Fudget
THE United States is in danger of running out of money this weekend. No panic is expected, though, and it is thought that the population will be watching football on television, as usual. The 'debt ceiling', which limits the Administration's borrow- ing powers, is there to encourage all concerned to make their minds up. The Budget deadline has had the same effect. Rather than pretend that they could not pay the air traffic controllers — who, as the civil servants who would actually be mis- sed, were down as the first to be laid off— the President and Congress reached the makings of a deal. It is, of course, a Fudget. Even in its reduced form, says a friend in the money market, the Budget is an elephant which has sustained a slight chip on an interior molar. Besides, as our own experience shows, any programme of retrenchment which has to be projected over five years is a post-dated cheque with a built-in bounce. The new 'sin taxes' set a red-faced Congressman protesting that the beer-drinkers had not got us into this mess. The yacht-buying classes are hard hit, and the President has been denied his cut in the capital gains tax — but if nobody has any capital gains to buy yachts with, these questions will not arise. What matters about the Budget is the unstated deal that if Congress does not treat the bill as a Christmas tree, hanging presents for every- one on its branches, the President will sign it. That will give the cue to Alan Green- span at the Federal Reserve. In the abs- ence of a Budget, Mr Greenspan can scarcely be expected to relax his grip on interest rates. Now, though, the market has begun to look for cheaper money — relief for hard-pressed borrowers and for even harder-pressed lenders.
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