WORLD

DRAWING A LINE

Clinton’s new budget sets the stage for a battle with the Republican-controlled Congress

CARL MOLLINS February 13 1995
WORLD

DRAWING A LINE

Clinton’s new budget sets the stage for a battle with the Republican-controlled Congress

CARL MOLLINS February 13 1995

DRAWING A LINE

WORLD

Clinton’s new budget sets the stage for a battle with the Republican-controlled Congress

Last summer, the U.S. Congress yielded to months of intense pressure from President Bill Clinton and enacted anticrime legislation that he lauded as “the toughest, largest, smartest federal attack on crime in the history of our country.” The measure outlawed 19 types of assault weapons, stiffened penalties for violent crimes and launched a six-year program to finance prevention programs, prisons and municipal police forces (communities have hired about 7,500 police with the federal grants so far). Last week, in a Congress now controlled by Republicans with different priorities than the Democrats they supplanted in the November election, the new majority began rewriting the funding measures in the Clinton crime law before tackling repeal of the assault-weapons ban in the spring. That attack on one key feature of the Democratic President’s financial policies reinforced signals that the annual federal budget Clinton prepared for delivery to Congress on Feb. 6 would be largely a dead letter.

Many details of Clinton’s tax and spending plans for the U.S. financial year that begins on Oct. 1 comply, at least in part, with Republican demands—middle-class tax relief, a diminished federal government and a shift of spending power to the states. Clinton, offsetting revenue losses from tax breaks with program cuts, also responds to the prevailing anti-deficit dogma by keeping the budget’s overall increase roughly in line with the U.S. economy’s growth (up about five per cent to $1.6 trillion in U.S. funds). He holds the excess of spending over revenue to under $200 billion (U.S.), down from a peak deficit of $290 billion four years earlier. He projects future cuts in the deficit. But overall, and in its fine printstanding fast with major social programs, proposing more funds for the anticrime program—the budget falls short of goals set in the revolution led by Newt Gingrich, Speaker of the House of Representatives, against what he derides as “a bureaucratic welfare state and a counterculture set of values.”

That seemed to set the stage for a congressional savaging of the Clinton program. Republican leaders propose multibillion-dollar cuts in federal outlays. It is true that annual budgets crafted in the White House never

REPORT FROM WASHINGTON

CARL MOLLINS

emerge unscathed from Congress, regardless of party alignments. Clinton discovered that two years ago when a Democrat majority wrecked his first budget’s attempt to kick-start a laggard economy with increased federal spending. Last week, Clinton served notice that he is ready to co-operate with the Gingrich Republicans on his budget: “I’m looking forward to working with Congress to see how we can do even better.” But then, in a separate announcement that defied Republican opposition, the President urged Congress to raise the hourly minimum wage for workers under federal jurisdiction in two annual stages from $4.25 to $5.15 ($7.25 in Canadian funds). Some Republicans, claiming that the minimum wage costs jobs and fuels inflation, want to abolish it altogether. As for an increase, said House Majority Leader Dick Armey of

leaders sought the necessary congressional approval. And when Clinton then set up the support for Mexico by executive action—with the compliance of Gingrich and Dole—several Republicans denounced the deal as an end run around Capitol Hill. Gingrich publicly rebuked them, commended Clinton, and declared: “I will tell you flatly I did not exactly see lots of members jumping up and down and eager to vote Yes [to the original loan guarantees package].” Other pre-budget statements seemed to leave little room for compromise between Clinton and Congress on domestic spending. Expenses at issue include such increasingly costly programs as federal Medicare, which serves some 37 million senior citizens and disabled people; Medicaid, a shared federal-state health plan for 32 million poor people and pregnant women; Social Security, the U.S. counterpart of Canada’s Old Age Security pension program. In Clinton’s annual state of the union address to Congress, two weeks before he presented his budget, the President drew the line. “My budget cuts a lot,” he said, “but it protects education, veterans, Social Security and Medicare, and I hope you will do the same thing.” Both Gingrich and Dole retorted in speeches last week that government health care, at least, is not immune to the austerity campaign in Congress. Gingrich said a task force should be assigned to “rethink Medicare from the ground up.” Said Dole, citing concerns about both Medicare and Medicaid: ‘What we need to do is focus on how to do more with less, thinking smaller and thinking smarter.” How to do more with less is the question at the heart of the debate in the United States—and throughout North America—over balancing demands to restrain government debt against the needs of citizens in their changing and dislocating economies. Even the wave of rookie House Republicans eager to cut government down to size are feeling the conflicting pressures. As House committees labored last week on their mission to outlaw budget deficits by the year 2002—a promise in the Republican election campaign’s “Contract with America”—freshman Sam Brownback remarked that his Kansas constituents are phoning to tell him: “Yes, we need to cut, but don’t cut my program.” State and municipal politicians face a similar squeeze. The 50 state governors divided at a Washington conference last week over proposals to free federal funding for several welfare programs from conditions set by Washington, lump the funds into block grants, and let each state decide how to use the money. Some governors expressed concern that such a scheme might prompt citizens to shop across state boundaries for the best deal, encouraging state legislatures to reduce services for fear of an in-

