The Naked Truth About The Budget
President Clinton and Republican leaders are locked in a bitter debate over whether the federal budget should be balanced in 10 years (Clinton) or seven years (the GOP). A political train wreck looms, commentators warn, when Congress reconvenes in September.</br></br>If this were a fable, a small boy would cry out about now that the emperors have no clothes. But this is Washington: Mum's the word as our political leaders parade by, clad in see-through promises of balancing budgets by dates certain, creating millions of new high-wage jobs and cutting middle-class taxes.</br></br>These things can be done, but not through the low-growth and fiscally timid policies the current crop of emperors pursue. They have been cowed into damage-control economics by their rapacious financial markets, their overstimulated electorates and the swift change in global trade and investment patterns. They stand naked and hope nobody notices.</br></br>But the U.S. debate over the pace of budget deficit reduction exposes a basic change in the international political economy. Even the once endlessly optimistic Americans have scaled down their own expectations about how much growth their economic policies can -- and should -- deliver.</br></br>They are prepared to settle for less because stock and bond markets have spooked the world's political leaders and central bankers into a collective inflation phobia.