Congress and the Politics of Deficits

Oct 01, 2003

With annual federal deficits approaching the $500 billion mark for the foreseeable future, why aren’t the American people upset, and why isn’t Congress doing something about it? That was a key question panelists at a September 22 seminar on Congress and the Politics of Deficits kept coming back to. “Are these numbers consequential?” asked Congressman John M. Spratt, Jr. (D-SC), the ranking Democrat on the House Budget Committee. “They used to have some traction. I don’t think people feel that right now.” When asked how he would get the American people excited about the deficit issue, Spratt said, “It’s got to be put as a moral question. We are clearly leaving a legacy of debt to our children. That is the most powerful argument with my constituents.”

While the panelists agreed that for now the American people seem willing to tolerate deficits as a product of the recession wars, eventually deficits will reemerge as a political issue as happened in the 1980s and 1990s. None of the panelists, however, was willing to speculate over whether deficits would be a central issue in next year’s congressional and presidential election campaigns. As Spratt put it, “There is not yet a candidate like Ross Perot (in 1992) who can dramatize the issue and who has cachet with the people as a successful businessman who knows how to get things done.” Moreover, Spratt said, even if Congress were inclined to, it is ill-equipped to deal with the deficit today. “The problem is, we don’t have a budget plan…and we don’t have a process. The spending caps and PAYGO (a pay-as-you-go requirement for tax and entitlement changes first enacted in 1990) have been allowed to expire.”

Andrew Taylor, who reports on the appropriations and budgets for CQ Weekly, said he even doubts that today’s Congress would be up to dealing with the deficit since it is different from the past Congresses that were able to forge budget agreements in the 1980s and 1990s. “Congress is more polarized today,” he said. “It is inconceivable that Congress will raise taxes to deal with the deficit as it did ten years ago. It’s also inconceivable today that Congress is capable of cutting spending. September 11 was a get-out-of-jail free card for the Congress and the President. We’ve had more spending and tax cuts ever since. I don’t see deficit politics right now. It isn’t getting much traction with the people. The Democrats come right out and say they want to beat up Republicans for not spending enough. Republicans are quietly simmering about the growing deficit since they came to Washington demanding a balanced budget.”

Rudolph G. Penner, former director of the Congressional Budget Office from 1983 to 1987 and now a senior fellow at the Urban Institute, struck a more optimistic note. While pessimists claim Congress may not be willing to tackle deficits again because they saw the first President Bush lose his presidency over his 1990 deficit reduction plan and Clinton lose a Democratic Congress over his 1993 plan, “I am not that pessimistic.” The American system of government has a remarkable ability to adapt before things get too out of hand or destructive, said Penner. “The great paradox, when you look at the politics of deficits is that the U.S. has generally been very responsible, even though the American people like their spending and the politicians like to satisfy their constituents…We have never gone so far as some nations have as to print more money rather than borrow and pay interest on our debts. I don’t see the long-term deficits implied by Congressman Spratt’s charts going that far.” Spratt had shown that in addition to the current deficit trends over the next ten years, things will become even more dire in 2015 and beyond as the baby-boom generation moves into retirement and the Social Security and Medicare trust funds begin running deficits instead of surpluses.

Penner, who is frequently quoted as saying about deficits that “the process isn’t the problem, the problem is the problem” (1984), said he was talking then about a proposed, balanced budget constitutional amendment. “Process is important,” he told the seminar audience. “The process affects decisions.” Like Spratt, he regretted that the 1990 budget rules, that set statutory spending caps and strict off-set requirements for new entitlement benefits and tax cuts, were allowed to expire. Penner said part of the problem in deciding what to do is related to our inability to develop accurate economic assumptions. “We don’t know where the hell the economy is going.” Deficit projections in the late 1990s were widely off the mark.

James A. Thurber, a professor of government at the American University, while not disputing that process is important, cited several expectations of the original 1974 Budget Act, all of which have failed. It was supposed to produce timely budget decisions, reduce deficits, control uncontrollable and backdoor spending, make a larger portion of spending subject to annual appropriations, reorient priorities between defense and domestic spending, control fiscal policy, allow the Budget Committees to readjust spending through second budget resolutions, and allow Congress to regain the power over the purse strings from the Executive Branch.

Thurber said the big winners from all the budget process changes over the years have been the centralized party leadership of Congress where the key budgetary decisions are now made, and the appropriators who have more clout than ever for increasing spending. The losers have been the authorizing committees who have been squeezed out of the action, and the interest groups who have fewer entry points to get what they want. "The budget process did not change policy all that much,” Thurber went on, “the change in party control did.” It was the change in the will of Members of Congress and a change in the economy that produced a change in policy. “As the economy expanded, revenues increased, and surpluses came, it was easier to change or ignore the budget rules." He concluded that “deficits will again take center stage with both parties accusing the other of being responsible for them. And they will bring a new round of budget process reforms and constraints on spending and tax expenditures.”

Report by Don Wolfensberger, Director, The Congress Project (691-4128)

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