The Challenge of Federal Budget Deficits
As I look at the tough challenges faced by the members of the National Commission on Fiscal Responsibility and Reform , it reminds of my service in Congress on the Ways and Means Committee and as member of the House Budget Committee. I was elected in 1974 to serve the people of Illinois’ 3rd District as part of the wave of post-Watergate candidates who were swept into office by voter anger and the desire for reform. I won my office based on a grassroots campaign and I was motivated by a desire to improve our government. Having a seat at the table for the review of the President’s multi-trillion dollar budget submissions was a real eye opener for a former state’s prosecutor who had come to Congress as an outsider and not as a moneyed corporate executive.
As a member of the House Budget Committee, each year we would receive the President’s budget and closely review all the facts and figures in an attempt to discern their impact on revenue and the size of spending programs. As a Democrat who was fiscally conservative, I always focused a good deal of attention on the deficit. It did not seem right to me (or my constituents) that our country would regularly spend more than we took in. I soon learned that the deficit for a budget the size of the United States was highly dependent on the four economic assumptions upon which it was based: Real GNP Growth, GNP Deflator, Unemployment Rate, and 3-Month Treasury Bill Rate. The accuracy of these four forecasts were important in determining whether the budget could be relied on as an true indicator of projected spending and whether the projections for the deficit were real…or fiction.
After a few budget review rounds, I quickly learned that the underlying forecasts for a President’s budget submission were often overly optimistic. This was a natural outgrowth of the President’s desire to show the country that the economic situation would improve under his leadership. However, using “best case scenarios” for budget projections invariably led to deficits when reality failed to meet the administration’s rosy expectations. As a result, deficit spending continued throughout the 1980’s.
The difficulty in addressing deficit spending was – then, as now – political. If more realistic forecast assumptions were used, it would require difficult decisions to raise taxes and cut spending, which a significant portion of the public would oppose.
When George H.W. Bush was elected in 1988, I was hopeful he would attack the budget deficits and present a realistic budget to the Congress. I had the privilege of getting to know the President on a firsthand basis and knew he would want to do the right thing for the country. The question was whether any President could turn around a pattern of deficit spending that started back in the late 1960’s.
[...] week when writing about The Challenge of Federal Budget Deficits, I recalled my initial impressions of dealing with the massive U.S. government budget as a member [...]
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