AFTER several false attempts at fiscal discipline during the Reagan-Bush era, the budget deal brokered by President Clinton last August finally imposed a hard freeze. Today Congress can't spend money on one item without taking it away from another.
Federal spending during the next five budget years will actually be lower relative to national income than under Presidents Reagan and Bush. Discretionary domestic spending is already at its lowest fraction of national income -- about 8 percent -- in 40 years, and dropping.
But the administration, despite its pride in the new fiscal rectitude, is finding life under the budget caps almost unbearable.
Item: President Clinton recently took his welfare reform proposal back to the drawing board for the second time. Lack of money to finance welfare-to-work transitions threatens to turn Mr. Clinton's careful reform package into a draconian two-years-and-you're-out formula.
Item: On May 18, Mr. Clinton enthusiastically signed legislation increasing money authorized for Head Start by $700 million dollars. But on Capitol Hill, key House and Senate Appropriations Committee members were predicting that Head Start spending might barely keep pace with inflation.
Item: Job training is the centerpiece of the Labor Department's efforts to help new entrants to the labor market and the long-term unemployed.
But Mr. Clinton's imaginative new "Re-employment Act" will only be partially funded.
This fiscal climate would fit if Mr. Clinton were bent on dismantling government programs, like his two predecessors. But this president wants to be an activist, "putting people first" with new initiatives on jobs, health, urban aid, environmental cleanup, more cops on the beat, more drug treatment, more child care and so on.
The budget stretch would also be easier if Mr. Clinton were cutting deeper into military spending. But his narrow governing coalition includes dozens of hawkish "defense Democrats," and the president is unwilling to accelerate defense cuts.
The unprecedented result: Mr. Clinton's own new program initiatives -- those enacted by Congress -- are being funded at something like 20 cents on the dollar.
The administration's 1995 budget cuts discretionary domestic spending by some $3.6 billion. These are real cuts, not cuts in inflation-adjusted dollars. Mr. Clinton proposes to terminate 106 government programs outright, and trim dozens of others.
With the money saved, Mr. Clinton hopes to finance his new "investment" initiatives. But here the administration runs into congressional turf resistance. When the president proposes to cut, say, agriculture funding to increase spending on job training, health and education, this has the side effect of altering the relative sway of key Appropriations subcommittee chairmen.
And the problem is not just turf. Some of Mr. Clinton's closest allies on Capitol Hill, such as Rep. Dave Obey, D-Wis., the new House Appropriations Committee chairman, fault the president for proposing more than can realistically be funded in the current fiscal climate.
There is also grousing among some liberal Democrats that the administration is proposing steep cuts in good programs -- clean water, soil conservation, even education and aid to the poor -- in order to put his own stamp on new initiatives in the very same areas.
Scarcity, of course, always magnifies such strains. And scarcity, not bad faith or turf battles, is the deeper dilemma.
If Mr. Clinton truly wants to be an activist president, remedying public ills in the fashion of LBJ or FDR, he has to change the perception that the public cupboard is bare. That means either challenging deficit-reduction fever and fighting for increased public borrowing; or pressing for new tax revenues; or cutting military spending at a faster rate.
If the president won't pursue any of those options, he risks increased conflicts with his allies, ending in what Jeff Faux of the Economic Policy Institute calls a "pilot program presidency" -- lots of great initiatives with only token funding.
While the president and his congressional allies squabble over marginal trims and meager innovations, the deficit sharks of both parties are demanding deeper cuts.
In the wings is the "A to Z" plan, promoted by Reps. Robert Andrews, a New Jersey Democrat, and William Zeliff, Republican of New Hampshire (A to Z -- get it?). A to Z would suspend the usual budget rules -- no hearings, no public comment, no analysis -- and schedule 56 hours of floor debate. The entire federal budget from A to Z would simply be up for grabs and any member could propose a cut in any program and get an immediate up-or-down vote.
This so appalled Mr. Obey that he offered his own bill, the "Anti-hypocrisy Deficit Reduction Act of 1994," also providing for 56 hours of debate, but limited to proposals by members to cut spending in their own districts. He has few takers.
A to Z is only a sideshow, but the fiscal stalemate is real. The deeper problem here is a new form of gridlock that is reducing serious administration initiatives to mere tokens -- and once again deferring solutions to our real national ills.
Robert Kuttner writes a column on economic matters.