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Pork-barrel spending offsets efforts to cut budget deficit

Even as Congress trims some programs to reduce the federal budget deficit, it is expanding others. Lawmakers acknowledge that savings achieved with great difficulty this year may soon be offset by added spending. In addition, buried in the House and Senate deficit reduction plans are special breaks to alleviate much of the burden for companies and industries fortunate enough to be represented by the handful of lawmakers negotiating the final compromises.

The new spending comes about because of old-fashioned pork-barrel projects, policy choices in favor of new or expanded programs and the deterioration of the economy, which is increasing demand for benefits like unemployment insurance and food stamps.

Whether any particular increase is good or bad is a political question with a subjective answer; what seems essential to one lawmaker or interest group may appear wasteful to others.

But it is indisputable that Congress has quietly enacted appropriation laws that increase spending, often in districts represented by influential lawmakers, while they publicly proclaim the need for deficit reduction.

"The federal debt is going from a quart to a gallon," said Gerald Miller, executive director of the National Association of State Budget Officers. "But Congress and the president are taking out only a cup."

Saving here, spending there

Sen. Dale Bumpers, D-Ark., said one subcommittee of the Appropriations Committee recently received 2,800 written requests for park, land and water projects from various senators.

"Those same senators then come in here with unctuous, pontificating statements about how, if we just freeze this or that, we could get the deficit under control," Bumpers said.

To cover the increases in spending, Congress plans to raise the debt limit. Under budget plans adopted by the House of Representatives and the Senate, the federal debt, which represents the accumulated total of all federal borrowing, would soar to $5-trillion in 1995, from the current $3.2-trillion. When President Reagan took office in 1981, the debt was slightly less than $1-trillion.

A little-noticed provision of the deficit-reduction bill passed by the House would raise the statutory limit on the public debt to $5-trillion. If the higher limit is part of the final bill, Congress could avoid the annual ritual of increasing the debt ceiling.

The ritual is politically embarrassing to lawmakers and occasionally brings the government to the brink of default. When Congress fails to extend the debt limit, the Treasury must postpone new borrowing, as it did last week.

There is virtually no way for the government to reduce the debt unless it runs a budget surplus. A budget deficit in one year must be covered by further borrowing, which increases the debt and adds to interest costs in future years.

Net interest payments on the federal debt were the fastest-growing major category of federal spending in the 1980s. The increase in such payments, from $52.5-billion in 1980 to $169-billion in 1989, exceeded all the savings Reagan achieved in health, education, welfare and social service programs.

Sen. Ernest Hollings said that the new deficit-reduction package "guts the Gramm-Rudman-Hollings law" by making it easier for Congress to avoid meeting the annual deficit targets in the law.

As originally passed, the law stipulated that the budget should be balanced in the fiscal year that began on Oct. 1. The deficit (how much more the government spends than it takes in each year) was $221-billion in 1986, hovered in the range of $150-billion to $155-billion in the next three years, but shot up again in the fiscal year just ended.

Sen. Frank Murkowski of Alaska, ranking Republican on the Veterans Affairs Committee, said he saw a "great inconsistency" in Congress' instincts: for example, cutting some veterans programs by $620-million a year while expanding others almost exactly the same amount.

Speaking of a new plan to make World War II veterans eligible for "readjustment counseling," Sen. Alan Simpson said, "It boggles the mind that veterans of World War II, the hideous war that ended 45 years ago, are still having trouble readjusting to civilian life after military service."

Sen. Pete Domenici, R-N.M., observed that "we all say, "Spend less,' but we have more ideas and we want more things." Here are a few examples:

The deficit-reduction measures passed by both houses of Congress would expand Medicaid to cover children from poor families longer, through age 12 under the House bill and age 18 in the Senate bill. Under current law, states must cover poor children through age 5. Pediatricians and public health experts applaud the expansion. But states pay, on the average, 44 percent of Medicaid costs, and the National Governors' Association expressed alarm at the cost of an expansion. The expansion would cost the federal government at least $400-million a year.

Under the House bill, the federal government would pay Medicare premiums for low-income elderly people, and the Senate bill would allow states to offer such protection with a combination of federal and state funds.

Congress has just approved an appropriation bill that permits $14.5-billion in highway spending this year. President Bush requested $12-billion.

Special tax breaks

Even within the plans that would raise taxes on many segments of society are special breaks for some. For example, thanks largely to the efforts of the Senate majority leader, George Mitchell of Maine, the UNUM Life Insurance Co. of Portland, the largest private employer in that city, may pay a fraction of the new tax being imposed on the rest of the industry, and other insurers must take up the slack. Cost to other insurers? About $1-billion over the next five years.

And while higher tobacco taxes proposed in both the House and Senate bills will increase the price of cigarettes eight cents a pack by 1993, the cigar industry in Florida won't feel as much of the bite if the House version prevails.

Makers of large cigars owe their break in the House bill, worth $100-million over five years, to Rep. Sam Gibbons, a Tampa Democrat and negotiator for the House Ways and Means Committee.

Taxes on wine would rise by 18 cents a bottle under the Senate bill and by 22 cents a bottle under the House version, but thanks to the efforts of Sen. Bob Packwood, the senior Republican on the Senate Finance Committee, wineries that produce less than 200,000 gallons a year will not be affected. All of the 80 wineries in Packwood's home state of Oregon happen to fall into that exempt category.

According to a senior Republican tax aide, all but 300 of the nation's 1,400 small- and medium-sized wineries also fall in that category. And since these wineries generally produce more expensive wines, this provision would exempt most of the high-priced wines in the country from the new levy.

Cost to the Treasury? Hundreds of millions of dollars over five years, the aide said.

These carefully crafted tax provisions may change, of course, in the give and take of last-minute bargaining. And other deals will almost certainly emerge.

But who wins and loses has a great deal to do with which players sit at the bargaining table.