Congress, President seek ways around annual budget battles

What to do about federal deficits? Raise taxes, say lawmakers. Reform the budget process, says President Reagan.

Frustrated by continuing criticism of the huge United States federal deficits, Mr. Reagan is lobbying the American people to support overhaul of the budget procedures. Specifically, he seeks a balanced-budget amendment and line-item veto authority.

The President refuses to negotiate with Congress over the 1988 budget. White House officials say such negotiations are futile because lawmakers do not stand by the compromises reached in ``budget summits,'' but end up sending the White House an omnibus spending bill containing items not agreed to.

As Reagan and Congress joust over the budget, there is hope that movement on procedural reform will open the way to substantive negotiations. But some of the proposed reforms, which Reagan has been pushing for years, are controversial.

One is a balanced-budget amendment to the Constitution, which many lawmakers also favor. It would be designed to force fiscal responsibility. But many economists are concerned that requiring a balanced budget regardless of the state of the economy would make it difficult to control fiscal policy and cause sharp swings of inflation and unemployment.

Robert Reischauer, a senior fellow at the Brookings Institution, suggests that such an amendment would be ``neither the horror that opponents think it is nor the salvation that advocates hope.'' While it could lead to slight instability, he says, this would not be of 1930s proportion.

``But it would not solve all the questions for advocates, because it would do nothing to reduce pressures of politicians to bring home the bacon,'' Dr. Reischauer adds.

If Congress could not respond to the enormous pressures of interest groups through direct spending programs, he says, it would do so through additional regulation of businesses, or by shifting tax policy, or by imposing mandates on state and local governments.

``These mechanisms are less efficient than and less visible than direct spending,'' says Reischauer.

The line-item veto, which would permit a president to veto any portion of an appropriations bill passed by Congress, is also contentious. Because it would increase the power of the presidency at the expense of Congress, which zealously guards its ``power of the purse,'' it is not expected to be adopted.

But Alice Rivlin, former director of the Congressional Budget Office, and other economists suggest the item veto would not have much impact on the deficit because the bulk of federal spending comprises defense spending, social security, and interest on the national debt - not areas where a veto would come into play.

So-called ``pork'' programs, which a president would want to chop out, are a decreasing proportion of the budget. Moreover, analysts say, a president would hesitate to eliminate projects that are popular with members of Congress, since he needs congressional support for his own programs.

There is an alternative to the line-item veto, however, that would not require changing the Constitution. Sen. Pete Domenici (R) of New Mexico, ranking minority member of the Senate Budget Committee, is proposing a package that includes bolstering the president's ``rescission'' authority. It would permit a president to cancel (or rescind) individual budget items unless Congress votes otherwise by a set deadline.

However desirable some changes in the budget process would be - and Congress, too, is considering reforms (including a two-year budget cycle) - the fundamental problem on the deficit is seen to be political rather than procedural.

It is a matter of the President sitting down with lawmakers and making the hard choices necessary to break the budget impasse. For a President who does not want to raise taxes, pushing budget reform is the preferred alternative.