Stalemate

It was early October, and the U.S. Government was running out of money. The Treasury warned of imminent bankruptcy and bouncing benefit checks. The Senate responded by raising the national debt ceiling to more than $2 trillion. Attached to the bill was the Gramm-Rudman Amendment, a dramatic proposal to reduce the federal deficit to zero in five years--and to show that Senate Republicans are serious about reducing deficits. The problem was now with the House.

It is early November, and the U.S. Government is still running out of money. A House-Senate conference has produced no compromise on Gramm-Rudman. The Treasury again warns of bankruptcy and says it will have to draw money from Social Security trust funds. The House extends the Government's debt ceiling for a mere five days. Moreover, to show that House Democrats too are serious about deficit reduction, they pass their own proposal on spending cuts tied to economic growth. The bill is tossed back to the Senate, where it lands with a thud.

In response, the Senate passes its own version of debt extension, but too late to prevent the Treasury from raiding Social Security investments late Friday to keep the Government solvent. It is apparent that Congress can manage this self-imposed crisis no better than its annual battles to reduce spending. Lawmakers have turned the balanced-budget battle into a bizarre game of political one-upmanship.

Gramm-Rudman would permit Congress's previously agreed deficit limit for the current fiscal year, 1986, to increase from $172 billion to as much as $193 billion. Then it would require that the ceiling be lowered by roughly $36 billion each year until reaching zero by 1991, necessitating spending cuts in many social programs and much of the military budget.

House Democrats have responded with a bill that would specifically exclude cuts in food stamps, Social Security and veterans' pensions. Since Democrats think Gramm-Rudman is a Republican trick to avoid any painful budget slashing until after next year's elections, the House also tried to outtough the Senate by lowering the 1986 deficit ceiling to $161 billion and projecting a zero- deficit target by the end of the decade. Congress could not "put off the political pain" of budget cuts, said Illinois Democrat Dan Rostenkowski, adding, "We wanted a fair deficit-reduction proposal. The Senate wanted an incumbent protection act."

The hostage in this Capitol Hill crisis is the federal debt limit, which constrains the Government's ability to borrow. Ironically, a debt limit was created by Congress in 1947 to put a "permanent" $275 billion cap on federal overspending. Congress has been raising it ever since.