The question I get asked most frequently these days as I give speeches and briefings around the country is simple: What should the next federal budget process do?
First, we need to admit that the current deficit reduction process not only will not work in the future, it is not working now. It is increasingly obvious that the wholesale avoidance and ever more brazen evasion of the current procedures will continue at least as long as there is a budget surplus. With on-budget as well as off-budget surpluses now projected through at least the end of the decade, it makes little sense to retain the current restrictions and limitations that have repeatedly been proven to be so irrelevant and avoidable.
Second, and even more generally, we need to acknowledge that there is no consensus whatsoever about what the next budget process should achieve. The "reduce-the-deficit" mantra that existed through the 1980s and most of the 1990s has not yet been replaced by anything that is close to being as commonly accepted. Any new budget process that tries to impose a policy outcome (such as tax cuts, spending increases or debt reduction) on an unwilling majority is a process that will be doomed from the start.
Third, we need to own up to the fact that we have no real economic experience dealing with federal surpluses and, therefore, that no one is really sure what should be done with them.
The distant past certainly provides no guidance. The last time the U.S. had four consecutive budget surpluses was 1927-1930, and the economy was completely different then than it is now. Recent experience is similarly unhelpful. Neither the Keynesian economic models that were so popular in the 1960s-1970s nor the supply-side theories of the 1980s and 1990s seem to make as much sense today as they did then-especially when what we all learned in Intro to Macroeconomics about the relationship between economic growth, unemployment, inflation, and interest rates, no longer seems to be true.
Fourth, the role of other players can no longer be just an afterthought. For example, the still-growing importance of interest rates means that the Federal Reserve Board may be at least as important an economic policymaker as Congress and the White House. In fact, the Fed's ability to act quickly in the face of today's very fast-paced market events almost guarantees that this is the case.
Fifth, the changes in the economy, the existence of surpluses rather than deficits, and the speed with which economic and market events happen and are reported mean it is time to acknowledge that some mechanism has to exist to allow budget decisions to be reviewed more often than once a year. Congress's role may be annual (or biennial) budgets, but some mechanism should be considered that will allow adjustments to be made when they are needed rather than when the budget process schedules them.
Sixth, now that there is no outcome that has to be achieved every year, the budget process must require some type of debate on overall national priorities. The military vs. education debate should be replaced, or at least preceded, by a debate over whether increasing the surplus will provide better overall economic results than, say, cutting an equal amount of taxes or increasing an equal amount of spending. This is what has been completely missing from the current budget process because the answer-cut the deficit somehow, anyhow-was preordained.
Finally, the work on any new process needs to start with a recognition that all of the questions above will be answered in the most political of all arenas: the budget debate. Regardless of how well-intentioned, a budget process that does not include a healthy dose of political reality-that representatives and senators will always try to get more for their constituents at less cost-will be as useless and will fail as assuredly as a process that is not designed to answer the prime questions in the first place.
Question Of The Week
Last Week's Question. Readers were asked to name the character from a current or previous television show that might make a big difference if he or she held an official position in the federal budget debate. There are two winners this week. Ashlie Warnick, who works in the Washington office of Sen. Peter Fitzgerald, R-Ill., gets an "I Won A 2000 Budget Battle" T-shirt for suggesting that Wimpy from the old "Popeye" series would be perfect for a number of possible budget positions. After all, she says, the person who came up with the phrase "I will gladly pay you Tuesday for a hamburger today" seems to have been born to create gimmicks like delayed obligations and postponed paydays. Previous winner Diana Meredith of the Office of Management and Budget also wins a T-shirt for her suggestion of the Borg, the wonderfully evil villain from "Star Trek: The Next Generation." According to Diana, the Borg would make a perfect president of the United States because its sole method for dealing with antagonists is to assimilate them while calmly announcing, "Resistance is futile."
This Week's Question. In keeping with the spirit of the topic of this week's column, readers are asked to provide a suggestion for how the federal budget process should be changed. Two "I Won A 2000 Budget Battle" T-shirts will be awarded, one for the best substantive recommendation and one for the most imaginative. Send your responses to scollender@nationaljournal.com by 5 p.m. EDT on Saturday, April 8, and you could have a T-shirt to wear while completing your federal taxes at the last minute.