Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.wpost From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Mr. Clinton and the Budget= Date: Sun, 8 Nov 92 09:22:42 EST Message-ID: <39.1992Nov8.092243@AmeriCast.com> Mr. Clinton and the Budget= THE CLEAREST expression of President-elect Clinton's intentions toward the economy next year won't be the particular changes he proposes in federal taxes and spending, but their combined effect on the deficit - the approach he takes to the budget rules. The governor indicated in the campaign that he would try to stimulate the economy. But the budget rules, aimed as they are at holding down the deficit, basically say that he can't apply traditional fiscal stimulus beyond what the budget already implies without declaring an emergency. The rule as to taxes and the various spending programs - mostly entitlements - not subject to the annual appropriations process is pay-as-you-go; any legislated tax cut or spending increase has to be paid for, which is to say in terms of stimulus that it has to be neutralized. As to appropriations, there continue to be ceilings or annual caps. The cap for the current year has already been hit, and the cap for next year will be extremely tight; that's true even though the rules relax next year so that it will be easier to shift money to domestic programs from defense. The new president will thus have to choose early on. The one al- ternative is simply to rearrange existing patterns of public and private spending - for every new tax incentive a tax increase - on the theory that the currently projected deficit is stimulus enough or already more than the country can afford. The rear- rangements - simple shifts of resources from the private to the public sector or among programs within the public sector - may all be excellent policy, and in the long run they may well con- tribute to increased growth, but not in the short term. The stimulative alternative would require suspension of the rules, a step in which Congress would have to concur. For any number of reasons, however - to reassure the inflation- conscious here and abroad, to protect himself politically and ul- timately to get the monkey of the deficit off the country's back - any relaxation of the rules in the short term would likely have to be accompanied by a tightening over the longer haul. Sooner or later the longer-term issue will have to be faced anyway, since the current rules expire at the end of fiscal 1995. Indeed, it was pretty well understood when they were adopted as part of the 1990 budget agreement that they would likely last intact only through the election just completed, when it was thought that a newly elected president and Congress would want to negotiate rules of their own. In some form or another, that's what lies ahead. Our own sense is that these have been pretty serviceable rules. They've done what they were intended to do - have proved much more enforceable than most budget rules past - and without them the deficit would likely be much higher even than it is. The restraint they represent should be extended - but that is really only a holding action. The deficit is currently such that the national debt is being increased at a rate of more than $1 trillion a presidential term. That's a greater burden than future generations can afford, and more than they should be asked to bear. 02:40 11-08C9999--- -- Copyright 1992, The Washington Post. This story is from the Washington Post's Capitol Edition On-Line and is not to be ar- chived or redistributed. For more information, send-email to American Cybercasting Cor- poration (usa@AmeriCast.COM)