Will Tons Of Highway Pork Flatten The Balanced Budget?

President Clinton's coming showdown with Congress over a $217 billion highway bill promises to be more than a punch-out over pork-barrel projects. In many ways, it could be a defining moment of his second term. If the President doesn't take a stand against runaway transportation spending, he'll soon find his long-sought balanced budget paved over. And he'll send a message to Hill porkmeisters that the coming era of budget surpluses gives them license to spend like drunken swabbies.

The six-year highway and transit measure that's heading for overwhelming House approval would boost transportation spending by $33 billion above the levels of last year's budget accord. Republican leaders have let the bill's drafters salt it with 1,467 "demonstration projects"--$9.3 billion targeted for specific roads, bridges, and even university studies in 400 congressional districts.

OUTMUSCLED. So what happened to the GOP's vaunted fiscal discipline? The party is nervous about losing control of the House in November, and bringing home the bacon is a sure vote-getter. Democrats are happy to play along--if they get their cut. And House Transportation Committee Chairman Bud Shuster (R-Pa.), the Hill's Prince of Pork, outmuscled fiscal hawks like House Budget Chairman John Kasich (R-Ohio), who says the bill perpetuates Washington's "culture of spending."

House GOP leaders swear they'll honor the budget deal, promising to make offsetting cuts in other domestic programs. But budget experts wonder how real any cuts of that magnitude would be. "They're going to bust the caps, either explicitly or by subterfuge," says former Congressional Budget Office Director Rudolph G. Penner.

Although Administration budgeteers are clucking over the GOP's edifice complex, Clinton isn't exactly a fiscal purist himself. His 1999 budget calls for a $90 billion increase in domestic spending, much of it for education and other "public investments." Now he fears that Congress' love of asphalt and buses will come at the expense of his social agenda.

But a frontal assault on Shuster's bill would inflame congressional Democrats--dangerous for a President still under the threat of impeachment. So Clintonites are joining with Kasich and moderate Democrats to create enough embarrassment to whittle the bill down in negotiations with the Senate.

BARGE BOONDOGGLE? Shuster & Co. will counter that public-works spending packs a mighty economic wallop--creating jobs and paving the way for a more productive economy. Even after a big spending boost in 1991, the U.S. needs to pour $358 billion into roads and $73 billion into transit between now and 2002 to keep traffic moving, argues the American Association of State Highway & Transportation Officials.

But with the economy running at top speed, public-works stimulus is hardly vital. As for boosting productivity, "infrastructure is important, but it's not special," says economist Douglas Holtz-Eakin of Syracuse University. Transportation spending looks even worse when the cash is earmarked by politicians--a practice the House is taking to record levels. Two examples: $14 million to buy barges for a company that transports new cars to dealers in Brooklyn and Manhattan and $2.75 million for an access road to a Dayton baseball stadium.

Largesse like that buys loads of support on the Hill. That's why White House aides consider the threat of a Presidential veto, as one puts it, "mere symbolism." They hope Clinton can schmooze the bill down till it's closer to $200 billion. But it's hard to negotiate over the roar of a bulldozer.

Before it's here, it's on the Bloomberg Terminal.