Guts Check

Republicans control the nation's purse for the first time in 40 years. Do they have the courage to roll back federal spending?

Carolyn Lochhead from the July 1995 issue

Fresh from the victories of their first 100 days as Congress's new majority, Republicans stand on the brink of an epic clash over federal spending whose outcome will set the nation's economic course for years to come, and determine whether GOP dominance is lasting or brief.

Republicans are resolved to balance the budget by 2002, the supreme vow that undergirds their aim to shrink government and restore the nation's fiscal integrity. But like Pickett's troops before their suicidal charge at Gettysburg, they find themselves facing daunting and possibly overwhelming odds. Not since 1931 has the budget been balanced with any consistency. Doing so would change the course of 20th-century government.

At Gettysburg, a handful of the southern troops who charged the Union fusillade survived to reach the enemy line, only to fall at the spot historians now call the high watermark of the Confederacy. Republicans today declare this to be their historic moment, and speak bravely of courage, boldness, and the nation's salvation for unborn generations. Yet still a sense of dread is evident among even the most enthusiastic GOP troops. They know that this summer's struggle could mark the high point of their own war against the immense forces that have spawned the modern state.

Like many Republicans on Capitol Hill, Sen. Bill Frist, the Tennessee heart surgeon who came from nowhere to defeat Democrat Jim Sasser last November, said he will fight to the death. "I've been in medicine for the last 20 years," says Frist, sitting in his Capitol Hill office one afternoon in March, "and I'm going to be here for six or 12 years and leave the Senate after that. I have a finite time in which to accomplish my mission...and suffer whatever ramifications there are from a political standpoint."

Republicans know that they must scale back or end scores of programs that are just as popular with their own allies as with their foes. Business subsidies have to be slashed along with Democratic favorites like welfare and public television. And as a cold matter of arithmetic, Republicans must take on the huge middle-class welfare programs called entitlements.

They also know that to mess with middle-class welfare is to violate the first principle of American political survival. The last time they tried it, in 1986, it cost them the Senate.

Entitlements are programs that automatically pay benefits to anyone who asks and qualifies. The scariest one for Republicans is Medicare, the health care program for the elderly. Second only to Social Security in the pantheon of sacred cows, it is careening wildly out of control, its "trust fund" going into the red next year. Medicare will be the decisive battlefield in this year's budget war.

"The real problem is that the public wants to have its cake and eat it too," says a top Republican Senate aide. "These programs exist for a reason. There are well-organized and identifiable groups that benefit. A lot of people are getting more than they're putting in, and the elderly especially are getting a nice deal."

The political landscape right now, he says, "is very uncertain. Nobody knows where it's going."

Half of all Americans now receive some form of entitlement, whether Social Security, Medicare, Medicaid, Aid to Families with Dependent Children, unemployment insurance, veterans benefits, federal pensions, food stamps, school lunches, the earned-income tax credit, farm subsidies, or disability payments.

Entitlements consume more than half of the $1.5-trillion budget. They are driving the chronic $200-billion deficits, which will double to $421 billion by 2005. The General Accounting Office, the Congressional Budget Office, the Office of Management and Budget, and the Bipartisan Commission on Entitlements and Tax Reform have all charted the budget's calamitous current course and urged quick action.

Interest on the debt, at $203 billion, is now the third-largest item in the budget, consuming nearly as much as all domestic programs combined. Interest payments will overtake the entire defense budget in just five years. By 2012, entitlements and interest on the debt will consume all federal tax revenue, leaving no money for anything else: no Head Start, no national parks, no highways, no courts, no Pentagon.

Already, government borrowing is absorbing fully half of all U.S. savings, draining the economy of investment in the future productive capacity vital to higher living standards. Gargantuan government borrowing is already depressing the economy.

When the baby boom, now in middle age, begins to retire in just 15 years, entitlement costs will explode and the nation will find itself in financial crisis. Entitlements must be contained, not just to balance the budget, but to prevent a ruinous decline in living standards and a crushing tax burden on future generations.

Republicans, not entirely by design, are making it their crusade to avert this calamity. The keystone pledge of the Contract with America was the constitutional amendment to balance the budget. Republicans hoped it would give them the political cover to begin controlling a Great Society run amok.