The director of the Congressional Budget Office warned a House-Senate conference committee yesterday against granting an "extraordinary amount of power" to appointed officials, including himself, in proposed legislation that is designed to force a balanced federal budget by 1991.
Rudolph G. Penner, the CBO director, issued the warning as the committee began its second week of deliberations on the Senate-passed balanced budget measure by arguing over which programs would be subject to automatic cuts under the bill and which would be exempt from cuts.
Penner's warning centered on a key procedure in the legislation in which economic projections by the CBO and the Office of Management and Budget would be used at the start of each fiscal year to determine whether the federal deficit was going to exceed the mandatory deficit limits set in the balanced budget bill. If the projected deficit exceeded the limits, the president would be required to impose across-the-board cuts in most federal programs to meet deficit targets.
Penner said that these CBO and OMB projections would form the basis for cuts in federal programs "down to the penny," placing too much power in the hands of unelected officials.
"There should be some political or legislative endorsement of what is really a cosmic decision on the part of unelected officials," he said.
Under legislation passed by the Senate, if the CBO and OMB deficit projections differ -- as they almost invariably do at the beginning of a fiscal year -- the average of the two figures would be used to determine whether automatic funding cutbacks are triggered. Penner suggested that Congress vote on which figure to adopt as its own deficit projection.
Penner testified yesterday as the conference committee began reviewing lists of programs and estimates of how they would be affected by the budget proposal.
The lists, produced by the staff of the Senate Budget Committee, put federal programs into three categories -- those exempt from automatic cutbacks, those in which only indexed cost-of-living increases are subject to cutbacks, and programs subject to complete cutbacks and elimination to meet deficit targets.
Democrats on the conference committee, led by Rep. David R. Obey (D-Wis.), complained that the legislation was so vague it would allow the president to decide which programs to cut and which were on the exempt list.
"We are going to define the list," replied Sen. Bob Packwood (R-Ore.), the committee chairman. "The president is going to have a tough time defining the list if we make it specific.
Earlier yesterday, Obey, one of the most vocal critics of the bill, continued his assault on the legislation by calling this year's winner of the Nobel Prize in economics before the Joint Economic Committee, which Obey chairs.
The economist, Franco Modigliani of the Massachusetts Institute of Technology, described many of the Senate bill's provisions as "plain Mickey Mousing" and charged that it was designed to allow the current Congress to escape from the politically onerous task of making deep budget cuts now.
Modigliani said the deficit posed a grave threat to economic stability, requiring Congress to "cut the budget now and cut it deeply, with no ifs, ands or buts." Instead, he said, the Senate legislation represented "the nearly meaningless exercise of ordering future congressmen to cut the budget" in a measure that future Congresses could change.
"Frankly, if you are not going to cut the budget yourself, I see little reason why you should dictate to others how to do it," Modigliani said.