Texas, “I will oppose it with every fibre of my being.” Such rancor over money matters on Capitol Hill also infected U.S. efforts to help Mexico out of a more urgent financial crisis—and provoked open dispute within Republican ranks only four weeks into the initial session of the new Congress. Both Gingrich and Senate Majority Leader Robert Dole endorsed an original Clinton plan to co-sign massive bank loans to Mexico with guarantees backed by the U.S. public purse. The majority on Capitol Hill, in its penny-pinching mood, rebelled when their

flux of demands. Others said bundling programs into block grants might make them more vulnerable to austerity cuts by Congress, forcing state taxpayers to take up the slack— effectively shifting federal financial problems onto the states. Vermont’s Gov. Howard Dean, a Democrat who chaired the National Governors’ Association conference, calculated that success in the Republican drive to balance the federal budget would reduce services around the country by about 20 per cent. “When you talk to peo-

pie about what a 20-per-cent cut does to your schools, you would have a lot of angry parents demanding that the state spend more money,” he said. “When you talk about what it does to health care, or libraries, you’re going to have a lot of angry people who use those services demanding more money.” Members of the U.S. Conference of Mayors, who also met in Washington last week, are fearful in turn that burdens passed from Washington to the state governments may simply be bounced down to the municipalities—the front line in the struggle for schooling, health care and help for the needy. Critics of the money shuffle cite an example in New Jersey, where Republican Gov. Christine Todd Whitman has become a hero of her party because of tax-cutting, expense-pruning policies she has pursued since she took office 13 months ago. (Gingrich assigned Whitman, a potential U.S. vice-presidential candidate in 1996, to respond to Clinton’s state of the union address on national television.)

One result of her cuts in state taxes and spending, say Democrat opponents, is an increase in municipal property taxes to pay for local services. “American people are funny,” said Vermont’s Gov.

Dean. ‘They want more efficient government, but they also don’t want to lose the services they have.”

Gingrich’s answer to the conundrum

is to transform America. “The thing we have to do is literally replace the welfare state with an opportunity society,” he says. The first step is to reduce government, and people’s dependency on government, he adds in a standard speech. To accomplish that, “we don’t have to de-authorize programs. We simply have to not pay for them. Under our constitution, if the spending doesn’t originate in the House and the Senate, it cannot be spent.”

And Clinton has presented Gingrich and his Republicans with the means to that end. “The budget is the transformational document for this system,” says the House Speaker. ‘When you change the budget, you’ve really changed government. And until you change the budget, you’ve just talked about changing government.”

For the new budget’s author, there are other goals to keep in mind. As Clinton told Congress in his state of the union address: “I think we should all remember, and almost all

of us would agree, that government still has important responsibilities.” He urged the Congress to be mindful of “certain fundamental national needs”—from immunization against childhood disease to school lunches and medical care, safe water and safe highways. “Should we cut the deficit more? Well, of course, we should. But we can bring it down in a way that still protects our economic recovery and does not punish people who should not be punished and instead should be helped.”

Many American analysts, citing the formidable if not impossible task of reconciling the drive to reduce government with the persistent needs of society, have faulted Gingrich for pursuing simplistic flights of fancy in his revolution, Clinton for being too willing to please all sides. But in their debate over the budget, despite agreements on the need for reform, the lines of difference on how to go about it are already deep and clear. □