Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, August 25, 1994                   TAG: 9408260010
SECTION: EDITORIAL                    PAGE: A-12   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

FEDERAL FUND

The provision of a rainy-day fund helped win Financial World magazine's citation of Virginia, for two years running on Wilder's watch, as the best fiscally managed state in the nation. Wilder cites this citation from time to time, especially now that he is running as an independent for the U.S. Senate.

And now, says Wilder, the federal government should have a rainy-day fund, too.

Say what? It's understandable that, during the campaign, Wilder would want to point back to his fiscal record while pitching proposals for a more responsible federal budget. But would the federal government know a financial crisis when it has one?

Most states, Virginia included, are constitutionally required to maintain a balanced budget. When, say, unexpected shifts in the economy cause revenue collections to fall short of projections, states can legitimately declare an emergency. Rainy-day reserves, built up by a mandated set-aside of revenues, are designed to help survive a temporary shortfall without having to cut spending or raise taxes to avoid a deficit. But avoid a deficit the states must.

The federal government suffers no such constitutional annoyance - and obviously feels no obligation to produce a balanced budget. Deficit spending has become standard operating procedure.

True, with President Clinton's budget-reduction efforts last year, the deficit has dropped a tad this year, and is expected to drop more next year. But it's still in the $200 billion range, and projected to be back up to more than $300 billion in 10 years.

Until Congress begins to see that as a financial crisis, it's hard to imagine that it would take Wilder's proposal for a rainy-day fund - a surplus! - very seriously.

Wilder, in a position paper released today, also supports a balanced-budget amendment, which would seem consistent with his rainy-day proposal. But he fails to note that nothing stops the president and Congress from balancing the budget now, if they want to.

They don't want to, in part, because wasteful subsidies and tax breaks are fiercely protected by special interests that line politicians' campaign coffers. But they also don't want to because most federal dollars go to programs that most Americans want: middle-class entitlements and defense.

Wilder's proposals, like many others about the deficit, are less than serious because they ignore the fact that the deficit expresses, in important ways, the public's conflicted will.

Keywords:
POLITICS