"We're Unable to Act"

By Ed Magnuson

With deficits at unnerving levels, Congress stumbles to adjournment

The situation was distressingly familiar. The 98th Congress had dithered for months over its most basic responsibility: funding the vast operations of the Federal Government. Now it was in a frantic haste to adjourn. In a sudden spasm of activity, it fell all too short of meeting its self-imposed spending and revenue limits. Illinois Democrat Dan Rostenkowski, chairman of the House Ways and Means Committee, pronounced a scathing verdict on the legislators' performance. "As we leave Washington," he predicted, "word of our impotence will precede us. We have put special interests on notice that we can be pushed around. We have confessed to an already doubting nation that we are ruled by political fear, rather than economic courage." The self-criticism was both bipartisan and bicameral. Declared Missouri Republican Senator John Danforth: "We're in a catatonic state. We're immobile. We're unable to act."

The congressional malaise was most evident in the failure of the House to pass even a three-year tax increase of a mere $8 billion. It would have been a token move toward meeting a three-year goal, set by Congress itself last June, of raising $73 billion in new revenue. Even the larger target would have had limited impact on federal deficits that are running at around $200 billion a year. The $8 billion tax bill foundered partly because it would have placed restrictions on industrial bonds issued by states to finance major construction projects. This offended some special interests--construction contractors, building-trades unions and bond brokers--and they put the squeeze on Congress. When brought to the floor at the insistence of House Speaker Tip O'Neill, the bill could not even muster enough votes to set the rules for debating it.

The rejection of the tax measure symbolized the various failings of the Congress. Once again, the legislators had bowed meekly to lobbies unconcerned about the broader national interest. Ostensibly, O'Neill and the Democrats control the House by a margin of 268 to 167. But in the 214-to-204 vote against considering the tax bill, the Speaker's slipping leadership grip was evident: he found 65 Democrats voting against him. An even bigger factor in the loss was the partisanship of the Republican opposition. Fully 149 G.O.P. Representatives voted nay, only 13 aye. O'Neill's barbed protest was apt: "The next time I see Republican crocodile tears about the deficits, I will ask them where their party was today."

The fact is that on this issue most of the Republican Party was with its Republican President. Reagan's unyielding resistance to any tax increases at all this year and his refusal to join in the search for solutions to the deficit mess have contributed heavily to the inability of the legislative branch to act on basic economic issues. Admitted a presidential aide last week: "We cannot win in this game, either substantively or politically, so we choose not to play at this time." Declared a weary Republican Senator Robert Dole, chairman of the Senate Finance Committee: "There are two stumbling blocks. One, Ronald Reagan; the other, Tip O'Neill. Unless we have the two giants in this town on board, we're not going to put together a deficit-reduction package."

Dole's frustrations were evident when he asked his committee to approve his plan to decrease the deficit by about $150 billion over the next three years. It would do so partly by giving Reagan the authority to cut spending across the board by 2 1/2%, under the difficult condition that he get similar savings from changes in Social Security cost-of-living adjustments and the indexing of income tax brackets. But Dole's committee did not share his political courage. He discovered he did not have the votes to send his bill to the floor.

In its final flurry, Congress managed to give Reagan only a 4% increase in defense spending, but that still amounted to $250 billion--a record. It includes funds for every major weapons system sought by the Pentagon except for a new type of nerve gas. Congress also voted an additional $8.4 billion for the International Monetary Fund and $15.6 billion to subsidize housing for low income earners.

As the legislators rushed to catch airplanes, leaving a sea of red ink behind them, few could take pride in their year's work. "Increasingly, Congress has become the cowards' branch of Government," charged Columbia University Historian Henry Graff. "Members of Congress only reserve the right to criticize." That was a bit harsh, especially since Congress cannot really initiate a budget for the entire federal establishment. It can only take the Administration's spending and taxing proposals and, if it finds it does not like them, rearrange the ingredients. Certainly, there was plenty of reason to criticize Reagan's fiscal 1984 budget, which last January called for a 14% increase ($30 billion) in military spending, a $32 billion decrease in nondefense appropriations, and tax increases that would only go into effect at the end of 1985--by no coincidence, well after next year's elections--and only if certain unlikely conditions prevailed. That budget was so impractical, carrying a deficit of $189 billion, that the Administration could not find even a single Republican in Congress to introduce it.

Having agreed to disagree, however, Congress has been unable--or, to be more exact, unwilling--to get behind an alternative to the Reagan proposals. Its own budget resolution, passed last June after bitter partisanship and with no helpful guidance at all from the White House, was almost as unrealistic as that offered by Reagan. Congress decided to slice the Pentagon spending increase to 5%, while increasing nondefense spending by $20 billion and finding $12 billion in new revenue. The projected deficit under the congressional plan was at least $170 billion.

