Reform the budget process

THERE have been rumblings of late in Washington about reforming the budget process. Oh? the casual observer may ask. You mean there's a process behind the fiscal Niagara that pours federal dollars out across the countryside?

Well, yes, there is - a tremendously time-consuming process involving countless committees on both sides of Capitol Hill. The real budget issue for Washington to face is the deficit, which was not caused by the budget process, and will not be resolved by budget-process reform. But developing a more time- and energy-efficient way of setting the budget is still a good idea.

A two-year cycle, which the Reagan administration is likely to propose to Congress, would give a greater continuity to certain programs and would save time, even if it didn't make the tough choices required any easier. There is, however, something to be said for making lawmakers make spending decisions annually.

Streamlining the budget's path through congressional committees would be another useful step. As it is, both authorization and appropriations committees review budget proposals; the difference between these two kinds of committees has pretty much disappeared.

And the government could probably get along just fine with fewer line items in the federal budget. The much-discussed ``line-item veto,'' however, for all the President's enthusiasm for it, would not really affect the budget process much, since there are other presidential means of doing more or less what the line-item veto would do. In any case, President Reagan is unlikely to get such authority from the Democratic Congress.

A more problematic proposal much mentioned is establishment of a separate ``capital budget.'' The idea is that the budget system should distinguish between long-term ``investments'' - in aircraft carriers, for instance - and ``current consumption'' items - such as that on government employee salaries or welfare benefits.

Advocates of this approach have often further suggested that it makes sense to borrow for these ``investments.''

But any householder weighing whether a particular domestic expenditure is enough of a long-term investment to justify going into debt can see how it would be hard for the government to distinguish between the two groups. After all, isn't government aid to schools an ``investment'' in the future, in human capital? Isn't that worth going to the capital markets to borrow for? In fact, the federal government, as a borrower, is such a major player in the financial markets that it's not clear it would be a good idea to make borrowing decisions on this basis anyway.

Moreover, a capital budget could also be used to disguise the size of the deficit.

Which brings us back to where we came in. Yes, keeping after budget process reform - and following through - is a good idea. But no, it won't solve the basic problem of a nation that wants more government than it is willing to pay for.