BOTH THE administration and Congress would have you believe that the only reason they haven't put the federal books in apple pie order is that they have inherited an uncontrollable burden from their feckless predecessors. There was much discussion of the deficit yesterday, as the tax bill was making its way noisily through Congress. No doubt, federal spending has acquired a considerable built-in momentum. But it's interesting to note that most of the federal deficit projected for next year arises from decisions made by this Congress under the leadership of this administration.
The administration now formally admits to a deficit next year of $115 billion -- but almost any administration official will tell you that something in the range of $140 billion is much more likely. Those numbers assume that the president gets pretty much what he is seeking in terms of spending and taxes. How did the deficit get so big?
One large contributing factor was, of course, the massive tax cut that the administration fought for so hard last year. The Treasury estimates that without the tax cut, next year's revenues would be about $90 billion higher. Another big contributor to the deficit is the massive defense buildup. The administration wants to increase next year's military spending by $33 billion, roughly $20 billion more than would be needed to keep pace with inflation.
Then there are the other spending increases that the administration is seeking. Not all domestic programs are to be cut. Many favored activities -- such as western water projects -- are scheduled for substantial increases. Perhaps these are useful activities, but Congress doesn't have to expand them.
There is also the matter of the economy. If the roseate economic projections upon which the administration sold its economic program to Congress a year ago had come true, next year's budget deficit would have been more than $100 billion smaller. That was never a serious possibility, but many economists would argue that a more sensible mix of fiscal and monetary policy could have avoided the very serious downturn that the economy is now going through.
This is not to say that all would have been well if Congress had just left federal taxes and spending alone. Many federal activities had increased mindlessly, and Congress still has to come to grips with the future implications of some of the entitlements it has created in past years. But it is important for both the administration and Congress to remember that, to a great extent, the financial dilemma they face is of their own making -- and it is up to them to keep working on it.