September 22, 2000
By Peter B. Sperry
The president has made his choice: more spending. He's
threatening more vetoes - this time aimed at the fiscal 2001 budget
bills wending their way through Congress - unless lawmakers agree
to boost funding for some pet White House projects that will cost
an estimated $25 billion to $40 billion. Of course, with so much
public support for debt reduction, and the importance both parties
attach to avoiding another budget "train wreck," these must be very
important projects, right?
Let's see: President Clinton may veto the energy and water
appropriations bill because the House placed a $150 million limit
on contractor travel after congressional investigators found many
government contractors were making weekly trips between Washington
and California at taxpayer expense. Evidently paying down the debt
is less important than securing free "frequent flyer miles" for
Then there's the Commerce/Justice/State appropriations bill,
which the president may veto because it gives the Legal Services
Corporation (LSC), a quasi-federal agency that provides free legal
aid to low-income clients, only $141 million - considerably less
than the $340 million he requested. Never mind that the General
Accounting Office, the official government auditing agency, has
found that the LSC over-billed or double-billed on more than 5,000
cases last year - or that the agency has been shown to have
inflated its client list in an effort to get more funding.
The president may also veto the Treasury/Postal appropriations
bill because he strongly objects to the "deeply inadequate" funding
given to the Internal Revenue Service ($409 million below his
request). That may sound like a lot, but the bill already provides
$8.5 billion for the IRS - and most of the president's proposed
increase would go toward agency restructuring efforts that will be
completed before the budget takes effect.
There are many other examples, but the question is, why
shouldn't this money be put toward reducing the debt, which
currently tops $3.4 trillion? The savings in interest alone would
make it worthwhile. The Congressional Budget Office estimates that
the interest on the federal debt is 6.5 percent. Since every $1
billion in debt costs $65 million per year in interest, lowering it
by $40 billion would save $2.6 billion in interest payments every
In fact, debt reduction is critically important for our
continued economic health, according to the one man most
responsible for that health: Federal Reserve Chairman Alan
Greenspan. In testimony before the Senate Banking Committee last
January, Greenspan made it clear that more spending was the worst
option in deciding how to use the surplus. "My first priority would
be to allow as much of the surplus to flow through into a reduction
in debt to the public," he said. "If that proves politically
infeasible, I would opt for cutting taxes. And under no conditions
do I see any room in the longer-term outlook for major changes in
However high next year's spending goes, the blame can't be laid
entirely on President Clinton: Congress plans to devote $241
billion of the $268 billion surplus to debt reduction, so - even
without the president's "help" - spending would still rise by $28
billion. But that's not enough for the president, which helps
explain why some federal lawmakers want to add a debt reduction
"line item" to each appropriations bill. If adopted, it would force
them to balance budget increases with budget
In an ideal world, surplus money would be returned automatically
to the taxpayers who provide it. But until the tax system is
reformed, using the surplus for debt reduction is a second-best
option. President Clinton himself said earlier this year: "We
should remember what got us to this dance was discipline, fiscal
discipline." Indeed, it did. Will someone please remind him?
Peter Sperry is a former Grover M. Hermann fellow in federal
budgetary affairs at The Heritage Foundation (www.heritage.org), a
Washington-based public policy research institute.
Distributed nationally by Scripps-Howard News Wire
The Budget Battle Endgame
Peter B. Sperry
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