Exercises in Make-Believe

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Congress insists on setting spending goals, however fanciful

The way to reconcile the irreconcilable is to choose the flat-out impossible. Or so, apparently, think the leaders of a conference committee that is trying to close the enormous gaps between fiscal 1984 budget resolutions passed by the Democratic-controlled House and Republican-ruled Senate. Though the conference had been expected to be long and prickly, the committee last week reached a tentative agreement, but only by adopting a set of revenue and spending targets that are an exercise in make-believe.

Military spending posed no real problem. The conferees agreed on an increase of 5% after adjustment for inflation, the obvious compromise between the Senate's 6% and the House's 4%. They settled on a $12 billion rise in revenues, which is much closer to the Senate target of $9 billion than the House goal of $30 billion. The House conferees knew their Democratic colleagues had voted for that $30 billion primarily as a protest against big deficits; when it comes time to make the decision on whose taxes to raise how much, it will be difficult to round up the votes even for a $12 billion boost.

In fact, Congress last week acted to reduce revenue. The Senate followed the House in voting to repeal the 10% withholding tax on interest and dividends scheduled to begin July 1. The Senators voted to raise their own pay to $69,800 a year, from the present $60,662, and to defer until Dec. 31 a limit on the outside income they can earn.

The big sticking point in the budget conference was expected to be domestic spending. The Senate had voted for a rise of $12.5 billion, about as far as its Republicans dared go in defying President Reagan's wishes. The House had demanded a $30 billion jump, thought necessary by many Democrats in order to keep faith with their liberal constituents.

Somewhat to the conferees' surprise, however, they found themselves less interested in ideology than in preserving the prerogative of Congress to set spending goals, which requires passage of some kind of budget resolution. So they crafted an ingeniously deceptive compromise. Domestic spending would be increased by $20 billion, but $6 billion of that would be in the form of a "contingency fund" to finance various recession-relief measures advocated by Democrats. The meaning: if Congress later fails to appropriate the money—or, more likely, fails to override the almost certain veto by Ronald Reagan—the $6 billion will simply vanish from the budget. This would allow Republicans to boast that they had held down spending and Democrats to tell their constituents that, well, they tried. In any case, there would be no major slash in the budget deficit, which would be between $170 billion and $180 billion.