Washington: Congressional Fodder

Unlike Ronald Reagan, George Bush sought the presidency to serve, not to do. As the campaign made painfully clear, the new president has no program as such. He hopes to solve a few disjointed problems, not reshape the role of government in American life.

Unfortunately, the Democrats, who tightened their grip on Capitol Hill last November, do have an agenda, one of expanding federal power virtually across the board. "There is now at least 10 years of pent-up demand in Congress for an array of new spending initiatives," observes David Smick, a Washington consultant. Given the White House's lack of an ideological rudder, the Democrats are likely to set the nation's political agenda. Among the battleground issues will be:

Taxes. Bush endorsed a "flexible freeze" to balance the budget by the early 1990s; he made opposition to a tax hike the cornerstone of his candidacy. Personal honor may be enough to stop him from proposing a tax hike, but whether "read my lips" George will stand firm is not so clear. Perhaps prompted by the National Economic Commission, Congress may propose a budget deal that combines spending cuts and tax hikes. The betting is that Bush will stick by his pledge, at least during his first year, and the Democrats will refuse to consider a tax increase unless the administration simultaneously backs it.

Savings & Loans. The New Deal thrift structure is crumbling, with some 500 institutions sliding toward the financial abyss. Even though the crisis has resulted from years of stultifying regulation compounded by a federal deposit insurance system that protected S&Ls no matter the riskiness of their loans, Congress is likely to further isolate thrifts from market forces. Rep. Henry Gonzalez (D–Tex.), the new chairman of the House Banking Committee, proposes that Treasury provide the Federal Savings and Loan Insurance Corp. with a $50-billion line of credit to guarantee depositors' money, and the cost may go higher. Moreover, Democrats are pressing for increased regulation of S&L lending practices as the price of a bailout.

Banking Deregulation. Last session, legislation to remove Depression-era restrictions on commercial banks was killed in the crossfire between warring committee chairmen and interest groups. Progress is no more likely this year, given the ferocity of opposition from the securities and insurance industries and the turnover in congressional leadership. (Sen. William Proxmire retired and Rep. Fernand St Germain was defeated, opening up the chairmanships of the banking committees in both houses. But neither new chairman seems enthusiastic about unchaining the banks; both will also need time to consolidate their authority.)

Minimum Wage. Only a Republican filibuster last fall killed Senate legislation to hike the minimum wage from $3.35 to $4.55 an hour. Though the Reagan administration failed to create a subminimum wage for teens, it did succeed in holding the minimum constant, ameliorating the law's job-destroying effects. An increase seems inevitable this year, however, since candidate Bush endorsed a hike in an effort to woo labor votes. Congressional Republicans will not fall on their swords now that their leader has surrendered.

Child Care. All semblance of the quaint notion that children are a family, not a government, responsibility is disappearing. Senate Democrats propose $2.5 billion in day-care subsidies—accompanied by expansive federal regulation. Bush responded during the campaign by advancing a hefty tax credit. The prime question this year is not whether Congress will pass a child care bill but whether the Bush administration has sufficient backbone to stand up to congressional restrictions on private providers.

Parental Leave. Employee benefits traditionally have been left to labor-management bargaining, but Hill Democrats are pushing legislation to force private firms to grant parents 10 weeks of unpaid leave. During the campaign, Bush spoke favorably about the concept without offering specifics. Though business remains adamantly opposed to this provision, which was filibustered to death last fall, administration support makes passage of some measure likely.

Campaign Finance Reform. Public financing of congressional elections has been a particular favorite of Democratic legislatures; numerous bills have been introduced to limit or eliminate private contributions and expenditures, especially money from political action committees (PACs) and the so-called soft money collected and spent by state parties. During the last session a sustained Republican filibuster killed changes in the law, but the 1988 election dampened GOP enthusiasm for PACs: most of them supported incumbents, no matter how liberal or antibusiness. So expect legislation this year to restrict PAC contributions, though Bush has expressed no opinion on the issue.

