Reagan's Big Win

By Ed Magnuson

The President's prestige soars with a triumphant budget vote

Ronald Reagan's velvet steamroller smashed through the Democratic House of Representatives last week, flattening opposition to his radical plan to curtail federal spending. As a result, his even more controversial tax-cut proposals stand a good chance of gaining final congressional approval this summer. The President's victory in the House budget fight was decisive: not a single Republican deserted his party, while 63 Democrats abandoned theirs. That gave Reagan a 77-vote margin in the 253-176 roll call, on which a Reagan-endorsed budget proposal replaced a more moderate cutback recommended by the House Budget Committee.

It was the President's first significant political triumph since he took office, and it stemmed largely from the emotional groundswell of admiration generated by his cool and courageous conduct after the assassination attempt. Reagan, however, cited grass-roots pressure from the voters as the key to his success. Said he: "For years the American people have been asking that the Federal Government put its house in order. Today the people have been heard."

Implicit in the President's reaction to the budget vote was a threat to enlist that same kind of constituent pressure on lawmakers who fail to follow through on the rest of his economic package. Predicted Reagan: "When the people speak, Washington will now listen--and will act." Legislative strategists for the White House made little effort to conceal their optimistic belief that Reagan's popularity, coupled with his bold program, may even have forged a new coalition of Republicans and conservative Democrats that will give the G.O.P. practical control of the House, despite the Democrats present 51-member majority. With Republicans firmly in control of the Senate, the new combination could accelerate a historic shift toward conservatism in the nation's capital.

To be sure, those sweeping expectatations could fade as committees in both houses tackle the nitty-gritty details. In the past, intense lobbying by special interests has nibbled away at any cohesive economic planning. Beyond that, there is some question as to whether the President had won on the budget largely through his own effective lobbying and prestige, or whether the Democrats, particularly House Speaker Tip O'Neill, had fumbled away all chances for a much closer vote. Indeed, while the margin of victory was psychologically and politically devastating for the Democrats, it was partly illusory. If the last-minute head counts had been closer, an unspecified number of restive Democrats had pledged to stay with their party. When they realized that their votes actually would make no real difference, they jumped to Reagan's side.

The President had courted the Democrats shrewdly. He invited 60 Democratic Congressmen to the White House in groups of five to eight, applied his genial soft sell for up to an hour, then gave each Representative a little blue box bearing his signature on the outside and a pair of presidential cuff links on the inside. The cuff links, which cost about $4.40 a pair, were bought by the Republican National Committee. Many of the legislators emerged from the Oval Office wearing big smiles. Presidential aides also applied pressure through influential constituents in the home districts of wavering Democrats.

On Capitol Hill, Speaker O'Neill described Reagan's salesmanship extravagantly: "There is no question that this is the greatest lobbying in the history of the country." O'Neill was blowing smoke, trying to obscure his own failure to hold his party together. Ten days before the vote, the old pro had blundered by predicting a Democratic defeat: "I know when to fight and when not to fight." That admission undermined House Budget Committee Chairman James Jones, who had put together a package designed to please conservative Democrats as well as appeal to moderate Republicans. It protected some social programs supported by urban Republicans as well as by most Democrats, and called for smaller tax cuts and a smaller budget deficit than Reagan's own proposal -- features long advocated by conservatives in both parties. At the time, Jones figured that he had a good chance to win about eleven Republicans to his package and hold the Democratic defectors to 35. That, by Jones' reckoning, would have produced a Democratic victory by as many as five votes.

O'Neill tried to recover lost stature within his party by rounding up Democratic votes for Jones' budget resolution. But he undercut those efforts by continuing to predict that the Democratic fight was hopeless. A party leader traditionally makes rosy forecasts of a close battle even when he knows the outlook is bleak. O'Neill, however, made another public admission on the eve of the vote. "There's a feeling among the American people to give the President what he's asked for," he said. "Only the Lord himself could save this one." Dismayed at the Speaker's gloom, Wisconsin's liberal Democrat David Obey quipped: "I think I'll take my harmonica and play Our Only Friend Is Jesus."

The outnumbered Democrats in the Senate realistically had no hope of blocking Reagan's budget there. But Senate Minority Leader Robert Byrd further undercut his party's position in the House by announcing that even he planned to vote for the Reagan package. One Democratic leader in the House soon began getting calls from Republicans who had considered voting for the Jones bill. "We can't be hanging out there if your people are throwing in the towel," one of the Republicans complained. On the day before last week's vote, only one Republican, James Jeffords of Vermont, still leaned toward the Jones proposal.

