AN ARTICLE YESTERDAY ABOUT AUTOMATIC BUDGET CUTS INCORRECTLY IDENTIFIED REP. TRENT LOTT (R-MISS.) AS HOUSE MINORITY LEADER. HE IS MINORITY WHIP. (Published 9/29/87)
Emerging from one of a seemingly endless series of meetings on legislation to revive the Gramm-Rudman-Hollings law, Sen. Daniel Patrick Moynihan (D-N.Y.) turned to several of his colleagues and asked: "Do you think we'll be able to balance the budget in this century?"
Moynihan's somewhat wistful inquiry said a lot about the frustration, resignation and weariness infecting Congress this year as it tries -- yet again -- to come to grips with the nation's chronic economic ill -- the budget deficit.
After nine months of nearly continuous effort, the Democratic-controlled 100th Congress has reached to the back of its medicine chest for a distasteful old nostrum that even some of its chief hucksters concede will at best make marginal progress in fighting the disease.
In adopting a new automatic spending-cut mechanism for the 1985 Gramm-Rudman-Hollings budget law last week -- which President Reagan said Saturday he will sign -- Congress has said in effect that the fundamental political stalemate with the Reagan administration over spending and tax policies cannot really be broken. In agreeing to sign the bill, Reagan promised that he will continue to battle with Congress over spending and tax issues.
The legislation will require a $23 billion reduction in the deficit during the fiscal year that begins Thursday. If Congress and the White House cannot agree on spending cuts and increased revenues, the $23 billion would be achieved by automatic budget cuts triggered in late October, half of them in defense. The threat to the Pentagon budget, some lawmakers say, may bring Reagan to the bargaining table more willing to talk about a tax increase.
Some opponents argue that the threat of a defense cut is a hollow one because it would leave the Pentagon budget not much worse off than it might have been under the lowest level Congress might have given the administration under the budget adopted in June.
In addition, the across-the-board budget cuts, which exempt a number of cherished programs like Social Security, would begin at a higher starting point than under the original law, making the hammer even less powerful.
But even if it works as advertised, critics and some advocates say the new budget-balancing law is a stopgap device and a monument to a collective failure of political will.
Not only does the Gramm-Rudman-Hollings amendment require $14 billion less in deficit reduction than the budget resolution adopted three months ago by Congress, but also it could easily produce even scantier results in fiscal 1989.
As Sen. William L. Armstrong (R-Colo.), who supported the Gramm-Rudman-Hollings repair, pointed out, the legislation conveniently postpones the tough budget choices until after the next election. The law, said Armstrong, allows most members of Congress and the next president to get elected "before the hard work really starts."
Along with many other proponents of the budget law revision, Armstrong had faint praise for the bill he supported. "This thing is pretty hokey, and there is a good chance it may not work," he said.
So why did bipartisan majorities in the House and Senate vote for it?
Because, as Rep. Willis D. Gradison Jr. (R-Ohio) put it, "This may not be the best way to cut the deficit, but it appears to be the only way."
Proponents argued that even if the new, improved Gramm-Rudman-Hollings does not achieve a balanced budget, at least it keeps them marching forward, however slowly. If it worked in the first year, they said, the deficit would have come down from about $221 billion in fiscal 1986 to $144 billion two years later.
But as Rep. Leon E. Panetta (D-Calif.) said last week, Gramm-Rudman-Hollings, "like a lifeboat, . . . represents both failure as well as hope . . . . Failure because we failed to break the political logjam . . . over putting controls on defense, controls on entitlements, and taxes in the same package; and failure because we have had to resort to an automatic mechanism to force what we should do through compromise and through voting."
Reduced to its basics, the failure of Congress and the Reagan administration to rein in the deficit monster more effectively is fairly simple:
Reagan opposes another tax increase, and Congress cannot muster enough votes to pass one over his veto.
Congress will not cut discretionary domestic spending enough to satisfy the president and cannot get much more out of defense after two straight years of negative real growth in that account. Neither side is willing to tackle entitlement programs such as Social Security.
Without higher taxes as an option, the tyranny of the spending-side arithmetic is also fairly straightforward. There are four major components to the federal budget: defense spending, entitlement programs (including retirement, Medicare, aid to the poor, farm payments and other areas in which spending levels are set by permanent law rather than annual appropriations), nondefense discretionary spending and interest payments on the national debt.
Since the beginning of the Reagan administration, the amounts allocated to some of these budget areas have shifted rather dramatically. Pentagon spending has risen from roughly 23 percent of the federal budget to almost 28 percent. Nondefense discretionary spending has fallen from nearly 25 percent of the budget to less than 17 percent. Interest on the debt has risen from 10 percent to more than 13 percent. Entitlement programs have held steady at a level less than half total spending, while offsetting receipts, which the budget classifies as something akin to a negative outlay, remained steady at about 5 percent.
In the past two years, Congress has braked the administration's Pentagon buildup, keeping it slightly below the level needed to keep pace with inflation. Politically, wringing substantial additional savings from defense is not practicable. Nor are more deep reductions in domestic spending. Interest payments cannot be cut.
The three remaining choices are to raise taxes, cut entitlements, or devise a combination of the two. Tackling Social Security and other entitlements, said Stephen E. Bell, a Salomon Bros. vice president who was chief of staff on the Senate Budget Committee, is the political equivalent of touching "the third rail."
In resorting to a revived Gramm-Rudman-Hollings, Congress is looking for a way to temporarily avoid being electrocuted. The hope is that the threat of automatic reductions will yield a compromise that gives everyone political cover and keeps the deficit from ballooning out of control.
House Minority Leader Trent Lott (R-Miss.) described the choice as one between the "train wreck" threatened by Gramm-Rudman-Hollings and the "total chaos" of not having it in place.
"One advantage of a train wreck is it does stop," said Lott. "Chaos goes on forever."