The following discussion of our country's budget crisis was taken from a Reader's Digest Feb. 91 issue. It was written by Fred Barnes. It is to be taken very seriously...

Dirty Secrets Behind the Budget Mess.

During last year's budget crisis, Rep. Harris Fawell (R.,Ill.) had a helpful idea. Why not slash unnecessary spending Congress had planned for itself? On the floor of the House, Fawell proposed an amendment cutting $375000 for renovations to the House beauty parlor and $25000 for a study on a proposed gym for House staffers.

Fawell was shouted down and labeled a sexist for targeting the unprofitable, taxpayer-subsidized beauty parlor. House Democratic leaders arranged a non-recorded vote so no one could be blamed for killing the amendment.

In a federal budget of nearly $1.4 trillion, the money saved by Fawell's modest proposal would have been insignificant. But the episode reflects an enduring truth: despite pious talk, Congress continues to spend taxpayer's money at a furious clip, and the executive branch usually goes along willingly. What's more, they go to extraordinary lengths to deny it.

When the five-year "deficit reduction" agreement was reached last fall, officials claimed $42 billion in savings. That's a sham!!! What they didn't mention-and the press didn't report-is that actual spending will INCREASE by $111 billion, or $480 for every man, woman & child in the nation. Worse, the deficit, according to governments own official figures, will grow larger.

On the very day the deal to curb the deficit was forged, Congress voted to increase social-welfare spending this year by $22.6 billion, The five-year deal includes $136 billion in additional funds for non-defense discretionary programs. Mandatory outlays for Social Security and Medicare will rise more than $200 billion.

A culture of spending dominates our national capital. An "iron triangle" of the unelected-executive branch bureaucrats, Congressional committee staffers, special interest lobbyists-aggressively protects each program and pushes unrelentingly for more. Members of Congress believe spending helps them get re-elected. With few exceptions, agency heads appointed by the President regard greater outlays as a measure of their success.

In four years as Education Secretary, William Bennett learned this the hard way. At first he loyally defended President Reagan's proposed cuts. He found himself nearly alone among Cabinet members. Over the next two years, he was attacked by educators, reviled by his own bureaucrats and overruled by Congress. In 1987 Bennett rebelled and insisted on a boost in spending. "There was no political gain in ruthless cutting," a Bennett aide says. "You could be a reformer but not a cutter."

Official Washington has created a myth to justify higher spending in the 1990s. As Sen. Robert Byrd (D.,W.Va.) puts it, domestic discretionary spending is the "little runt pig" on the federal budget that has been on the cutting table for years. It hasn't. Domestic spending was trimmed in 1982, then grew rapidly during the next eight years. Outlays for many programs rose substantially, including education for the handicapped (50%), National Institute of Health (47%), National Science Foundation (36%), medical care for veterans (25%) and Environmental Protection Agency (22%).

The biggest problem on Capital Hill, says Rep. Dick Armey (R.,Texas), is "the committee mystique." Members from farming areas angle to get on the Agriculture Committee. Those from port cities join the Merchant Marine and Fisheries Committee. Those eager to keep military bases in their district hope to serve on the Armed Services Committee.

There's a tacit rule: to get what you want, you go along with what other committee members want. And it's taboo to challenge the programs of another committee. "You don't want them challenging yours," says Rep. Tim Penny (D., Minn.), a leader for deficit reduction.

Rep. Vin Weber (R., Minn.) a conservative who believes in spending reductions, was happy to leave the Budget Committee, which cuts, and join the Appropriations Committee, which spends. Weber had discovered Washington's dirty little secret: cutting is a political minus.

Chairmen of the appropriations subcommittees retaliate when they're crossed. After Fawell criticized nonessential spending in an "emergency" appropriations bill last year, extra funding for a project in his district was deleted. When Rep. Clay Shaw (R., Fla.) voted against the wishes of Rep. William Lehman (D., Fla.), a subcommittee chairman, Lehman scratched $1 million in funding for a tunnel in Shaw's district.

Budget watchdogs such as Penny and Rep. Bob Walker (R., Pa.) are treated like pariahs. "A large number of colleagues wouldn't come to dinner at my home," Penny says. An Appropriations Committee member once remarked of Walker: "The only cement that will ever be poured in Walker's district is that around his feet when we throw him in the river."

"in a corporation, everything is geared toward minimizing overhead," says Mark Everson, a Chicago manufacturer who was a top official in three Washington agencies from 1982 to 1988. "In government, almost nothing is." Like many others, Everson discovered another of Washington's dirty budget secrets. Instead of being rewarded, officials who make economy a top priority can count on being criticized by Congress, jumped on by lobbyists and undermined by bureaucrats in their own agencies.

When Charles Heatherly became head of the Small Business Administration (SBA) in 1986, the agency was facing $345 million in bad loans. Heatherly was hauled before a Congressional committee-but not for the bad loans. His transgression was trying to streamline the SBA by jettisoning failed programs. A phalanx on interest groups- the National Small Business Association, Small Business United and the American Association of Minority Enterprise Small Business Investment Companies-weighed in against him. To SBA bureaucrats, Heatherly was the enemy. "Not one of them came to me at SBA and said, 'We're with you on this. What can we do to help?'" Heatherly says.

Because the big spenders presented a united front and taxpayers made little noise, the SBA was kept alive and spared further budget cuts. "The iron triangle worked," says Heatherly.

Sometimes the triangle can be very clever. For fiscal year 1991, the Senate and House would have agreed to a smaller appropriation for the SBA. The Senate voted to give the agency $440 million; the House voted $438 million. But the Senate-House conference did not come up with a compromise figure you might expect, $439 million. Instead, it pegged SBA spending at $469.5 million.

