Budget Battles: The Dark Ages Of The Federal Budget

The Dark Ages were a period in history when chaos replaced order, when the more or less general agreement about what should happen was replaced by tremendous uncertainty about what lay ahead and who would lead, when the rule of law was replaced by the exercise of power.

In the aftermath of all that has happened this year (or in many cases failed to happen), it is time for us to admit that the federal budget debate has entered its own Dark Ages.

As "Budget Battles" noted a few weeks ago, the federal budget process for all intents and purposes is already dead and forgotten. The Budget Enforcement Act, which is legally required to be followed, is being replaced almost daily by ad hoc procedures implemented by those with the most votes-that is, by raw exercises of power. The previous general agreement on what should happen and how is no longer enforced, and it probably cannot be.

More important than the collapse of the budget process, however, is the fact that the underlying assumption of the federal budget debate that has guided most of the decisions of the past generation-that the deficit should be eliminated-is now no longer applicable. The question of what to do with the surplus, which should be the primary budget issue being discussed, apparently has become a taboo subject for decision makers and thought leaders.

This is all the more chaotic because few of the previous leaders of the intellectual and even political aspects of the federal budget debate seem to be seriously engaged in raising the issues that need to be settled. For example:

The Republican chairman of the House Budget Committee and ranking Democrat on the Senate Budget Committee are not running for re-election and are no longer playing a major role in the debate. No one in either chamber has replaced them as the budget world's heir apparent.

The director of the Office of Management and Budget is part of a presidential administration that will be out of office in five months and does not have to submit another budget to Congress. His focus is actually even shorter-getting through the next six weeks, when Congress is scheduled to adjourn for the year.

The Congressional Budget Office has been quieter lately than it has been in the past as it continues to work hard to stay out of the limelight.

The Federal Reserve, which has often played a very important role in the federal budget debate by setting the stage for what should happen and providing critical input on the economy, has become an almost nonparticipant in the fiscal policy debate-even though the decisions that may be made could be the opposite of what Alan Greenspan & Co. believe should happen.

Wall Street, which has been an important influence on federal budget decisions, is totally AWOL. There are some strong indications that the market cannot decide between its desire for reduced federal borrowing, which would make existing bonds more valuable, and smaller surpluses, which would require the federal government to borrow more and, therefore, provide a larger supply of bonds for traders to sell. There are also indications that Wall Streeters are conflicted between the personal tax cuts they think they would receive if the Republicans win this fall and the faster reduction in the federal debt the Democrats are offering.

The economics profession is nowhere to be found. The precise group that should be providing the intellectual leadership about the new realities of the federal budget debate, about the role of federal budget decisions when (1) there is a surplus and (2) Washington apparently does not have to do anything to keep the economic good times rolling, seems to have gone on an extended sabbatical. Where is the current day equivalent of supply-side or Keynesian economics that we can debate?

On top of all of this, the vast majority of this year's political campaigns are avoiding "the budget" as an issue. In one sense this is very strange: Both sides should want to take credit for what is genuinely one of the big Washington successes stories of the past few years. On the other hand, claiming credit could lead to a follow-up question about what should be done next-and no one seems ready to answer that yet.

Question of The Week

Previous Question. Two weeks ago "Budget Battles" readers were asked to name the federal department that the Office of Management and Budget was a part of before it became an independent federal agency. The answer is the Treasury Department. The Bureau of the Budget, as it was first known, was created in 1921, was transferred to the Executive Office of the President in 1939, and became OMB in 1970. The winner of the "I Won A Budget Battle" T-shirt, who was selected at random from the very large number of correct respondents, is Virginia McMurtry, who works at the Congressional Research Service of the Library of Congress.

This Week's Question. I heard what you were saying when you read the second bullet above: "What do you mean the Clinton administration does not have to submit a fiscal 2002 budget?" It's true. The question for next week: Why not? Get it right and you will win your very own "I Won A Budget Battle" T-shirt to wear while playing in your first touch football game of the season. Send your responses to scollender@nationaljournal.com by 5 p.m. EDT on Saturday, Aug. 26, 2000. If there is more than one correct response the winner will be selected at random from all of the correct entries.

Who Will You Nominate For The Budget Person Of The Year?

What person or organization has had the most positive impact on this year's budget debate, and so should receive the coveted "Black Ink Award" from NationalJournal.com and "Budget Battles"? You get to choose. As soon as Congress adjourns for the year, readers will be asked to nominate their choice. In December they will be asked to vote for one of the top five nominees. All nominations and voting will be done online. More details will follow.