Debate on the budget proposals opened in the House with Democrat Obey trying a classic parliamentary ploy. He offered a relatively liberal substitute to the Jones budget that would have kept most social programs intact. Obey's purpose was to give moderate Republicans and Democrats from conservative districts a proposal to vote against--after which they could in good conscience vote for the far tougher Jones budget. But Republican Jeffords ruined the maneuver. He announced that he liked the Obey package and would vote for it. Knowing that it would fail, he would then vote for the Reagan-endorsed substitute, a "bipartisan" proposal sponsored by Republican Delbert Latta of Ohio and conservative Democrat Phil Gramm of Texas.

Obey's proposal was crushed, 303-119. The next step was the vote to replace the Jones resolution with the Gramm-Latta substitute. Shortly before the roll call, O'Neill admitted that the outcome was clear. "I'm not trying to change any votes out there," he said with a shrug. As for the Republicans his party needed for any chance to win, O'Neill observed: "They're kind of running for the woods."

During the debate on Gramm-Latta, Republican Robert Michel of Illinois, the minority leader, argued that Reagan's budget was "a small step for Congress but a giant leap for the country." He placed it in a long-term perspective, declaring: "Let history show that we provided the margin of difference that changed the course of American government." O'Neill roused himself to deliver a stirring, if melancholy, defense of the social action programs he had helped shape during 28 years in Congress. "Do you want to meat-ax the programs that have made America great?" he asked. "You close the door on America in the Latta bill." Referring to Reagan's claim that his budget provided a "safety net" for the needy, O'Neill scoffed: "A safety net? It is a trap, not a safety net."

As O'Neill well knew, his plea was much too late: the roll call, when it finally came, contained no suspense. The Senate is expected to pass a similar Reagan budget this week with even greater ease. Responding to the new frugal mood, the Senate last week reversed an earlier vote and approved a $7.9 billion reduction in cost of living increases for retired federal employees and Social Security recipients in fiscal 1982. After the two budgets have been passed, minor differences between the resolutions will have to be resolved in a conference committee. And then, unless the whole budget process later goes off its planned track, a radical reversal of federal economic policy will be enacted into law.

As passed by the House, the Gramm-Latta budget slashes $50.5 billion from the $739.3 billion that the Carter Administration had proposed spending in fiscal 1982. The cuts include some $8.8 billion in education funds, $13.8 billion in var ious welfare programs, $7.7 billion in energy projects and $1.8 billion in transportation supports. It raises military outlays by $4.4 billion (to $188.8 billion, or 27.4% of the budget). Gramm-Latta includes a three-year individual income tax cut program that would cost the Government $51.3 billion in lost revenue in fiscal 1982. The overall result would be a 1982 deficit projected at $31 billion (this year's deficit is now estimated at $54.9 billion).

Reagan's big win gives him a strong chance to prevail in the two major un certainties still facing his economic pack age: 1) Will Congress stay within the dollar limits of the budget resolution it is now adopting? 2) Will it give the President the kind of tax program on which the budget is based? The first question should theoretically be answered in the President's favor through the "reconciliation" process. Under this, the budget committees in each house are empowered to insert cuts into any committee bill that exceeds the spending limits set out in the budget resolution and include them in a final spending package for floor approval.

The tax uncertainties are greater. The official White House stance has long been that it will not compromise on the so-called Kemp-Roth plan: a threeyear, 10%-a-year cut in individual income tax rates; some retreat, however, had seemed almost inevitable. Now, the size of Reagan's budget win has given the President and his advisers even more reason to hold firm in the real hope of getting just what they want. In all likelihood, any initiative to ward a compromise will have to come from the demoralized Democrats. Asked about that, a smiling Reagan told one Democrat last week: "We're here and willing to listen." One small modification being talked about on Capitol Hill was to seek Reagan's agreement on reducing the 10%-a-year cut to 8%. In return, the Democrats may be willing to slash the marginal tax rate on unearned income (interest and dividends) from its current 70% to 50%, a move that would spur savings and investment far more than would Kemp-Roth alone.

"There will be tougher votes down the road," predicted Republican Michel as he argued for Reagan's budget. In deed there may be, as final program cuts and tax proposals are decided. But, noted a happy White House strategist about the sentiment in Congress: "It's still moving our way." After last week's historic vote, that was an under statement.

-- By Ed Magnuson.

Reported by Laurence I. Barrett and Neil MacNeil/ Washington

With reporting by Laurence I. Barrett, Neil MacNeil

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