Haunted by sky-high deficits but lacking the will to raise taxes or cut spending, a frustrated Congress yesterday missed its second deadline in two months for drafting legislation to help reduce red ink over the next three years.
With as little stir as possible, Majority Leader Howard H. Baker Jr. (R-Tenn.) got unanimous consent from the Senate late Thursday to extend yesterday's deadline to Oct. 17. The House is expected to concur. Previously, Congress granted itself a similar extension of its original July 22 deadline.
The delays have called into question not just the prospects for deficit control but the effectiveness of the congressional budget machinery in enforcing Congress' shaky self-discipline on tax and spending matters, especially as elections approach.
For two years, Congress joined with President Reagan to use the so-called "reconciliation" process by which Congress can order its own committees to cut programs or raise taxes to meet budget targets and reduce the deficit. By Hill standards, both the deadlines and targets were met to an amazing degree, and billions of dollars were "saved."
But this year Congress balked at spending cuts, at least for domestic programs, while Reagan resisted cuts in defense. And while Democrats called for tax increases, they said they would vote for them only if Reagan led the way, which he adamantly refused to do; the Democrats feared that Reagan otherwise would use a tax increase against them in the 1984 campaign.
Meanwhile, the deficits have grown from $60 billion in fiscal year 1980 to about $200 billion for fiscal 1983, which will end Sept. 30.
But Reagan has lost the unusually powerful sway he held over Congress at the start of his term, and even fairly hefty tax increases or spending cuts would seem like drops in the bucket measured against the size of the deficits. For a politician, the cost-benefit ratio for budget bravery under those circumstances has not been encouraging.
The result is that experts are saying the deficit is likely to stay around $200 billion a year for the foreseeable future, with improvement hinging mainly on the strength of the economy.
A particularly somber note was injected Thursday by Martin S. Feldstein, the president's chief economic adviser, who warned in an Indianapolis speech that a delay in raising taxes could mean even higher taxes in the future.
"As the national debt accumulates, the government will inevitably have to raise future taxes even more just to pay the interest on the extra debt," he said.
But Feldstein has also warned that if Congress waits until 1985 to tackle the deficit, as many lawmakers say is likely, it may find an even worse climate then.
According to this theory, if high deficits in the meantime cause higher interest rates and thus trigger another economic decline, Congress could be faced with the unpalatable task of trying to raise taxes and cut spending in a recession.
There is still a chance that House and Senate committees can come up with the deficit reductions--a three-year total of $73 billion in tax increases and $12.3 billion in spending cuts--that they were ordered to draft in the budget Congress adopted earlier this year.
House Democratic leaders, who only recently reiterated their insistence on Republican sponsorship of any tax increase, were reported jolted by the degree of unrest at a caucus Thursday among rank-and-file Democrats over what they perceive as the government's drift on fiscal policy.
So far, the Democratic leaders in the House and Republican leaders in the Senate have tentatively agreed to raise taxes by $12 billion to $20 billion in dribs and drabs over the next three years, a far cry from the $73 billion stipulated in the budget. But the two tax-writing committees have yet to act on specifics.
On the spending side, the Senate Finance Committee is working on $1.6 billion in Medicare savings, including a possible freeze on physicians' payments, but House committees with jurisdiction over health programs have not acted.
Other House and Senate committees have agreed, at least in principle, to a deferral of cost-of-living increases for federal retirees in line with a previously approved six-month deferral of inflation adjustments for Social Security recipients. Also, next year's federal pay raise will be limited to 4 percent.
If all the proposed spending cuts are approved, they would provide roughly the $12.3 billion required by the budget. But there is reluctance, especially among Democrats, to approve spending cuts before tax increases are nailed down.
Meanwhile, the deficit issue, which Republicans once used to flog the Democrats, is now being picked up as a campaign theme by congressional Democrats.
The House Democrats' campaign committee, for instance, is planning a media barrage starting next month in an attempt to lay the deficit at the feet of the Republicans.
Whatever the political effect of the campaign, it is unlikely to encourage the kind of partisan truce that many lawmakers believe is necessary to solve the deficit problem.