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Budgetary Madness. As the 1990 budget is being crammed into a single 1,376- page package, the White House and Darman's Office of Management and Budget have joined Congress in a staggeringly cynical conspiracy to mask the actual size of the deficit. OMB says it will be $110 billion in the next fiscal year, within the Gramm-Rudman-Hollings target zone. But nobody really believes that. At the same time, several long-term, big-ticket items have been taken "off budget," including at least $30 billion of the $50 billion for bankrupt savings and loans over the next three years. Because Gramm-Rudman-Hollings contains no penalty if estimates of past deficits are wrong, the Pentagon has shifted $2.9 billion from the deficit for fiscal year 1990, which began Oct. 1, to the previous year, simply by moving a payday back two days.
The Administration has proposed almost no specific budget cuts this year, leaving Congress to find whatever savings it can. The Senate late last week passed a budget-reconciliation bill, but hours of negotiations with the House remain before final approval. If the bill does not reach the President early this week, for the first time ever the Gramm-Rudman-Hollings buzz saw will swing into action, requiring across-the-board spending cuts -- in Medicare, education, law enforcement, defense. Congress can vote to restore the money once the deadline is past. Dan Rostenkowski, chairman of the House Ways and Means Committee, wrote in the New York Times last week that Congress should let Gramm-Rudman-Hollings take effect to force a crisis: "Our refusal to attack the deficit would be comic if it were not so irresponsible."
Yet many senior Bush advisers argue that the deficit is no longer a major concern because it is declining as a percentage of the gross national product. But that is true only by virtue of bookkeeping magic. The Congressional Budget Office puts the real fiscal-1990 deficit at $206 billion and says it is increasing relative to the GNP, thereby exerting upward pressure on real interest rates. Even so, says a White House official, "hardly anybody in the White House, or in the financial world, or elsewhere in the real world, believes that the budget deficit matters."
Special-Interest Politics. Congress last week seemed to be moving toward approval of the Administration's plan to cut the tax on capital gains to 15% as well as repeal or drastically curtail the catastrophic-health-care program for the elderly that was passed only last year with the wholehearted approval of the Reagan White House.
The capital-gains cut, which would fulfill one of Bush's few specific 1988 campaign promises, is aimed at the well-to-do executives and wealthy investors in the Republican electoral coalition. The Democratic leadership on Capitol Hill mounted a confused, last-minute campaign to stymie the cut as unfair to working people. But the leaders' hearts, let alone those of rank-and-file members, did not seem to be in the fight. A two-year cut easily passed the House, while a bipartisan group of Senate leaders negotiated ways to make the reduction permanent.