Budget Maneuvering Yields Modest Savings
White House agrees to `gimmicks'; Congress permits to some savings. ECONOMY
WHEN Congress and the White House started the budget process early this year, there were high hopes that the deficit would be brought down. Instead, after 11 months of negotiations ``they both wimped out,'' says Stan Collender, a budget analyst with Price Waterhouse. Alice Rivlin, former director of the Congressional Budget Office, says the budget shows ``unless there is a strong will by the White House and Congress, the problem won't get solved.''
And Carol Cox, director of the Committee for a Responsible Federal Budget, says, ``Once again the theme of the budget deliberations is never do today what you can do tomorrow.''(Federal budget process, Page 8.)
But Ellen Nissenbaum, of the Center on Budget and Policy Priorities, says the final budget ``was an improvement over the alternative.'' The alternative was an automatic reduction of $16 billion from the fiscal year 1990 budget. ``There is solid deficit reduction here,'' says Ms. Nissenbaum.
Many analysts did not have a chance to see the final budget until Wednesday morning after House and Senate conferees had agreed on reconciling the differences between their two budget bills. The final legislation amounts to budget savings of $14.7 billion.
As part of a compromise, the White House agreed to some gimmicks while Congress permitted some enforced savings. ``What you have is a patch-and-glue job that produces on paper enough savings so everyone can say it's not perfect but it's good enough to adjourn Congress for Thanksgiving,'' says Julie Sedky, an analyst with the Washington Analysis Corporation.
For example, Congress decided to let stand four months' worth of automatic cuts already enacted under sequestration. These cuts, equal to about 1 percent of a typical department budget, will save $4 billion.
Nissenbaum notes Congress made a modest attempt at budget savings. Changes were enacted in the Medicare program which will save about $3 billion. Most of these savings are in reduced payments to hospitals and doctors.
Congress also raised about $5.3 billion in new revenue. The largest source of new revenue is a requirement that employers who withhold $100,000 in annual federal taxes for all their employees will be required to send the money to the government within 24 hours of withholding it. In the past, employers could delay sending the money to the government for up to three days. This amounts to a shift in timing of money owed the government.
James Miller, the previous director of the Office of Management and Budget, recalls that Congress in its negotiations would frequently propose such gimmicks. ``I would say this will produce no real savings and 90 percent of the congressmen would look at me as if I was the skunk at the picnic,'' recounts Mr. Miller, now at Citizens for a Sound Economy.
Miller says his worry is that Congress in not implementing more cuts will make it more difficult for the president to keep his no-new-taxes pledge. ``Congress get antsy during an election year and will want to spend like crazy.''
In fact, some of the departments are leaking their proposed budgets to the press in the hope that public pressure will change the numbers. The latest is the Pentagon, which has indicated it is looking at hacking $180 billion out of the 1992 to '94 budgets. According to news reports, the rationale is that the changes in the Soviet Union and Eastern Europe will mean a large ``peace dividend.'' Besides the changes in Europe, the budget facts of life have also caught up to the Pentagon. ``It overcommitted to weapons systems and personnel,'' says Mr. Collender.
Now, he says the Pentagon has adopted the ``Washington Monument'' strategy. ``If you tell the Park Service to cut back, they announce they are closing the Washington Monument. This prompts expressions of outrage from members of Congress who give the Park Service what it wants.'' So far, however, no one has jumped to the Pentagon's defense.