a half.

The scene was extraordinary. Democratic House Speaker Thomas P. (Tip) O'Neill Jr. pointed his finger sternly at Republicans and told them to support their President. Conservatives, moderates, and liberals in both parties joined forces, and in the end Congress voted for a giant tax hike and spending cut. This cooperation grew out of the meetings last spring of the so-called ''Gang of 17'' - officials from both parties in Congress and the administration. Most observers thought those meetings had failed at the time.

In the action last week, Congress took a major step toward reducing the towering federal deficit, and it met and actually exceeded some of the spending-cut targets set by its budget resolution last June.

In all, the measure would reduce the deficit by approximately $130 billion during the next three years. Of this total, $98.3 billion would come from increased revenue. The remaining $31-plus billion in savings would come from dairy price supports, food stamps, medicaid and medicare, as well as by limiting cost of living increases for civil service and military retirees.

Even with these moves, there is no guarantee that Congress has stemmed the tide of red ink. It still must prove it will make the cuts promised in other programs, notably defense.

More difficult still, Congress must cope with the economy, which in large part controls the deficit. For example, every time unemployment rises by one percent, the federal government goes into the red $25 billion more because of higher welfare and jobless payments and lower tax receipts.

Consequently, the deficit, which is climbing to the historic level of $115 billion to $151 billion in the current year, will be difficult to restrain. And while Congress is officially aiming to hold the red ink level at $104 billion in 1983 and still lower in the next two years, it has a tough task ahead.

The vote last week for tax increases and spending cuts showed that Congress is beginning to face that job, according to interviews with the chairmen of the two budget committees.

''It shows that the budget process can work,'' says Rep. James R. Jones (D) of Oklahoma, chairman of the House budget committtee. Mr. Jones, who voted against the tax increase, says that he wanted the bill to go even further by revoking tax cuts approved last year.

''It's historic politically and procedurally,'' says Sen. Pete V. Domenici (R) of New Mexico, who chairs the Senate Budget Committee. ''I'm very encouraged ,'' he says, noting that Congress has made ''the first change in COLA (cost of living adjustments) in 20 years'' as well as cut dairy price supports just before an election.

''That's not easy'' he says. The Senate budget chairman credits the budget process, which he concedes needs major reform, for forcing those tough decisions. ''Under very adverse economics times, it has stood the test,'' he says.

Rep. Richard Bolling (D) of Missouri, chairman of the powerful House Rules Committee and who helped shape the budget act in 1974, also sounds a note of optimism after the tax vote. ''I think we're making some progress,'' he says, explaining that both Congress and the public are finally understanding that government spending and taxes effect the economy.

''For the first time, we had a genuine bipartisan coalition,'' says Jones, who has long pushed for joint action. Recalling the fierce partisanship of last year's budget battle, Jones says, ''I've said all along that you can't turn the economy around and reverse spending patterns unless it's on a bipartisan basis.''

Bolling calls the action last week a ''healing process.'' It began last spring, he says, when the so-called ''Gang of 17'' met in a round of secret sessions. The discussions failed when Speaker O'Neill and President Reagan hit an impasse over social security.

The Gang of 17 meetings opened communications lines between the two parties, however. According to Bolling, they set the stage for cooperating on the tax bill.

Does this mean that Congress now has spending under control? It still has taken little action to slow the automatic increases in ''entitlement''' programs , ranging from social security to veteran's benefits, that account for about half of the budget. But according to Stanley E. Collender, publisher of the newletter Federal Budget Report, ''Congress has a better hold on (spending) than they have had in a long time.''

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.