Ideally, congressional leaders and the President would then have tried to work out their differences. But Reagan turned spectator, preferring to look ahead to November 1984. "Let them keep their hands off the recovery," he said of any members of Congress who proposed tax increases to reduce the deficit. "Let them start doing what they were elected to do--get spending under control." He kept calling for spending cuts, but refused to say where they should be made. Reagan vowed to veto any tax increases, "no matter how they arrive," in the apparent belief that the economic recovery will knock down the deficit by itself.

Reagan's insistence on running against "the big spenders" in Congress despite the fact his party controls one of the two coequal houses, made it more difficult for congressional leaders of both parties to put partisanship aside in a search for solutions to the deficit dilemma. Perhaps a third of the 55 Republican Senators stand ideologically committed to Reagan's anti-tax-increase position, even while decrying the deficits. Moderate Republican Senators concede that there is not much chance of imposing more large slashes in social spending, and thus consider tax increases necessary. But they hesitate to oppose a Republican President, both out of party loyalty and fear of reprisal. The House Democrats, on the other hand, have found Reagan's budgetary aloofness a handy political excuse for doing nothing.

Speaker O'Neill, a tough political infighter, took such an escapist view last week. Asked why he did not push harder to reduce the deficit, he replied with a question: "Put your own members and party through that ordeal for symbolism?" He contended that any such Democratic initiative would either die in the Republican Senate or be vetoed by the President. Such political calculations are beside the point. The Speaker has a duty to seek a budget that is best for the nation; once that is done, he can let others take the consequences of rejecting it.

(O'Neill was not above some political symbolism of his own last week. Instead of trying to prepare the way for a renewal of the Equal Rights Amendment with solid House support, he tried to ram it through under rules providing little debate and no revision. Even many of those who support ERA were angered and voted against it. The new ERA initiative fell six votes short of the two-thirds majority necessary to send it back to the states for ratification votes. All that O'Neill achieved was to put 109 Republicans and 38 Democrats on record as having voted against it. Cynics would say that was all he wanted to do.)

Overall, Senate Republican leaders have shown more political courage on the deficit than the House hierarchy. "There is virtually no dispute that the deficit does threaten recovery," Dole insists, "because it will either drive interest rates back up or lead to renewed inflation. The time to act is now, not 1984, not after the presidential elections--but now." Majority Leader Howard Baker, Budget Committee Chairman Pete Domenici and Appropriations Committee Chairman Mark Hatfield fought hard all year to keep the budget process of Congress from dying. Domenici's committee produced a bill that would have required the various appropriations measures to be "reconciled" with $28 billion worth of new revenues and program cuts. But the Administration denounced the Republican effort and Domenici decided to try again next year.

Such Republican conservatives as Colorado Senator William Armstrong not only opposed the Dole and Domenici deficit-reduction plans but also tried to block any increase in the national debt ceiling. Armstrong argued that the only solution was to cut federal spending enough to keep the debt limit unchanged. He finally yielded, and the debt limit was set by both houses at $1.49 trillion, estimated to keep the debt funded until next April.

Such conflicting currents in the Congress, coupled with the lack of presidential participation, have rendered the legislative body virtually inert on the urgent economic issues. This is all the more troublesome because nearly every unbiased analyst knows what must be done to tackle the deficits: there must be some substantial tax increases, some further reductions in military spending, and new cuts in nondefense expenditures. Most also agree that the only way to get significant slices out of domestic spending is to take a knife to the politically sensitive entitlement programs, notably Medicare and Social Security. Democrats want no part of that, while Reagan refuses to consider tax hikes or military cuts. Both sides fear that the one who moves first will be sandbagged by harsh criticism from the other.

Senator Dole and House Budget Chairman Jim Jones have both proposed a way out of the impasse: a summit meeting involving congressional leaders, the President and his top economic aides. The aim would be to seek a solution in which both sides would accept an equal share of the political heat. Such a "big fix" approach might be feasible next spring, when the impact of the deficits on interest rates will be clearer. If the cost of money is rising, the public outcry could force Congress and the Administration to the bargaining table. But in the absence of urgent signals, the two stubborn Irishmen--Tip O'Neill and Ronald Reagan--will probably play chicken over the deficits right up until Election Day.

--By Ed Magnuson.

Reported by Laurence I. Barrett and Neil MacNeil/Washington

With reporting by Laurence I. Barrett, Neil MacNeil/Washington This file is automatically generated by a robot program, so viewer discretion is required.