Cowering Before the Deficit

By Susan Tifft

The fiscal crisis provokes a lot of pointless posturing

On Capitol Hill last week, the ballooning federal deficit was being treated more as a conversation piece than an urgent problem. Despite a few genuine efforts to do what everyone knew had to be done--raise revenues and reduce spending--the week ended with a blizzard of babbling and fruitless finger-pointing between Congress and the White House that brought the Government once again to the brink of a breakdown. "I am not rinding any leadership at either end of Pennsylvania Avenue," said Democrat James Jones of Oklahoma, the chairman of the House Budget Committee.

Not until Saturday did Congress finally pass a stopgap spending bill, known as a continuing resolution, to keep the Government functioning. Although the 1984 fiscal year began Oct. 1, five of the 13 annual appropriations bills have been stalemated on Capitol Hill. Another important measure, which would raise the legal debt ceiling and allow the Treasury to borrow the money it needs, was still stalled in the Senate. And Congress, it seems, will not be able to whittle a thin dune from the 1983 deficit of $195 billion by the time it adjourns this weekend.

What stymied the continuing resolution in the House was a surprise revolt by a group of 26 freshmen Democrats against the House leadership. Impatient with inaction on revenue-producing remedies for the deficit, they threatened to vote against the continuing resolution as a symbolic protest. Their unlikely alliance with conservative Republicans caused the mea sure to fail by a 203-to-206 vote. "We want to send a message to various powers that be," declared Freshman Congressman Jim Moody of Wisconsin. "We want the deficits attacked."

The break in ranks left House Democratic leaders flabbergasted and furious. "It's possible to do something so clever that it's stupid," chided Majority Leader James Wright. "They've made a foolish gesture, subject to misunderstanding in their districts." Indeed, after two days of rebuke by their leaders and angry buttonholing by the powerful education lobby, all but twelve of the dissident Democrats came back to the fold. The continuing resolution, with a $1 billion hike in education and other social programs attached, passed the House 224 to 189.

But the Senate soundly rejected the House's increases in social spending by a vote of 53 to 36 when it passed its own version of the continuing resolution. Conferees from both chambers met Friday evening trying to work out a compromise. Finally, a plan was passed on Saturday that included a token $100 million increase in social funding. Congressional leaders said it would be acceptable to President Reagan. He is expected to sign the bill when he returns from Asia on Monday.

The bickering did nothing to squeeze the deficit. The only feasible plan to do that was a gallant effort by Republican Robert Dole of Kansas. He pushed all last week for a plan endorsed by the Senate Finance Committee, which he chairs, that would reduce the red ink by $150 billion over three years through new taxes and spending cuts. But Reagan, who made high deficits a major campaign issue in 1980, now seems unwilling to tackle the problem and has promised to veto the tax increases "no matter how they arrive." House Speaker Tip O'Neill was similarly intransigent about spending cuts. "We can't keep cutting away at the safety net," he said last week, noting that about 65% of the reduced outlays would come out of cost of living increases in Social Security benefits. "No way is the Dole bill going through the House!" By week's end Dole had all but conceded that his deficit-slashing plan would have to wait until next year.

Meanwhile, the Senate refused to raise the debt ceiling from its current level of $1.39 trillion. The Administration requested $1.6 trillion, and the House has approved the higher limit. The Senate stalemate has bottom-line implications for the U.S. Treasury. The Government hit the current debt limit Nov. 10 and has been drawing down its cash reserves ever since. If a new ceiling is not approved this week, the Government is projected to run out of money by Dec. 1. Even if it is passed, the Senate's delay will end up costing the Government in higher interest payments as investors become wary of Government notes. "We've already disrupted the financial markets," Treasury Secretary Donald Regan fumed. "The debt ceiling is a time bomb that's ticking away."

One huge chunk of spending Congress has been unable to cut significantly: the military budget. The Senate last week passed the largest single appropriations bill in history: a $252 billion defense spending bill, $5 billion higher than the House version. One controversial element in the Senate bill is $124 million for the production of nerve-gas weapons, which the U.S. last manufactured in 1969. Vice President George Bush, presiding over the Senate, cast the tie-breaking vote to rescue the proposal for a supposedly improved form of nerve-gas technology. The House, which has opposed producing the deadly gas in the past, will try to work out a compromise with the Senate this week on funds for the weapon.

The deficit monster clearly looms large. "The danger of not moving now is very serious," Martin Feldstein, chairman of Reagan's Council of Economic Advisers, warned after a congressional hearing last week. "We are facing a fiscal crisis." It is a crisis, however, that seems to provoke only cowardice and complacency, both in Congress and in the White House. Said Democratic Congressman Leon Panetta of California: "Everyone is posturing. Everyone is trying to protect their skirts for when they go home. But without the President and without the Speaker and the Majority Leader of the Senate, you won't see anything happen." --By Susan Tifft.

Reported by David Beckwith and Neil MacNeil/ Washington

With reporting by David Beckwith, Neil MacNeil/Washington This file is automatically generated by a robot program, so viewer discretion is required.