TOPICS > Politics

Budget Balancing Act

March 14, 1996 at 12:00 AM EST

TRANSCRIPT

MARGARET WARNER: With another possible government shutdown looming at midnight Friday, the House of Representatives today passed yet another temporary spending bill. This one keeps federal agencies open one more week through March 22nd. The Senate is expected to follow suit by approving the measure possibly as soon as tonight. Here to bring us up to date on this latest twist in the budget story and to explain what it means, we turn to one of our budget watchers, Susan Dentzer, chief economics correspondent for “U.S. News & World Report.” Welcome back, Susan.

SUSAN DENTZER, U.S. News & World Report: Nice to be back, Margaret.

MARGARET WARNER: Here we are in a budget year. It’s almost half over. We are on our 10th temporary spending bill. What is going on?

SUSAN DENTZER: Well, if we only knew. What we do know is that, of course, Congress came back at the end of January and passed this measure to get them through to March 15th. The hope was that that would be ample time to work out a number of differences between both Houses and with the White House over this measure to fund nine remaining cabinet departments that had not yet been funded for, as you say, the rest of the fiscal year. As I say, the hope was to have enough time to work out all these differences. In fact, the time has come and gone, and many, many differences remain, some of them over money. The White House has argued that at least $8 billion needs to be put back into these various measures to fund priorities it cares deeply about chiefly in the realm of education, training, and social spending. The Republicans have insisted that much of this money is squandered and duplicative and shouldn’t be spent if you really are serious about balancing the budget. In addition to that, there are lots of differences over the policies that are inserted in these bills, for example, policies having to do with timber cutting in the West and so forth. So all of this has led up to this point where, in fact, nobody could agree on anything, except to put this argument off for another week and buy some time to work out the remaining differences.

MARGARET WARNER: All right. Let’s look at the issues in the big budget bill. Now, the Senate did this week move somewhat toward the President’s direction.

SUSAN DENTZER: Yes.

MARGARET WARNER: They restored some money.

SUSAN DENTZER: Yes. They put back in some money, particularly on some programs that the President cares deeply about, for example, summer youth jobs programs, which had been completely zeroed out as the language goes under the House measures. That money has been put back in. Money has been put back in to fund the Head Start program at levels comparable to what was spent last fiscal year, so there is some progress being made. There still are some differences, and now, as I say, many differences have emerged on the policy level, and the White House has sounded the gong about vetoing the measures once they get, in fact, to the White House, unless some more differences can be worked out.

MARGARET WARNER: The President clearly feels he has the upper hand here.

SUSAN DENTZER: Well, yes and no. I think that both sides are very leery about seeming to be the entity that prompts another government shutdown. And, in fact, that’s precisely what would happen if the White House vetoed these measures outright sometime when they finally get to him after next week. So there’s a bit of a dance going on here to try to avert that situation, to try to work out the differences. Whether this can be accomplished in a week’s time remains really very much an open question, and it could be that we are staring at a series of continuing resolutions, the 11th, the 12th, the 13th, and so forth, between now and the end of the fiscal year on September 30th.

MARGARET WARNER: Now, there was another issue on which the White House and the Congress were at loggerheads which had to do with extending the debt ceiling. Where does that stand now?

SUSAN DENTZER: Looking more hopeful than at any time in the most recent past. Specifically, the limit on the federal debt has stood at 4.9 trillion dollars, has needed to be raised for some months. We have finessed the issue of, of a default on the federal debt by a combination of special measures that the Treasury Department has undertaken and Congressional moves after, after some decrying of those steps on the part of Treasury Congressional moves to accommodate them. There has been the desire on the part of Congress to use the debt ceiling legislation as an action-forcing mechanism to force the administration to come to heel on entitlement spending restraints and so forth. Now people have pretty much given up that strategy and have started to talk about a long-term–

MARGARET WARNER: You mean the Republican leadership.

SUSAN DENTZER: The Republicans have agreed now to look for a longer-term extension of the debt ceiling, probably getting accommodating federal barring that would need to take place into next year, with a couple of other measures tacked on. So it does look as if there is a bright light on that horizon.

MARGARET WARNER: Does that mean now that Dole and Gingrich have backed off on attaching this entitlement reform that entitlement reform is dead for this year?

SUSAN DENTZER: No, I don’t think so at all. In fact, now that we are maybe in the middle of the movie of the great budget battle over fiscal 1996, we’re about to start a new movie which is the “Great Budget Battle,” the sequel, in effect, the budget battle pertaining to fiscal 1997 and beyond. Next week, the White House will release its formal budget request for the next fiscal year, which starts next October. At that point, the House will get busy with a budget resolution which is going to be, in effect, a six-year budget balancing deal which, which in turn will launch another process on reconciliation, which will have those entitlement reforms in it. So the movie gets going again, now a six-year discussion about reigning in entitlement programs, rather than a seven-year discussion.

MARGARET WARNER: But, of course, we have this election in November. How is Presidential politics going to now play into this whole budget struggle?

SUSAN DENTZER: Intimately. The single greatest sign of that is that the President will appear at a press briefing next week when the budget is unveiled, which never happens usually. It’s the dreary job of the budget director and some of the staff people to talk to the press. The fact that the President is going to claim the spotlight tells you that if you had any doubt, the campaign has officially begun.

MARGARET WARNER: But is it in either Majority Leader Dole’s interest or in the President’s interest to, for instance, actually come up with something on entitlement reform, or do you think we’re just going to see this stand-off all the way to the election and let the election decide?

SUSAN DENTZER: I continue to believe that despite all evidence to the contrary, that it really still is in the interest of the President and Sen. Dole to reach a deal. It is the kind of thing which sends a signal to the public not only that they can work with each other, but that they can really handle the reins of government. And I think the, both sides in a way feel that. The problem is that the details that have to be agreed upon, the differences that have to be broached to get to that, now a six- year deal, still remain so immense it’s just not clear that those differences can be broached. And, in fact, if you look at some of the things that are most contentious, welfare reform, for example, is the President–is it to the President’s advantage at this point to reach a deal on welfare reform, having promised to end welfare as we know it, or is it to his advantage not to appear to give in to Republican demands that the President still feels would imperil the well-being of children going forward? Again, these are the kinds of things that I think, if anything, the polls over the next few months will help to decide what happens with this process in the final analysis.

MARGARET WARNER: You’re probably right about that. Thanks, Susan, very much.

SUSAN DENTZER: My pleasure.