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VIEW FROM WASHINGTON / ROBERT A. ROSENBLATT : Squeeze on Federal Spending: There's a Bumpy Road Ahead

August 27, 1995|ROBERT A. ROSENBLATT | ROBERT A. ROSENBLATT writes about banking, health care and other national issues from The Times' Washington bureau

WASHINGTON — You travel on a crumbling interstate highway to your vacation destination: the shabby grounds of the national park, where the guardrails on the mountain overlook are twisted and rusting.

During the ride, you worry about how to come up with the extra $5,000 to pay the emergency tuition hike just announced by your daughter's college, which is desperate for money after losing its last federal research grants.

And you notice that the sky is a bit browner and hazier these days because the government is spending less time and money monitoring the pollutants from power plants and factories.

This is life at the end of the century when the federal budget is balanced, and the government has shrunk dramatically. While today's loudest political battles in Washington focus on welfare reform, Medicare and Medicaid, some of the most profound changes will come from stringent cutbacks in the category known as non-defense discretionary spending.

The bland catch-all term covers a multitude of programs--National Institutes of Health, the weather service, national parks, the FBI, mass transit and job training, among others.

Federal outlays for all these items, plus foreign aid, now total $274 billion, an amount equal to 3.9% of the nation's total output of goods and services. Under the congressional budget resolution, such spending would be trimmed to $244 billion by the year 2002, dropping to just 2.4% of the gross domestic product--a share not seen since the early 1950s.

"This would be a very different government than most Americans are familiar with," said Robert Reischauer, former head of the Congressional Budget Office, now with the Brookings Institution.

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Since the Eisenhower era, he said, "there has been an explosion in things like health research." The country sent astronauts rocketing into space, regulated the pollution emissions of cars and factories, and distributed money to states and local government to help with projects ranging from "education to feeding elderly people," he noted. "These are things nobody had dreamed of in the 1950s."

For a generation, discretionary spending rose steadily, peaking in 1980, reflecting an expansion of job training programs and financial aid to local governments during the Carter Administration. The discretionary sector's share of spending dropped during the Ronald Reagan era, but has resumed growing in the last five years.

Now, an aggressive and determined Republican majority, controlling both houses of Congress for the first time in 40 years, is operating with a radically different vision of the world. The Republicans view the federal government as an evil to be restrained, and are pledged to starve it of the funds.

"It is impossible for us to truly have the kind of country we want without going through a peaceful revolution," House Speaker Newt Gingrich (R-Ga.) told a conference of young Republican leaders. "It is our goal to replace the welfare state. Not to reform it, not to improve it, not to modify it, to replace it."

Driven by this philosophy, Congress has adopted a resolution calling for a balanced budget in the year 2002, and to reach that goal discretionary programs will be squeezed as never before.

President Clinton has become a foot soldier, albeit a more reluctant one, in the anti-government crusade. Shaken by the trauma of the 1994 election for the Democrats, Clinton proclaims that he too wants to balance the budget, offering to do it in 10 years instead of seven offered by the GOP. It's just a matter of degree.

"The President says, 'I'm for downsizing the government, but not as much as the Republicans,' " noted Jim Miller, budget director for three years under Reagan, and now a fellow at the Citizens for a Sound Economy Foundation.

With both Congress and the White House pledged to shrink spending, the discretionary programs face a grim fiscal future. The money for these programs is appropriated, meaning it has to be approved by Congress each year.

In contrast, the huge entitlement programs--Social Security, Medicare, veterans benefits--keep going automatically unless Congress musters the will to change them.

"It's much easier to cut appropriations than entitlements," said Stanley Collender, a budget expert with Price Waterhouse, a major accounting firm. "And the entitlements have entrenched constituencies, particularly the senior citizens."

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The beneficiaries of discretionary programs, whether they are bus and subway riders, university research laboratories, companies seeking help with export red tape, or doctors who want reports from the Centers for Disease Control and Prevention, are "smaller groups and less politically savvy and less well organized," Collender noted.

If "you force people to pay more for Medicare, they kick up a fuss right away," said George Schultze, an economist who served as budget director in the Carter Administration.

But it is easy to let the national parks deteriorate in any one year, or trim spending on water pollution--"it takes awhile for something significant to happen."

When a bridge finally does crumble from neglected maintenance and falls down, "you have an emergency, and then the sentiment for spending money is very different," Collender said.

In the future, if nervous members of Congress suddenly decide to boost discretionary spending to rebuild falling-down bridges, they can do it without breaking their budget vows: Emergency spending doesn't count when calculating the year's budget deficit.

More money and a theoretically balanced budget: that may provide some solace for your vacation drive at the end of the century.

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