Newspaper article The Christian Science Monitor

New Year. No Budget. Good News. ; US Fiscal Year Begins with No Spending Blueprint, but Some Argue

Newspaper article The Christian Science Monitor

New Year. No Budget. Good News. ; US Fiscal Year Begins with No Spending Blueprint, but Some Argue

Article excerpt

It's one day before the fiscal new year, and America's budget- and-spending process is running as smoothly as Beltway traffic, at rush hour, in the rain, after a collision between a moving van and a poultry truck.

Spending bills are languishing in Congress. President Clinton is waving his veto pen so vigorously that ink could spatter passersby. Lawmakers are fighting over everything from Air Force jets to medicinal marijuana. In short, it's a mess.

But lest you think this is just another "budget clash" story, consider this twist: Today's fiscal chaos may be a good thing.

In the past, budget problems kept Washington from dealing with the great problem of the deficit. Gridlock in this era of surplus may halt hasty actions that threaten recent progress, say some analysts.

In other words, both major parties are still learning the new politics of black ink. "They're kind of stumbling into the right economic policy by default.

That's the irony," says Stan Collender, director of the Federal Budget Consulting Group at Fleishman-Hillard, Inc.

The right economic policy, in Mr. Collender's view, is to use the surplus to pay down as much of the nation's debt as possible.

That means no GOP tax-cut package - a move President Clinton blocked when he vetoed it last week. It means no expensive prescription-drug coverage for Medicare - a Clinton proposal that the GOP-led Congress is highly unlikely to pass.

Paying down the debt is what voters want to use the surplus for, polls show. It is what Federal Reserve Chairman Alan Greenspan has urged the Congress to do.

In today's new economy, paying down the national debt has a direct benefit to consumers.

It reduces national demand for borrowing money, which helps keep interest rates low. That means everything from credit-card debt to adjustable rate mortgages cost less than they otherwise would.

"Anything that lowers interest rates is worth more to the average taxpayer than any tax cut you could give them," says Collender. …

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