Budget Battles: First, the rules. Then, the fight.

Early in the movie "Butch Cassidy and the Sundance Kid," there is a scene in which a knife fight is about to take place between Butch and one of the members of his Hole in the Wall Gang. Butch, who was much better at talking than fighting, insisted that before anything could happen, they had to agree on "the rules."

With the biggest budget fights of the year still ahead, it is a good time to do something similar-propose the rules that should be used to evaluate what happens.

These rules are not what Congress and the White House will use to develop and pass budget-related legislation. Those procedures, which were enacted at various times over the past 25 years by the different budget acts, are already in place.

These are the rules that we should use to determine whether the spending and taxing results are as good as Congress and the administration undoubtedly will declare them to be, and for which they will try to take credit. Establishing the standards now will make it easier and fairer to do the analysis later.

Rule #1: On-Time Is Critical. There is only one budget process deadline left at this point, and complying with it should be considered the most important rule of all. Getting the fiscal 2000 appropriations enacted by Oct. 1 is not just a goal but also a requirement. This means that shutdowns and continuing resolutions should be considered failures.

Rule #2: If Spending Is Higher Than The Caps Then The Caps Have Been Exceeded. Why is it necessary to state this? On one hand, members of Congress have said they are not going to vote to raise the cap on appropriations. On the other hand, they also insist that they are not going to vote to cut appropriations to comply with the caps, and they are doing just about everything possible to circumvent them. Meanwhile, the White House submitted a budget to Capitol Hill that it says complied with the caps-even though that budget includes a variety of tricks, without which spending would clearly exceed the limits. When this year's debate is over, anyone who claims to have maintained the caps should have to explain how that is possible if spending is projected to be above the limits.

Rule #3: An "Emergency" Really Has To Be An Emergency. Even though the Budget Enforcement Act does not include a definition of what constitutes an "emergency," we should be able to agree that this special exception to the caps cannot be used for anything that is routine or ongoing. An activity that happens every year is not an emergency. An activity that is known about for some time is not an emergency. An increase in an activity that could not be funded under the caps unless something else is cut, and that increase has little support, is not an emergency.

Rule #4: Moving A Payday Does Not Constitute A Spending Reduction. Legislation moving a payday or delaying a payment to government contractors from Sept. 30 to Oct.1 and, therefore, from one fiscal year to another, does not constitute a real reduction in federal obligations. It may satisfy some accounting needs, but it is one of the worst ways to comply with budget rules. (Note: This rule is more important that it might seem. The end of fiscal 2000 falls on a Saturday. It is not inconceivable, therefore, that Congress and the White House will simply delay paying employees and contractors by one day at the end of the fiscal year to take advantage of what will erroneously appear to be savings.)

Rule #5: Accelerating Revenue Collections Into This Year Does Not Constitute An Increase In Receipts. This is the revenue version of Rule #4. Taxes and fees collected this year instead of next may satisfy the procedures from an accounting point of view, but they only will make things better now at the expense of what may lie ahead.

Rule #6: Ten-Year Forecasts Are Worthless. The fact that long forecasts can be done does not mean they are meaningful. They are based on little more than speculation about the economy, the domestic and worldwide political situations and the weather and they should not be taken seriously. Permanent changes in spending and taxing must not be based on guesswork.

Rule #7: The Caps Cannot Be Assumed To Exist Beyond 2002. In the current budget and political environments, any assumption that the caps on discretionary spending will continue beyond 2002 borders on the ridiculous. If the budget surpluses and the narrow majorities in the House and Senate continue, there will not be enough support for any caps (at least not meaningful ones) to assume that they will be extended. Therefore, any spending and taxing policy changes that use a surplus as an offset must be considered highly suspect if that surplus projection is based on the assumption that the caps will continue to limit spending.

It is important to keep in mind the end of the scene from "Butch Cassidy and the Sundance Kid." When Butch demands that the rules be agreed upon before the fight begins, his opponent drops his guard and protests that there are no rules in a knife fight. At that point Butch immediately forgets about setting the rules, kicks his opponent in the crotch, and the fight is over before it ever begins. It is the budget equivalent of that kick that we have to prevent.

Question Of The Week

Last Week's Question. There were so many great answers to last week's question, which asked you to come up with the name of a budget-related rock-and-roll band, that I have to wonder whether Budget Battles readers ever listen to any other type of music. The winner of the "I Won A Budget Battle" T-shirt goes to Scott Heins of the Investors Advisory Group in Pewaukee, Wis., for his entry "B.A. and the Outlays" featuring C. Beeoh on guitar, Miss Appropriation on drums, Bud "Jet" Resolution on bass, E. "Merge" N'Cee on saxophone, and Vito Threat on keyboard. Honorable mention to Don Wolfensberger for "The Grand Funk Train Wreck," and Tracie Sandlin from Sen. Jim Bunning's Washington Office for "Size Matters."

This Week's Question. Here's an easy way to get an "I Won A Budget Battle" T-shirt of your own. Today's column lists seven rules that should be used to judge what is left of this year's budget debate. I want to increase that to 10. Therefore, in the spirit of what is left of the summer, "Budget Battles" will award T-shirts to the three readers who provide the best additional rules. Send your entry to scollender@njdc.com.