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
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive or Senior Sales Executive - B2B Exhibitions

£18000 - £30000 per annum: Recruitment Genius: A Sales Executive or Senior Sal...

Recruitment Genius: Head of Support Services

£40000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Warehouse Team Leader

£22000 per annum: Recruitment Genius: This industry leading company produces h...

Recruitment Genius: Business Development Manager / Sales - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: This IT provider for the educat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future