It’s not an idea that comes easily to this town of movers and shakers, but in the nation’s capital, a potentially powerful interest group is coalescing behind the cause of … doing nothing.
Not nothing in the personal sense, of course. Nothing Caucus members go about their daily business just like anyone else: walking the dog, driving to work, thinking big thoughts, making big deals, whatever. What unites them is their belief that the nation’s interests would best be served if Congress would just pack it in.
The guiding principle behind the movement was perhaps first articulated by that pre-eminent oracle on things economic, Federal Reserve Chairman Alan Greenspan. Given the current exuberant state of the American economy, he told a Senate committee back in January that his preferred use of any surplus in the federal budget would be to retire the federal debt. With U.S. personal savings running in the negative range (net investment by the rich being more than offset by borrowing by the masses) and America ever more dependent on borrowing private capital from abroad, Greenspan concluded it would be prudent for Uncle Sam to do a little saving for us. And, of course, using surplus federal funds to buy back outstanding Treasury bonds and notes frees up private capital for other investment.
(Understand that any money left over in the “general fund,” i.e., money not earmarked for Social Security, is automatically invested in Treasury bonds. Since the Treasury would not, in that case, need to do any new borrowing, those bonds would have to be bought back from the public and retired. The same is true of the Social Security trust funds–but only as long as the rest of government is in the black, which it hasn’t been for decades. Otherwise, the payroll tax surpluses are used to cover borrowing done to finance courts, prisons, schools, airports, weather forecasts, and all the other things that government does. So what Greenspan is hoping is that Congress will allocate no more for new tax cuts or spending than it can cover with the remaining taxes.)
Greenspan didn’t spell out how he hoped that would be accomplished. But other budget watchers, from both parties, have come increasingly to the view that, when it comes to direct action by Congress, less is more. “We get to talking about the do-nothing Congress as a bad thing, but look at the alternatives,” says Republican Carol Cox Wait, president of the Committee for a Responsible Budget. Wait points to last year’s last-minute $20 billion-plus “emergency” supplemental as a prime example of “what Congress does when it’s under pressure to do something.” Former Congressional Budget Office Director Robert Reischauer, a Democrat, agrees. “The salvation of the nation may be in gridlock,” says Reischauer. “It’s dangerous to let a pre-election Congress play with tax and entitlement legislation in a surplus environment.”
That’s especially so when those surpluses are as incorporeal as Macbeth’s dagger. Calculations by both private and official sources show that the existence of any 10-year surplus in the non-Social Security part of the budget depends upon a fiction: It is that this and future Congresses and presidents will agree to cut domestic and military spending (other than entitlements) by some 40 percent over the next 10 years. That fiction is embodied in the 1997 balanced budget agreement both Clinton and congressional leaders endorsed two years ago. The act sets a limit on so-called discretionary spending (both domestic and military) for next year that is lower than current spending. The limits are even lower in the following two years. Both the Congressional Budget Office and the Office of Management and Budget are required to assume the limits will actually be met when they make their projections (a point generally overlooked). Budget watchers noted at the time the caps were enacted that they were absurdly unrealistic, but the caution was lost in the general celebration.
Now, even highly placed Clinton administration officials secretly subscribe to stalemate. “It won’t be the end of the world,” said one last week, “It’s not a bad outcome.” But comments such as this are strictly not for attribution. True, when pressed, top economic advisers have called the spending caps “totally unrealistic,” but they are loath to press this point too loudly, lest it call into question both their own plans for additional “investments” (read spending and tax breaks) and the president’s embrace of the limits in the first place. That coyness led the White House to issue a budget that, by assuming the caps would be effective, showed the 10-year, $1 trillion general fund surplus that triggered the current orgy on Capitol Hill.
House Republicans led off the festivities last week by passing “The Financial Freedom Act.” This effusively named tax cut would, even after some cosmetic improvements to placate fiscal conservatives, likely absorb more than the total 10-year surplus. (That includes interest costs on the extra debt the Treasury will incur if it doesn’t buy back outstanding securities.) The measure is artfully constructed to hide its full cost; big-ticket items, such as repeal of the estate tax and the alternative minimum tax and across-the-board rate cuts, aren’t fully phased in until 2009. The administration now calculates that over the following 10 years, the tax cut will cost some $3 trillion–this just at the time that retiring baby boomers are starting to drain the Social Security surpluses.
O f course, both the president and the GOP leadership have piously embraced the notion of a “lockbox” for the trust fund surpluses, but each doubts the strength of the other’s padlock construction. And with good reason. There is no box that Congress, with the acquiescence of the White House, cannot unhinge in the dead of an October night when the budget is finally nailed together. Remember that any overspending in the general budget automatically results in borrowing from the trust funds–and that Congress, despite its lip service to the spending caps (and the surpluses that depend entirely upon them), is even now busy marking up appropriations bills that exceed the caps by tens of billions of dollars.
Consciously aiming for stalemate would not be acceptable to Congress. Ever since Harry Truman mocked the “do-nothing Congress,” our nation’s representatives have been sensitive to charges that their time is spent only in pandering, politicking, and pot thumping. And no one is suggesting that legislators pack up and go home forthwith. That would make for a mighty dull summer for us news junkies. But after the requisite barb-trading with the White House, and a much-photographed round of negotiations in which the sanctity of Social Security and the need to invest in our nation’s children are duly invoked, it would be a blessing if Congress would quietly pass a continuing resolution keeping spending more or less where it currently is, and then take to the hustings, where each party can blame the other for doing what’s best for the country–nothing.
