US steers towards fiscal 'train wreck'

Believe it or not, Republicans will miss Bob Packwood: not of course the serial sexual harasser and falsifier of evidence who resigned in disgrace last week, but the dexterous senator whose legislative skills might have made the difference between success and failure in the looming budget showdown between the White House and Congress.

Barring changes of stance almost unthinkable in this season of presidential- election manoeuvring, the two ends of Pennsylvania Avenue are on course for a "train wreck" - failure to pass a 1995/96 budget by the appointed date of 30 September. The result will be at the least a partial shutdown of the federal government, at the very worst a default by the Treasury and chaos in international financial markets.

As Senate Finance Committee chairman, Mr Packwood would have been pivotal in the toughest autumn budgetary confrontation in years. His gifts of compromise might have hastened agreement on the 13 appropriations bills releasing money for spending in the new fiscal year starting next month and on the subsequent jumbo "reconciliation bill" which sets out the tax and spending cuts to achieve the Republican goal of a balanced budget by 2002.

Small wonder Bob Dole, the Senate Majority Leader, tried to secure a stay of execution permitting Mr Packwood to see the budget process through. But the Democrats refused. Last weekend he gave up his chairmanship, and will be replaced by William Roth of Delaware, a conservative far less suited to forging budget consensus, first between Republican moderates and hardliners, and with the White House thereafter.

The "train wreck" could come at each, or all, of three moments. The first, virtually guaranteed, is 1 October, when Congress will not have completed the appropriations bills to be sent for President Bill Clinton's signature. The second, almost equally sure, comes a fortnight or so later, when the bills have been sent to the White House, Mr Clinton has vetoed at least a few of them, and Congress has been unable to produce the two-thirds majority required to override.

At this point "non-essential" government services would be shut down, until temporary continuing resolutions are passed to keep them functioning. If deadlock persists, these will probably be forthcoming, given that, with the first presidential primaries just months off, neither Mr Clinton nor Mr Dole, the Republican front-runner, wants to be held responsible for a case-study in Washington gridlock.

But that alone will not avert possible fiscal Armageddon. To force Mr Clinton's hand, some Republican true believers want to combine the reconciliation bill with congressional authorisation of an increase in the federal debt ceiling, currently at $4,900bn (pounds 3,180bn). That ceiling will be hit in November. If neither side blinks, the government will be unable to borrow money to meet debt interest payments - in other words, it will default.

Few believe it will come to that. But who has the stronger hand is far from clear. In the early stages perhaps, the advantage lies with the Republicans; sooner or later Mr Clinton will have to sign spending bills for 1995/96. Thereafter, however, the balance may shift to the White House.

Without a reconciliation bill, the status quo will automatically be extended. Deep Republican cuts in welfare, Medicare and other federal programmes will not happen, nor will Republican tax-cuts. With polls showing the public more concerned about Medicare than tax-cuts, even ones specifically targeted at middle and lower-income earners, Mr Clinton may calculate his opponents will blink first.

Start your day with The Independent, sign up for daily news emails
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the iWatch for you? Well, it depends if you want for the fitness tech, or the style
Astronauts could be kept asleep for days or even weeks
scienceScientists are looking for a way to keep astronauts in a sleeplike state for days or weeks
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own