IN PASSING a bipartisan budget resolution last Thursday, Congress made the only really constructive contribution by government to a sustained recovery since last summer's tax bill. The members from both parties who set aside their individual differences to achieve this result are to be especially congratulated because they acted to overcome impediments created by the White House, with little expectation of political gain.
The budget resolution is no one's idea of a perfect compromise. It calls on Congress to undertake the unpleasant tasks of raising taxes and cutting popular domestic programs for the sake of reducing a deficit that will still top $170 billion next year. In trying to achieve even that modest result, Congress is not likely to get help from the president, who has signaled his intention to veto any revenue-raising measures and to press for still bigger increases in defense spending. And if it succeeds despite the president's opposition, Congress can be quite sure that the administration will take credit for the beneficial effects of its actions.
But there is this to be said for the budget compromise: as far as the country is concerned, it beats all the other alternatives. The deficit it will produce is roughly the same as that proposed by the president. So are the outyear tax increases. But the fact is that the president's budget, with its deep cuts in domestic programs, would never have been passed by either body of Congress, because the public doesn't support these cuts.
The other real alternative would have been a budget stalemate in Congress. This would have been read by the business and financial world as a sign that Congress' fragile system of discipline had totally collapsed. As big as future deficits will be with the budget resolution, without this instrument of control they would be bigger yet.
The recent upward movement in interest rates is a timely reminder of how sensitive the markets are to the competing demands for credit that come from a recovering economy and the need for massive Treasury borrowing. Higher U.S. interest rates spell trouble not only for the interest-sensitive auto and housing industries, but also for U.S. exports, debt-ridden developing countries and ultimately for the entire precarious system of international trade and finance. Congress has moved to forestall this chain of consequences. Further progress will require the president's help.