TIME: Almanac 1995

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<text id=93TT0204> <link 93TO0125> <title> Aug. 16, 1993: The Low Road To Revolution </title> <history> TIME--The Weekly Newsmagazine--1993 Aug. 16, 1993 Overturning The Reagan Era </history> <article> <source>Time Magazine</source> <hdr> COVER STORIES, Page 20 BUDGET The Low Road To Revolution </hdr> <body> Why Clinton's slim victory with a watered-down budget could still be the start of something big By NANCY GIBBS--With reporting by Laurence I. Barrett, James Carney and Michael Duffy/Washington In the sweet fairy-tale version of the Clinton presidency, the hero rides into Washington on a team of snow-white wonks, sweeps away the mists of Reaganism, breaks the unbreakable gridlock, tames the deficit and restores faith in the institutions of democracy. The version that played out last week, however, was rather more Grimm. The President and his minions trudged through the halls of Congress, wringing hands, twisting arms, scratching backs, pulling teeth for those last votes they needed. Every single item in the President's budget made someone mad. No more Medicare cuts, screamed the liberals. More money for the cities, insisted the Black Caucus. Lower the gas tax, ordered the Westerners. Raise it, said the Greens. And after all that, at 9:55 on Thursday night and at 9:47 on Friday night, when it came down to the crucial vote, the Republicans and the holdout Deficrats leaned back, rubbed their bellies and said what they'd been saying for weeks: No, the President's plan hadn't gone far enough. It took Vice President Al Gore to break the 50-50 tie in the Senate; but it was Nebraska Senator Bob Kerrey who provided the deciding vote and the defining message. All week he had anguished over which way to go. "My head aches with all this thinking," he declared to his colleagues on Friday night. "But my heart aches with the conclusion that I will vote yes for a bill that challenges America too little because I do not trust what my colleagues on the other side of the aisle will do if I say no." In the end, he said, he could not persuade himself to cast a vote that would bring down a presidency. "You have made mistakes," he told Clinton, "but you do not deserve and America cannot afford to have you spend the next 60 days quibbling over whether we should cut more or tax less." Clinton thus won the first crucial victory of his presidency by doing far less than he had promised and far worse than he had hoped. The drama of the final 48 hours, and the relief that rose like steam from the White House when it was all over, did not change the fact that the whole ugly epic had in the end yielded only a modest prize. But for all its impurities and imperfections, the final budget deal brings to an end a bankrupt period in American politics. The narrow votes on Thursday and Friday represent the first real rejection of Reaganomics, a doctrine that survived for more than a decade in which taxes were lowered, spending raised, and Congress was blamed while everyone watched the deficit soar. It is the beginning, however modest, of a return to the economic orthodoxy of balanced budgets. In contrast to past fiscal pantomimes, the economic projections on which the deal is based are reasonably sound. Clinton's budget assumes an average growth of 2.5%--optimistic maybe, but not impossible. The budget plan also restores some fairness to the tax code by expanding the earned-income tax credit for the working poor. It includes $30 billion in new spending on food stamps, special tax breaks for establishing businesses in distressed urban and rural areas, child vaccines and a targeted-job tax credit. But most important, the deal actually got done, enabling the President to move on. Without a budget agreement, there was no chance whatever that this Administration could tackle the health-care system or welfare reform. Had the deal collapsed completely, the stock markets would probably have shuddered, interest rates would almost certainly have risen, consumer confidence slumped, and foreign investors would have lost any hope that the U.S. was serious about getting its house in order. Such are the humiliations of historymaking that the leap of faith the President envisioned began with a baby step. In the final hours, after all the rhetoric about "controlling our destiny," the final bill was in some ways actually less bold than the one passed by Congress in 1990 and signed by President Bush. The 1990 plan raised the gas tax even more, cut Medicare nearly as much, targeted the rich, nibbled at entitlements, promised to cut the deficit roughly the same amount--$500 billion over five years. Pork-stuffed farm programs were actually cut $13 billion in 1990, in contrast to just $3 billion this time. But then as now, the bill did not really clamp down on entitlements, so government just kept growing all the more as the recession drove up welfare and unemployment payments. Clinton's Congress, if anything, seemed to have lost its stomach for tough votes. "Washington is the only city in the world where it's considered courageous to raise someone's gas bill," said New Jersey Congressman Robert Andrews, one of 41 House Democrats to vote against the plan. "The truth is that