America can have its first balanced budget in 12 years if the members of Congress are willing to swallow one bitter pill.
The fiscal medicine will come in the form of a "reconciliation bill," required by the Budget Resolution reported by the Senate Budget Committee. A reconcilliation bill wraps together savings legislation reported by the various authorizing committees and brings them before the House and the Senate as a single package.
It will be a lot easier to vote for a single package of cuts than to go out and vote 25 or 30 separate times for the program changes neccessary to balance the budget. This approach will also allow us to construct a fair package that does not fall too heavily on any one sector of society.
The pain of the cuts will be offset by the fact that the package is large enough actually to produce a balanced budget.
Reconciliation is the key provision in the Budget Resolution. Without it, a balanced budget will continue to be a goal instead of a reality. This is how it works:
Ten congressional committees would be required to report legislastion to achieve $2.6 billion of savings in 1980 and $9.6 billion in 1981. The reconciliation process in the Budget Act carefully balances the need to have legislative savings developed by the authorizing committees that have the expertise in how the programs work against the need to keep federal spending within a tolerable limit.
The authorizing committees report to the Budget Committee the provisions that best achieve the savings. That committee, not permitted to change the provisions, wraps them together and takes them to the floor as a single package.
Once on the floor, the rules of the Budget Act protect the bill from extraneous amendments. More important, any amendment to reduce the cuts would have to be seen as an amendment to unbalance the budget.
The extraordinary action we have taken this year is to invoke reconciliation as part of the First Budget Resolution in the spring, instead of waiting until the Second Resolution in the fall. There are several important reasons for this action.
First, Congress is spending over its budget in 1980. Failure to enact a reconciliation instruction last fall has led to a failure of Congress to enact the $4 billion of savings contemplated in the Budget Resolution.
A good example is the disability insurance reform bill. As reported by the Senate Finance Committee, that bill would have saved taxpayers a billion dollars over five years. But, by the time the Senate completed its amendments, that "saving" became an $80 million incresase in spending.
Second, major changes in current spending laws are necessary if we are to balance the budget in 1981. Those changes cannot be implemented overnight. After the laws are written and passed, the agencies have to write new regulations and train their employees to carry them out by October, when the new fiscal year begins.
Finally, almost $3 billion of the 1981 savings are based on reduced obligations in 1980. More than 75 percent of federal outlays are "uncontrollable" in any budget year. The cost of entitlement programs, like Social Security and Medicare, are determined by the number of people eligible and price changes. They cause 52 percent of this uncontrollability, and the only way those costs can be controlled is to change the benefits or the terms of eligibility.
The remaining 23 percent is caused by spending under contractual obligations made in prior years. If the government writes a contract in 1980 to build a ship or purchase furniture, the actual cash expenditures will occur in 1981 and future years -- after the designs are completed. and the work actually gets under way -- without any further congressional action. So we have to cut back on spending obligations in 1980 if we are going to balance the budget in 1981.
There has been some confusion betweenthe reconciliation instruction and a committee amendment to add enforcement provisions to the Budget Resolution.
Those provisions became necessary when our experience of the last several years proved that the savings disappeared, while spending legislation made its way through floor amendments and votes to the signing stage. These additional enforcement procedures would not be necessary if Congress had the will and discipline to pass its savings first, then only pass those spending measures that it could afford within a balanced budget.
The current economic crisis of raging inflation and high interest rates has created a situation of tremendous urgency. We cannot leave the achievement of a balanced budget to chance, nor to the vicissitudes of the legislative process.
Under the reconciliation approach, various congressional committees retain their reponsibility to determine legislative changes required to achieve a specified level of savings. The Budget Committee protects those decisions and gathers them together in a single comprehensive package for floor action.
If C ongress will swallow that one bitter pill, we can enact the savings required to balance the books. If not, a balanced budget will be all but unattainable.
This is a test of congressional will. The public will soon know if Congress is serious about restraining federal spending and contributing to the fight against inflation.