Congress May Need Debt Counseling
Saint Paul Pioneer Press
Tuesday, May 15, 2001
Tom Web (Washington Correspondent)

Analysts say lawmakers ignore good money-management rules.

If you ran your household budget like Congress runs the nation's budget, you could be headed for trouble, with a capital T.

This week, Congress passed a budget blueprint that cuts taxes and details Republican priorities. But to pass it, lawmakers ignored some tried-and-true rules of good money management --- principles that credit counselors use to help consumers overcome their money problems.

Solving a family's money problems requires work, credit counselors say, but it can be successful if consumers are honest about their spending, focus on the long-term future, plan for the emergencies, understand their emotions and quit blaming bad habits on others.

Congress isn't exactly famous for embracing those principles, but independent budget experts say this year's Republican Congress is especially willful about ignoring them.

"This is an agreement that doesn't seem to be based on economic reality in any way, shape or form, and is almost certainly going to come back and haunt people," said Stanley Collender, budget analyst for the communications firm Fleischman-Hillard.

Here are some principles of debt counseling and how nonpartisan budget analyst think Congress measures up:

Budget principle: Be honest about your spending. "The biggest mistake people make is putting together a budget that's based on a wish list," said Nancy Ness Judy, a spokeswoman for a nonprofit financial consulting firm. "People sit down and say "OK, I'm going to spend this much on housing," and then at the end of the month, the numbers don't add up. The people who get it right are realistic from the beginning."

By that gauge, how realistic is the budget blueprint favored by President Bush and the Republican Congress?

"The budget resolution has got more fudge in it than a Godiva box," said Robert Bixby with the nonpartisan Concord Coalition, a national group that pushes fiscal discipline. "My problem with the spending numbers is a lot of things are going to happen that aren't in the budget resolution." For instance, Bixby says, Congress is sure to boost military spending, but that's not included. The president wants a missile defense system, but that cost isn't included, either. Nor are private accounts for social security, a new round of business tax cuts or the full cost of a prescription-drug plan for the elderly.

BUDGET PRINCIPLES: Focus on the long term.
Collender, a budget analyst, believes Congress is making a huge mistake on his front by using flimsy, short-term estimates to finance a long-term tax cut.

"Even if your going to cut taxes, why are you basing it on a 10-year forecast that you know is absolutely inaccurate?" he asked.

The result, he said, is "you are very likely throwing the government back into deficit, virtually eliminating all of the on budget, non-Social Security surplus."

BUDGET PRINCIPLES: Deal with the person, not just the numbers.
Tiff Worley, founder of Auriton Solutions, a debt counseling firm based in Roseville, has built a business by first focusing on the person, not just the numbers. His clients come in feeling stressed, overwhelmed, powerless.

"They feel there is no hope for their situation, and the very first thing that has to happen is they have to feel like they're in control of the situation," Worley said. So he focuses on treating his clients well, talking through their money worries, offering reassurance and guidance - all before hauling out the calculator.

Congress is much different, but honest debate and personal relationships do matter there, too. Yet those were utterly ignored in the rush to enact a tax cut, said Rep. Betty McCollum, a freshman Democrat from North St. Paul.

"I did not expect it to be so partisan," said McCollum, one of the many Democrats who fumed about the process as well as the spending priorities. "Not being able to feel that you have a role to play in participating is particularly concerning me. There has been no reaching out across the aisle to include the voice of the minority."

That has brought unusually harsh statements from Democrats. Rep. Martian Sabo, D-Minneapolis, blasted as a "sham" the "unrealistic, fiscally irresponsible Republican budget."

Republicans vigorously disagree. They see their 11-year, $1.35 billion tax cut as a monument to responsibility, by empowering Americans to make their own financial choices, weaning government from overspending and invigorating the nation's economy for the long haul.

Either way, Congress loves the idea of credit counseling - for other people. This spring, lawmakers voted overwhelmingly to require credit counseling before people could file for bankruptcy. It hasn't taken that advice for itself.

But, if Congress were to seek advice, what might credit counselors say?

"Everyone could benefit from tracking their spending, whether they're in business, on Capital Hill or in individual life," replied Judy, who worked for Sen. David Durengerger before joining a counseling firm. "Being honest with their business partner or their life partner is going to make them more successful."

partial excerpt St. Paul Pioneer Press