MISSOURI WATCH: WE'RE MISSING THE (ECONOMIC) POINT OF THE BUDGET

If I hear one more commentator or read one more column on whether the current budget battle in Washington works to the advantage of the Republican Congress or the Democratic president, I may consider hara-kiri. Since the bickering began last fall, Americans have been subjected to a long series of observations on who-wins and who-loses in the battle over the federal budget, which by now is more than three months late.

Far too often negotiations over how much Washington will spend, collect and tax are viewed as politics, which if memory serves is a word we used to use to identify political contests, not agencies of the federal government. Today we intermix government and political gamesmanship, so much so that the two have become interchangeable.

Unfortunately this comingling of the two has given us a government that has rapidly moved to a position of gridlock, freezing our government into locked positions from which neither side will retreat. This is not representative government, as envisioned by the Founding Fathers, but machinery that exists solely for the combatants.

The question has to be raised once more as to whether the drafters of our Constitution overdid the "check" in their check-and-balance principle, and shortchanged the "balance." When the legislative and executive branches engage in unremitting standoff even to the point of shutting down parts of the government, Americans need to ask what remedies are available. One that has been offered by our British cousins for centuries is the requirement that the executive head must be of the same party as the legislative branch.

Over recent years, many voters have preferred to have one party control the legislative branch and the other occupy the White House. We viewed this not from the problems it could cause but from a feeling that too much power should be divided, serving to protect the public from the arrogance of political winners. No doubt this part of the scenario is true, but it is also true the "solution" breeds gridlock faster than minks.

The issue that generated the current executive-legislative heat, the balancing of the federal budget by some fictitious year such as 2002, is itself little more than a sham. On the legislative side it's a cover for paring back some of the social-welfare programs that had their inception during the Johnson administration's "Great Society" era. It's also an excellent way to reduce taxes for your constituency, as witness the conglomeration of tax decreases for more affluent Americans and the ending of earned tax credits for the poor that materially added to the solvency of low-income households.

Even if the executive and legislative branches eventually reach a compact for budget-balancing in 2002, it will be scarcely more than political staging. Anyone with a sharp pencil can over-project income and underestimate spending, and make the two come out even. No one seems to have mentioned the fact that amid all this projecting from both quarters, there is little if anything beyond the immediate appropriation year that is binding. Neither this Congress nor this president can speak for those who will follow them in office.

There is no doubting the fact that some portions of the federal budget require revision. The Social Security formula must be adjusted actuarially to take into account our longer length of life. Medicare needs tighter cost control, both in payment rates and in the kinds of service that qualify. We also need to re-examine rates of pay for providers, particularly physicians who have long since given up their opposition to "socialized medicine." Medicaid has become the abused child of federal programs, with states tapping into its resources to provide relief for their own budget crunches. It is fair to say that had the states not abused the overly generous provisions of Medicaid, the system would have a far better reputation. Despite these horrendous outlays, the total federal deficit has been shrinking. It would have been possible to shrink it still further, through the administrative process.

In spite of all the current hubbub in Washington, there are a few of us who continue to believe that the federal budget is not the number one economic problem of our time. The trade deficit outranks it. Although the annual deficit in our foreign trade has narrowed somewhat, it still runs well above $100 billion annually. But this is not the entire story of the deficit's damage to our economy. The second portion is the huge damage that is being sustained in the U.S. industrial sector, where huge numbers of workers are being fired ("downsizing" sounds so much more civilized, doesn't it?) and other companies are approaching the time of complete shutdown.

The budget and trade deficits are different. For the most part, the budget deficit of government represents a transfer of wealth among our own citizens and is not a national loss. Only about 15 percent of our debt is owed abroad. A trade deficit, by contrast, transfers wealth to foreigners. The largest transfer in recent years has been to Japan. Our trade deficit with China keeps growing and may soon exceed Japan ' s .

Yet not even the huge trade deficit gets the number-one ranking among national economic problems. That unsought badge goes to the wild merger movement -- wilder last year than ever before and showing no sign of abating this year. I recently noted, and deplored, several of the events of the past 12 months, such as Chemical Bank's merger with Chase Manhattan in a $10 billion deal. Other buys or proposals are Time-Warner-Turner; Westinghouse-CBS; Wells Fargo-First Interstate; NationsBank-Bank South. KKR recently bid $4 billion for Aetna Insurance. Who wi ll buy U.S. Air? We can ask how much competition Microsoft will allow to survive. The other day, our state's largest industry, McDonnell-Douglas, talked about merging. More will come, some of it affecting the lives of Missourians.

Our economy is being reconstituted. It is moving ever more distant from the Adam Smith model of countless firms competing actively that was in the minds of the founders of our nation. We are reverting to Medieval mercantilism. The biggest surge to date came in the year just ended. Yet almost no one sounded an alarm. We were too busy watching the political games that pass for running the federal government.

~Jack Stapleton of Kennett is the editor of the Missouri News and Editorial Service.