This upward compromise is but one trick Washington employs to create the illusion of spending reduction. Here are seven others:

ARTIFICIAL BASE LINES

Imagine a company president who hopes for a $100000 pay increase. Instead he receives a $75000 hike, and then he claims a $25000 pay cut. Crazy? in Washington it's routine.

Rather than use this year's level of spending as the starting point for next year's budget, an artificial "base line" is created, the effect of which is automatic spending increases every year. Then, if proposed outlays are less than the base line, Washington claims a "cut"-even though spending actually rises.

That's what is happening now. The base-line budget for the current fiscal year originally called for spending to rise $130.8 billion. But because it will go up "only" $111 billion, Congress and the White House insist spending was cut by $19.8 billion. With a projected revenue increase of $22.2 billion, they claim a total "savings" of $42 billion.

OFF-BUDGET SPENDING

Last year, Congress "reduced the deficit" $2 billion by dropping the Postal Service subsidy from the official budget. The subsidy was still paid, only it was done off- budget. Off-budget programs include direct loans, loan guarantees, federal insurance and government enterprises.

Of course, real money is involved whether or not a program is formally in the budget. In 1989, loan defaults and write- offs were $14.4 billion and insurances losses $67.2 billion, all picked up by the taxpayer. The total liability of taxpayers for off-budget programs is almost $6 TRILLION, or $67000 for every U.S. household.

FAKE CEILINGS

With great fanfare and self-congratulation, legislators established spending ceilings. Then these limits were quietly ignored.

The original Gramm-Rudman deficit reduction law of 1985 called for gradually declining deficits. The first ceiling, for 1986, was topped by $49.3 billion. In 1987 the law was changed, and the deficit was supposed to have dwindled to $100 billion in 1990. It was $220 billion. Now Washington projects declining deficits in 1993 and 1994. Good Luck...!

UNDERESTIMATING

In 1983, Congress approved $8 billion to build a space station. By 1987 the price was $12 billion. Now it's $36 billion. Agriculture Department economists said the 1985 farm bill would cost $54 billion. A month later, after the bill was passed, the estimate was upped to $85 billion.

"There's a generic pattern ," says Congressional staffer Frank Gregorsky. "Once the legislation is passed, once the various clients are mobilized, once the bureaucracy is engaged, once the contractors start marking up-expenditures overshoot the promised levels." Spenders get their foot in the door by underestimating the costs of new programs.

"EMERGENCY" APPROPRIATIONS

In recent years, emergency appropriation bills have become vehicles for pork-barrel spending.

Last year President Bush asked for "dire emergency" appropriation to pay for flood relief in the South and aid to Panama. Congress tacked on another $1.4 billion-including $3 million for a convention center in Washington, D.C. $5.8 million for a Franklin Roosevelt memorial and $750000 toward a ferryboat for American Samoa.

TRANSFERS

A clever way to increase a discretionary program is to switch funds into it from an entitlement program, which has no ceiling and thus requires no new appropriation.

"A classic abuse of transfer authority," note budget experts John Cogan and Tim Muris, was the shift of food-stamps into the Agriculture Department's extension service. The Agriculture Stabilization and Conservation Service (ASCS) supposedly suffered a cut of $300 million in real spending between 1981 and 1989. Actually, funds were transferred from the Commodity Credit Corporation, which pays for farm price supports. ASCS spending actually ROSE by one third.

EARMARKING

Last year alone, Sen. Dale Bumpers (D., Ark.) says an appropriations committee got 2800 requests from other Senators to designate funds for projects in their home states. During the 1990 budget "crisis", Rep. Walker pointed out ten research projects that were sneaked into the Energy Department's budget and deserved cutting. One allocated $4.8 million to a technology center at Indiana State University in the district of Rep. John Myers (R., Ind.). Funds for it and the other projects Walker cited were overwhelmingly approved.

In Washington, D.C., where there are no farms, $1 million was appropriated for the Agriculture Extension Service. Also approved was $500000 to restore the boyhood home of bandleader Lawrence Welk in Strasburg, N.D. This expenditure was sought by Sen. Quentin Burdick (D., N.D.). It prompted Rep. Silvio Conte (R., Mass.) to say: "That is right-and a one, and a two, and a three, and a four, and a $500000. What will they do for an encore? Earmark funds to renovate Guy Lombardo's speedboat? Or restore Artie Shaw's wedding tuxedo?" Despite Conte's ridicule and criticism by President Bush, the Welk project was not killed.

Even the defense budget is used for earmarking. Tucked into the 1991 Pentagon budget was $5 million to build a new parliament building in the Solomon Islands and $10 million for a National Drug Intelligence Center that federal official wanted in Washington. Not surprisingly, the drug intelligence center will be located in the home state of Rep. John Murtha (D., Pa.), chairman of the House Appropriations defense subcommittee.

Political scientist James Payne, an expert on government spending, measured the ratio of those witnesses at Congressional hearings who testified for spending programs to those who testified against. His finding: pro-spenders outnumber opponents by 145 to one. Payne also found that roughly half the pro-spending witnesses are federal administrators and another ten percent are state and local officials. It's only human nature that they'd have kind words for their own programs and ask for more money.

When will the spending binge cease? Not until taxpayers rise up. THIS MEANS YOU!!! "Congress is going to go on spending until the public stops them," laments Walker. "Politicians respond to special-interest groups," says Penny. "They've been forgetting there's a general interest group-taxpayers." It's time for taxpayers to remind them.

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