Progress Report - Chapter 4


Making the Tough Choices

Never has the widely held dictum proved more true: "To govern is to choose." Under the budget law, for every program that the President and Congress want to increase, they will have to cut somewhere else.

Sometimes, the choices are almost irresistible. For years, federal subsidies for wool and mohair appeared on the "hit lists" of deficit-conscious lawmakers and private groups. Year after year, though, the program's supporters mustered the votes to save it.

The wool and mohair program, a relic of the National Wool Act of 1954, established incentives to wool producers after the military had run short of the wool it needed for uniforms in World War II and the Korean Conflict. More recently, the subsidies have cost taxpayers $200 million a year, prompting the New York Times to call this outdated program the "mohair toilet seat."[7] After NPR's call for its repeal, and through the persistence of Sen. Richard Bryan, D-Nevada, Congress voted in late 1993 to phase out the program by the end of 1995. The savings: $695 million by 1999.

For fiscal 1995, the President continued to dispense with old priorities. In his budget, which he sent Congress early this year, he proposed not only to cut more than 300 programs but to eliminate 115 of them. Meanwhile, the 1993 budget agreement extended the pay-as-you-go requirement of existing law. In essence, proposals to create a new entitlement program, [8] expand an existing one, or cut taxes must be offset by either cuts in other entitlements or tax increases. If changes in entitlements or taxes do not cover their costs, the law triggers an automatic, across-the-board cut in entitlement spending.

Combined with the annual caps on discretionary spending, the pay-as-you-go requirements will keep the total increases in federal spending below those of recent years. Compared to the period from 1981 to 1993, when total spending rose an annual average of 6.3 percent, total annual spending is expected to rise 4.6 percent from 1994 to 1999. Consequently, federal spending also will fall as a share of the economy (i.e., Gross Domestic Product)--from 23.1 percent from 1981-93 to just 21.6 percent from 1994-99.

Along with signing the budget agreement in August 1993, the President signed Executive Order 12857, establishing annual spending targets for entitlements through 1997 and mechanisms through which he and Congress can respond if those targets are breached. Also in August, the President signed Executive Order 12858 to ensure that the government applies the deficit savings from the 1993 budget agreement solely to reducing the deficit--not to more spending. It created a deficit reduction fund and ordered that the government credit it with amounts equal to the deficit savings.


Return to Table of Contents