Suddenly it's late summer and the political discomfort index is soaring on Capitol Hill.
Inflation and unemployment are hovering around the double-digit point. Congress, before its members go home to campaign, has to confront a frightening reality. The budget balance that it vowed to achieve only months before has turned into a $20 billion deficit.
On the one hand, Congress wants to retain its image as an inflation-fighter by keeping the budget in balance if at all possible. On the other hand, spending cuts to preserve the balance would only intensify the nation's ongoing recession. And there is pressure for a tax cut or for more spending -- or both -- to fight the recession.
A jittery politician's nightmare.
Maybe. But many lawmakers as well as econmists fear now that mid-summer budget reestimates will show that the $200 million surplus that Congress approved last Thursday in its initial budget resolution is turning, Frankenstein-like, into a deficit of $20 billion or more.
If this does happen, Congress will face some excruciatingly painful choices on Aug. 28 when, under its own spending self-discipline calendar, it must adopt a second and theoretically final budget resolution for the fiscal year that begins Oct. 1.
"Probably we're damned if we do and damned if we don't," said Rep. Richard A. Gephardt, (D-Mo.) who helped put together the fragile House majority in favor of the first budget plan last week.
Moreover, the battle to achieve spending cuts to keep the first resolution in at least nominal balance was so difficult that the additional burden of a recession may prove insurmountable for the six-year-old congressional budget control process, he said.
"If that was a peview," said Gephardt, "I don't know if we're going to make it."
If the deficit is big and irreversible, one option for Congress is flat-out abandoning of the balanced budget goal that was proclaimed with so much fanfare by President Carter and congressional leaders only three months ago.
But this would risk the wrath of voters who, except in areas where auto and construction industry unemployment is highest, are still complaining most about inflation.
A total flip-flop could also wipe out the substantial spending discipline that Congress imposed on itself by trying to work within the confines of a balanced budget, according to some liberal as well as conservative lawmakers. a
They point out that the budget, even if it isn't genuinely balanced, is the most restrictive that Congress has adopted in years. It calls for spending increases that -- with the conspicuous exception of defense -- are well below the increase in the cost of living.
A politically more attractive alternative, according to some budget leaders, is a moderate deficit tempered by continued spending restraint and possibly a tax cut targeted at providing more jobs and thereby mitigating the recession. a
But they do not claim that this would be easy to achieve.
Only a day after Congress passed its initial budget resolution, the House Appropriations Committee balked at going along with "reconciliation" instructions for program cuts that are required if the budget is to stay in even nominal balance. At issue was Saturday mail deliveries.
Other politically popular programs are on the budget's endangered list, tempting Congress to shrug off spending restraints when confronted with the opportunity to shower money on vote-rich projects.
Perhaps even more importantly, there is the supercharged atmosphere of an election year in which Republicans can be expected to capitalize on the budget dilemma of the Democratic-dominated Congress in pressing for big gains in both houses. The House and one-third of the Senate are up for election this fall.
The presidential campaign adds another layer of politics, with Carter linked to the congressional budget-balancing exercise while Ronald Reagan, as the almost certain Republican nominee, champions a huge tax cut as an antidote to the nation's economic ills.
"The problem is that it may be impossible for Congress to deal rationally because politics has so totally invaded, permeated and dominated the process," complained Rep. David R. Obey (D-Wis.). "I've never seen it worse."
House Budget Committee Chairman Robert N. Giaimo (D-Conn.), who speaks with the candor of a politician who's not running for reelection, sees a "political horror" for the Democratic Party. Many voters may continue to believe the earlier rhetoric from the White House and Congress about the importance of a balanced budget in fighting inflation and fault both for not living up to their promises.
As of now, there is no apparent consensus about what to do -- just a lot of worry.
"The problem is that we're in a kind of transition where we're still hurting from inflation while we're beginning to hurt from a recession," said Rep. Leon E. Panetta (D-Calif.), a key figure in the fight over the first budget resolution. "We can't afford to bounce either way until we see what's going to happen."
Uncertainty over the economy's course during the summer, especially regarding unemployment, is one reason most congressional leaders are not willing to bail out immediately on the balanced budget. Another is skepticism about economists' forecasts in light of their record of fallibility. s
The first budget resolution is predicated on an assumed unemployment rate of 7.5 percent for fiscal 1981. It is now 7.8 percent and projected to rise further.
Every 1 percent increase in the unemployment rate adds at least $20 billion to the deficit because unemployment and related social welfare costs go up and tax revenues decline. If unemployment hits 9 percent and stays there awhile, the deficit could be in the $30 billion to $40 billion range, some congressional sources predict.
There are offsetting forces, however, including lower interest payments on the national debt because of declining interest rates.Another is rising oil prices, which add to revenue from the huge crude oil tax levied by Congress earlier this year.