When he was the outspoken chairman of the House Budget Committee, Budget Director Leon E. Panetta had a no-nonsense philosophy: If you're serious about cutting the budget deficit, raise taxes, slash spending, or do both. Elaborate deficit-cutting mechanisms of the type favored by former budget chief Richard G. Darman or Senator Phil Gramm (R-Tex.) don't work because they're either laced with loopholes or because Congress inevitably alters them to alleviate the pain to voters.
At his confirmation hearing last January, Panetta stuck to his theme: "There is not a mechanism you can put in place, there is not a procedure you can put in place, there is not a constitutional amendment you can put in place that replaces leadership that the President has to provide."
Alas, Washington is not a place where such views can long endure. So there was President Clinton on May 12, telling business executives he planned to create "a legally separate deficit-reduction trust fund, which will tell you where your taxes are going." In reality, of course, the trust fund will have no funds and inspire no trust--because it's just the kind of accounting trick Panetta vowed to avoid. "Having a trust fund to put taxes into doesn't cut the deficit any more than if you didn't have the trust fund," notes Price Waterhouse analyst Stanley E. Collender.
MUSICAL CHAIRS. To make matters worse, there's more gimmickry to come. The Administration is drawing up legislative "enforcement mechanisms" to accompany the trust fund and replace ineffective budgetary machinery from the past. Among the proposals: new caps on discretionary spending. If Congress exceeded the limits, other programs would automatically be trimmed. Another provision would require that any new spending be offset with cuts or new revenue.
But Congress and the Administration could still evade this requirement by declaring an "emergency" and passing supplemental spending bills. In fact, in its first four months in office, the Clinton Administration has already sought more than $19 billion in supplemental spending to pay for wastewater cleanup, summer jobs, small-business loans, veterans' benefits, college student loans, highway construction, the Somali relief effort, U.N. peacekeeping efforts, the FBI, national parks, and a dozen or so other programs.
So far, Congress has balked at this profligacy. But the Administration hasn't even waited for an emergency to bust the fiscal 1994 caps. In its February budget proposal, the White House exceeds existing limits by $18.9 billion over the next two years. The message to Congress: You find the cuts to stay within the caps.
Congress can play this game, too, and conservative Democrats, led by Representative Charles W. Stenholm (D-Tex.), are pushing the White House to accept ceilings on entitlement spending. Their idea sounds reasonable: Why not just set a lid on, say, farm price supports? If a bumper crop drove down prices and pushed farm spending above the limit, all other entitlement programs could be trimmed to meet the cap. But here's the rub: The farmers' windfall would be paid for by children forgoing school lunches, the disabled losing home-care services, and veterans receiving less health care. Congress will never let such draconian measures take effect.
WHO DECIDES? The genesis of Washington's current obsession with arcane budget rules is political. As the president met with Senate Majority Leader George J. Mitchell (D-Me.) and members of the congressional tax-writing committees, all had the same complaint: "Our constituents are willing to sacrifice, but they don't trust us not to spend their tax increase." Meanwhile, Representative Charles E. Schumer (D-N.Y.) and Senator Bill Bradley (D-N.J.) pushed their similar trust-fund ideas. Says one White House official: "There was a feeling that this would help us get back some of the [lost] momentum on the economic plan."
The President says he will meet weekly with CEOs to buttress his sagging popularity. The assembled execs should suggest that he come up with more than budgetary smoke and mirrors. As it is, Bill Clinton hasn't been much more willing than George Bush or Ronald Reagan to make the painful spending cuts that genuine deficit-reduction requires. Without such commitment at the top, gimmicks are all Americans can expect.