THOUSAND OAKS — The American people rather like the current system of getting $1 in services for 80 cents in taxes," said Rep. Willis D. Gradison Jr. (R-Ohio), a member of the House Budget Committee, at a federal taxation forum. Americans are, after all, conditioned to buying on credit, presuming that future income will cover current consumption. That may explain, in considerable part, the continuing popularity of President Ronald Reagan. On the threshold of its sixth fiscal year, the Reagan Administration embodies the spirit of American consumerism. Elected on a platform of thinking lean, it was unable to confront the reality that thinning the budget and reducing taxes was irreconcilable with a hearty appetite for defense spending. When, in August, 1981, Budget Director David A. Stockman projected $100-billion-plus annual deficits, the President, according to Stockman, replied: "We can't give up on the balanced budget. Deficit spending is how we got into this mess." But the President refused to take realistic action to balance the budget.
Until 1974, the White House, through the Office of Management and Budget, dominated the balancing act, even though the Constitution places primary responsibility for taxing and spending in the House of Representatives. Then, in the wake of Vietnam and Watergate, Congress established its own budgeting capability, the Congressional Budget Office.
While this served to counterbalance OMB, it further complicated already complex procedures. After the President submits his budget in January, the CBO makes its own estimates. The House and Senate Budget Committees then establish the financial parameters for the upcoming fiscal year's programming. Thirteen authorizing committees in each chamber undertake enactment of legislation, all but a tiny percentage simply a continuation of current programming. Once authorizing legislation is passed, the House and Senate Appropriations committees--each with 13 subcommittees reflecting the 13 authorizing committees--apply themselves to funding. If, as is frequently the case, there are discrepancies among the various committees, the budget is subject to a "reconciliation" measure, intended to align the numbers.
The process is supposed to be completed by Oct. 1, the beginning of the federal fiscal year. Often, however, party differences stall an appropriations bill. In order to keep the government running, Congress must then pass a "continuing resolution" to keep departments operating at the previous year's level. Reps. Robert A. Roe (D-N.J.) and Al Swift (D-Wash.) have described "a budget process that is so complex it is incomprehensible to almost everyone. Most of the members do not understand it beyond a superficial level. The press does not understand it. The business community does not understand it. And, most important of all, the general public does not understand it."
This incomprehensibility, combined with the persuasive powers of an enormously popular President (who himself had difficulty grasping the complexities), helped bulldoze a reluctant Congress into passing the 1981 budget and tax bills born out of chaos and drawn with smoke and mirrors. Using a hand calculator, Stockman committed an $80-billion error that resulted in a 10% annual increase in defense expenditures instead of the 5% promised by the President. Yet once committed, the miscalculation might as well have been written in stone. At the other end of the equation, the tax cut presaged a five-year loss of revenues totaling between $650 billion and $700 billion. Annual deficits averaging more than $200 billion since 1983 have been the result. But the true state of affairs, masked by surpluses in Social Security and smaller trust funds, is considerably worse. Outside the much-maligned trust funds, the federal government has been spending $3 for every $2 it takes in--in 1985 it was collecting only 63 cents for every $1 it paid out.
Abandoning hope that the President would act to solve the deficit, Congress last December resolved to strengthen its own budgeting procedure and insulate itself to some extent from White House pressure. The Gramm-Rudman-Hollings Act set a 1991 target for balancing the budget, gave the budget committees enforcement in addition to advisory powers and provided for automatic sequestering of funds if targeted reductions weren't met. Although the U.S. Supreme Court held one clause--endowing the Comptroller General with sequestration powers--unconstitutional, the fallback provision placing responsibility for sequestering on Congress itself was sustained. The choices facing lawmakers are, in fact, so unpalatable that Budget Committee staffers refer to Gramm-Rudman as "the Anti-Incumbency Act of 1985."