Education. George Bush has said that he wants to be the "education president." What could it mean but more federal spending? Congress will be only too happy to comply. Ronald Reagan pledged to dismantle the Department of Education; its outlays actually jumped from $13.1 billion to $18.8 billion during his tenure. The only thing that will prevent outlays from rising faster under Bush, who has already endorsed $500 million for schools with disadvantaged students and an extra $50 million for experimental research, is the pressure to reduce the deficit.

Environmental Regulation. The Clean Air Act is up for reauthorization—business lobbyists narrowly averted passage of a more burdensome regulatory regime last year—and bills have been introduced in both chambers to limit smokestack effluents (to control acid rain) and to tighten auto emission standards (to reduce urban pollution). Environmentalists also want Congress to restrict leasing in federal coastal areas, adopt mandatory controls over chlorofluorocarbons to protect the ozone layer, and limit the use of fossil fuels to slow the much-ballyhooed "greenhouse effect." Market-oriented strategies could provide better protection at less cost, but Bush demonstrates neither the interest nor the will to divert Congress from the traditional regulatory approach.

Takeovers. While Bush has defended the freedom of shareholders to sell their stock to consenting adults, many Democrats on Capitol Hill are anxious to limit mergers, especially hostile takeovers, either through direct restrictions or changes in the tax law. Proxmire's retirement gets rid of one enthusiastic supporter of more federal controls, but the recent spate of well-publicized leveraged buyouts has bolstered efforts, previously endorsed by such corporate pillars as the Business Roundtable, to "do something." Only administration opposition—and Congress's need to concentrate on such issues as the S&L crisis—may stymie new legislation.

Miscellaneous Meddling. Republicans are inclined to intervene in private affairs, just on a smaller scale than the Democrats. As a result, the president and Congress are likely to spend most of this year debating how much to spend reshaping society, not whether to do so. Bush, for instance, has proposed allowing uninsured Americans to "buy into" Medicaid at a cost of $400 million in 1989 and an extra $200 million a year through 1992. However, independent analysts calculate that the expense of covering even the 5 million children now in poverty would run $2.5 billion annually. Bush wants taxpayers to throw $100 million behind a new program to promote volunteerism, Youth Engaged in Service. But his proposal could be easily hijacked by Democrats who want a much larger, and more expensive, program of national service for all youth. Bush has also urged "full funding" of the McKinney Act, which would cost an extra $300 million, to provide federal services for the homeless, even though the problem is a local one.

Moreover, the president is committed to pressing for more military spending and may be willing to trade extra butter for additional guns. Other issues on Congress's agenda that seem likely to be debated if not passed this year include further restrictions on trade, federal provision of long-term health coverage, reregulation of the airlines, multi-billion-dollar modernization of the government's nuclear weapons production facilities, new sanctions on South Africa, and escalation of the drug war, including finding an extra $2.3 billion to pay for programs authorized late last year.

Market-Oriented Initiatives. If Bush acts on his campaign promises, he will confront Congress with a handful of sensible proposals—a "college savings bond" that would defer interest on money saved to pay for college and stepped-up use of vouchers to help provide low-income housing, for example. Neither initiative seems likely to get far in Congress, however; the Democrats took years to authorize even limited tenant management and ownership of public housing units. Bush also wants to cut the capital gains tax, but Democratic demagogues are certain to trounce the issue. And on this and other issues, Senate Minority Leader Robert Dole could prove an even greater stumbling block, since he lacks any ideological commitment to Bush's program and personally dislikes the man who defeated him in the Republican primaries.

Despite the voters' superficial affirmation of the "Reagan Revolution" in November, President Bush will not be leading a blitzkrieg against the welfare state; instead, 1989 will be a year of trench warfare between liberal Democratic ideologues on Capitol Hill and moderate Republican pragmatists in the White House. Whoever wins the battles, the American people will end up losing ground.

Contributing Editor Doug Bandow is a syndicated columnist and a senior fellow at the Cato Institute.