TIME: Almanac 1993/TIME Almanac 1993.iso/time/081390/08131010.000

Text File | 1992-10-19 | 6.0 KB | 134 lines

                ⌐$!                          =                            ╚NATION, Page 32

A Deficit of Guts


Washington's fear of making tough choices wrecks the budget
summit

By MICHAEL DUFFY/WASHINGTON -- With reporting by Hays Gorey/
Washington


    Three months after Democratic and Republican congressional
leaders sat down with George Bush to craft a plan for reducing
the federal deficit, the budget talks collapsed last week under
a combination of evasion, finger pointing and partisan
bickering.

    The President declared himself "frustrated" by the lack of
progress but stopped short of holding the summiteers in
Washington during the August recess to complete the job. Now,
with the threat of a recession heightened by a leap in oil
prices triggered by the Persian Gulf crisis, Bush and Congress
have only 20 legislative days left before the
Gramm-Rudman-Hollings deadline falls. If no agreement can be
reached on paring the deficit to $64 billion by Oct. 1,
across-the-board spending cuts -- the so-called sequester --
will go into effect, closing airports, canceling children's
vaccinations and forcing federal prisons to furlough hundreds
of inmates. Although the deficit problem may seem familiar,
even tiresome, it is more acute than ever: Administration
estimates for this year have grown from $100 billion to $161
billion, largely because the economy is growing less quickly
than anticipated. Last week the Labor Department reported that
civilian unemployment rose in June from 5.2% to 5.5%, the
highest jobless level in almost two years. If, as many expect,
the economy plunges into a full recession, the deficit could
become even larger.

    Just what did the budget summiteers do for 11 weeks? Not
much. Though the panel met 18 times, its members never talked
about the two essential elements in any budget deal: raising
revenues and cutting entitlements. Instead, the two sides
engaged in an Alphonse-and-Gaston routine, dithering over
procedure, accounting rules and leaks.

    As usual, the Democrats are divided. Senate majority leader
George Mitchell, flanked by budget committee chairman Jim
Sasser, favors a risky wait-'em-out approach, calculating that
the nearer the dreaded sequester comes, the more malleable Bush
will be. So far, Mitchell has prevailed over House Speaker Tom
Foley, majority leader Richard Gephardt and budget chairman
Leon Panetta, who, one White House official surmises, "would
have preferred to wrap this up weeks ago."

    But the biggest strike against the Democrats is their
continued refusal to accept domestic-spending reductions. When
Budget Director Richard Darman suggested 47 cuts in health
care, agriculture subsidies, federal loan guarantees and other
giveaways good for $16 billion in savings next year, Panetta
countered with a "core package" of reductions worth only $5.6
billion. Paltry though his offer was, Panetta lacked much
support from fellow Democrats for even those meager measures.

Democratic participant. Meanwhile, loyalty on the Republican
side has broken down, especially on taxes. In recent weeks the
Administration has floated several revenue proposals, probing
gently for reaction to possible taxes on energy and stock
transactions and limiting deductions for state and local taxes.
But while the White House is expert at leaking, it has been
unable to keep its troops in line and has therefore stopped
short of formally offering its ideas.

    Bush and Darman believe they have already said too much
about taxes without getting anything in return -- and aides
point to the President's slipping approval ratings to prove it.
In fact, the Administration's inept handling of its plan to cut
back state and local income tax deductions two weeks ago sped
the talks' collapse. At one point, both sides were close to
pulling off what Darman calls "a no fingerprints" budget, in
which each party simultaneously put forth complete budget
plans. By doing so, says one aide, "no party could take
advantage of the other." But the immaculate conception failed
when Republican lawmakers disclosed the White House idea to
reporters. No sooner had the idea surfaced than even such
Republican stalwarts as House whip Newt Gingrich and a host of
Governors lined up against it.

    Scrambling to control the damage, Administration officials
tried to mask that miscalculation by claiming that the
Democrats had reneged on the bargain. But Gephardt told Bush
at a White House meeting Tuesday that not only had there never
been a deal but that Darman had not presented a full proposal
either. As Panetta said later, "We did not pledge that every
time the Republicans slit their wrists we would slit ours."

    The breakdown in talks left Bush exactly where he did not
want to be: severed from his "no-new-taxes" pledge with nothing
to show for it. Darman calculated months ago that Bush could
survive the political hit for his U-turn on taxes if in return
he solved the deficit problem. As an Administration official
admitted, "We got suckered. Now we're in the same place we were
three months ago except we've taken a 10-point hit in the
polls."

    The President's unease had Democrats gloating, as though the
goal of the budget summit had been to score political points
rather than to cope with a national crisis. "By our silence we
have been successful in these talks," boasted Dan Rostenkowski,
chairman of the House Ways and Means Committee. "The
Republicans have just shot themselves in the foot, in the neck,
in the ear. They're masochists."

    Such gamesmanship has made this budget summit a dismal
failure. The two sides should have been discussing real cuts
and constructive taxes, such as higher gasoline taxes or a
broader levy on energy in all forms, or both. But though an
energy tax would raise billions quickly, encourage conservation
and decrease the nation's dependence on foreign oil, a huge --
perhaps insurmountable -- obstacle stands in its way: it would
take guts to impose.


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