AS THE FIRST phase of the great groaning 1981 Budget Debate grinds to a halt, it is important to keep in mind just what the first budget resolution does and does not do. It does not, for example, guarantee a balance in 1981, despite the oratorical flourishes of the debaters. This is true not because of any lack of will on the part of the president or members of Congress, but rather because the federal government is not set up to work that way. One important thing that the resolution does do is to establish the means to come closer to meeting the budget-balance target on the expenditure side of the equation than has been possible before. Specified amounts to be saved through legislative change have been assigned to each committee, with tight deadlines for getting the changes made. If Congress can hold itself to its own discipline, genuine savings will be made. Such changes save a relatively small amount in any given year, but are permanent and therefore can be counted on, regardless of budget ups and downs that occur as a response to changes in the economy.
In six months the country has moved from high inflation and overspending into a recession. Budget effects of such changes are virtually automatic. Receipts from taxes go down because fewer people have an income to tax; some of those who do, have taken lower-paying jobs, and other sources of taxes, such as corporate incomes, have also gone down. Some outlays go up as unemployment climbs -- unemployment benefits, welfare, food stamps, Medicaid, for example. These are built-in features that did not occur by chance. They are meant to cushion the effects of a recession on people who are hardest hit.
As the debate moves from the need to establish a balance to the need to deal with the recession, this fact will become especially important. The government has already established a fairly efficient set of fiscal-stimulus responses to economic downturns. The standard list of possible additional responses doesn't provide much help. Virtually all (public works, tax cut, public service employment) take a number of months to have an effect on the economy, and in the past have had most effect just as the economy was turning up anyway.
So those who are thinking up ways for the government to spend us out of the recession might be wise to declare victory now, avoid new and different proposals and bend their efforts to keeping accounts like unemployment insurance and food stamps in enough cash to do the job. They might also consider, as the 1981 deficit rises, that that is a fiscal stimulus.
The tax-cut conservatives might also decide whether they are willing, regardless of what happens in the long run, to saddle the taxpayers with the interest payments on the additional massive short-term deficit that their suggestions would generate.
The technique signaled in this budget resolution seems wiser than either the spending stimulus or tax cuts. It trims back, through permanent changes, on a number of programs. It lets the automatic stabilizers now in the budget work. And it doesn't take a chunk out of the revenues needed to pay for it all.