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

(Page 2 of 4)

But on March 2, when the amendment fell one vote short in the Senate, the GOP found itself out on a plank that had just been sawed off.

The amendment "would have brought the president to the table," said a rueful Pete Domenici, chairman of the Senate Budget Committee, just before the measure went down. "It would have brought many of the parties that are out there warring over their own money and their own programs to the table, because the will of the sovereign states and the people would say we can't continue what we're doing. That was the strength of it. Without that, it's going to be very, very difficult."

In the fight to pass the amendment, Republicans deeply committed themselves to balancing the budget without it. Any retreat now, they are convinced, would doom them. This is their moment, they contend. "There's a big risk in politics," says Rep. Bill Baker (R-Calif.). "The disaster awaits us if we don't take that risk."

But many fear that taking the plunge could doom them too. John Danforth, the retired Missouri Republican senator who co-chaired the entitlements commission, says tackling entitlements "could be political suicide. That's why they haven't been dealt with in the past."

The budget problem is fundamentally political. The government could continue to grow at 3 percent a year and still get to a balanced budget in seven years, because tax revenue climbs continually as the economy grows. The problem is that many programs are growing much faster than that. Medicare is expanding by more than 10 percent a year; it will cost $174 billion this year and balloon to $272 billion in five years. Along with Medicaid, the health program for the poor, Medicare is the root of the federal deficit and the chief obstacle to balancing the budget.

It also provides health care to 32 million elderly at bargain-basement prices. Current retirees are getting about $5.00 in benefits for every $1.00 they paid in payroll taxes, and the deal gets better every year. The Urban Institute's Eugene Steuerle estimates that the lifetime value of Medicare benefits for an average retiring couple will increase an astonishing $100,000 over the current decade: from $186,100 in 1990 to $278,600 by 2000.

The GOP is about to get a dose of bitter medicine, as the same health-industry groups that helped defeat President Clinton's government takeover of health care--a defeat that helped sweep the GOP to a landslide in November--now wage all-out war to prevent any federal retreat from health care.

The American Association of Retired Persons is already gunning for the GOP. Industry groups are preparing versions of "Harry and Louise" ads to attack Medicare and Medicaid changes. Even the GOP governors are working overtime to preserve their Medicaid money. Washington policy analysts are already wondering out loud if health care will turn out to be Bill Clinton's ticket to re-election after all.

"To make this big change in spending and taxing is going to be extremely difficult," says the GOP aide, "and I don't think even the members are all fully aware of how difficult it will be--although they are starting to get an idea--nor is the public aware."

The one big success Democrats scored in the GOP's first 100 days was to stop the Balanced Budget Amendment, and they did it by claiming the measure would "plunder" the Social Security "trust fund," blithely ignoring the fact that the so-called trust fund is being "plundered" now. The argument was completely disingenuous, but it worked.

Rolling back government is much easier in the abstract than in its specifics, not only for politicians, but also for the public. Politicians' hypocrisy often simply mirrors the public's. Republicans rightly decry the willingness of liberals to finance their compassion with other people's money. But conservative voters also prefer to cut other people's programs while saving theirs, like farmers who bank hundreds of thousands of dollars in crop subsidies while denouncing welfare mothers.

Sen. Richard Lugar, a Republican running for president, has demonstrated that political courage does exist, offering a plan to phase out the farm subsidies that go to his own Indiana constituents. But sitting right next to him as he testified to the Senate Budget Committee in February was North Dakota Democrat Kent Conrad, fresh from killing the Balanced Budget Amendment. Conrad had been arguing that Congress can balance the budget without an amendment, but that day he was busy insisting that farm subsidies have to be off the table.

Conrad has a big Republican friend over in the House, where Kansan Pat Roberts has been holding Agriculture Committee field hearings that seem designed to undermine Lugar. The witness lists read like a subsidy pep rally: Mr. Don Crane, Ford County Wheat Growers; Mr. Larry Kepley, Farm Credit System; Mr. Otis Molz, Farmland Industries; Mr. Larry Williams, Kansas Bankers Association; Mr. Rod Lenz, Colorado Potato Administrative Committee; Mr. Dave Carter, Rocky Mountain Farmers Union, and on and on in an endless parade indistinguishable from the ones former Democratic chairman Kika de la Garza used to run.

The spectacle that raged over the $16-billion package of spending cuts in this year's budget, known as rescissions, offered another telling portent. The cuts unleashed howls of protest from Democrats who portrayed each trim as a mean-spirited attack on the poor to pay for tax cuts for the rich. Yet they totalled a mere 1 percent of the $1.5-trillion federal budget.

California Republican Jerry Lewis, chairman of the House Appropriations subcommittee that came up with $9.5 billion of the House package, emerged from the exercise furious at his own colleagues. "There are significant chinks in our armor as we go to battle at serious budget time," Lewis warns. "Unless we are willing to regroup and rethink, then we are absolutely whistling in the proverbial wind."