it's courageous to tell people you're not going to subsidize their sewer system anymore or pay for their daughter's education. That's courageous." In the end neither the tax hikes nor the spending cuts were very brave. Entitlements were barely nicked; the infamous mohair subsidy survived; and adjusting for inflation, Americans will still be paying less for gas than they did in 1947. Though the tax hikes kick in immediately--sooner, actually, since they are retroactive to January--most of the actual cutting doesn't begin until 35 days before Clinton faces re-election in 1996. Except for the rich, there was very little of the shared sacrifice for which Clinton had campaigned. Outside Washington as well as in, the fierce criticism of the budget perfectly reflected the difficult line Clinton had to tread. To the disgust of the Perotistas, Congress didn't even pretend to talk about spending only as much money as it takes in. For all the talk of spending cuts, what is actually being trimmed is the rate of spending increases. Instead of spending $1 1/2 trillion that it does not have over the next four years, the government will spend only $1 trillion. "The public would make sacrifices if they had a hard goal they could understand," says Lee Harrison, a Perot supporter and retired CEO of a Denver computer company. "People can understand a balanced budget, but Congress does not have the guts." Other critics took the opposite line--that the focus on deficit reduction at a time of economic weakness was folly. Businessmen pointed out that the best means of deficit reduction is economic growth: each 1% rise in GNP adds $100 billion in government revenues. Trying to eliminate the deficit in five years would mean trimming $1.1 trillion, out of government spending--which could seriously threaten an already fragile recovery. Reagan called the Clinton plan a "propaganda masterpiece," as he denounced the program in vivid terms. "When candidate Clinton promised to get this country moving," Reagan wrote last week, "most Americans thought he meant moving forward. Instead his Administration has gone backward on the economy, backward on reducing government and backward on its promises." The simple truth, he declared, is that "this plan is bad for America." Maybe it was from Ronald Reagan that Bill Clinton got the idea that passing tax bills was easy. Reagan entered office in 1981 saying the government simply spent too much, and the only way to make it stop was to treat it like the unruly child it was and cut its allowance. Give the money back to the people, who know how to spend it wisely, Reagan said. His landmark tax bills did just that, sailing through Congress with bipartisan support, slashing income taxes on individuals and corporations (even while raising Social Security taxes on workers) so that, in principle, bureaucrats had less to spend. The problem was that at no point did either the President propose or the Congress enact the spending cuts to match that new, lower allowance. By the time it was all over, the national debt had grown from $994 billion when Reagan came into office to $4.4 trillion when Clinton was elected. Throughout the 1992 campaign, Clinton pounded President Bush for his part in the decade-long Ponzi scheme. He promised an end to phony bookkeeping, and with the help of Paul Tsongas and Ross Perot, forced voters to take the deficit seriously. Last week he must have been wondering if he succeeded all too well. The man who came to Washington believing in the good that government could do, who was going to build new roads and invent new jobs and save the cities and the schools, wound up a reluctant apostle of austerity. It was hard to watch the drama last week and remember the vision Clinton sketched out in February. Whatever its flaws, his original economic plan did lay out a series of hard decisions on how the government should raise and spend its money. But right away, lawmakers tested their freedom to mess with it, and a series of strategic White House errors made sure that the process became messy indeed. Clinton disastrously underestimated the public's appetite for spending cuts, an error that cost him both his credibility on the Hill and his beloved stimulus plan, which went down to defeat in April. The entire focus became deficit reduction, rather than a combination of reform and new investment and savings. And deficit reduction hurts: there would be no new airports and bridges to show for it, just higher taxes and a change in a number with too many zeros to have any meaning. So when the bargaining began behind closed doors, lawmakers wanted some candy, and the White House caved in too soon and too easily. Chairman Dan Rostenkowski managed to slam the bill through the House Ways and Means Committee, but only by breaking pieces off it. Suddenly the energy tax wouldn't apply to diesel fuel. Or to aluminum producers. Once they figured it out, every single Democrat got to be President for a Day. "Early on, it became apparent that Clinton could be had," said Bill Frenzel, a former Republican member of the House Ways and Means Committee. "The birds of prey circled and plucked things out of the package." One official estimates that Clinton and his aides gave away $3 billion worth of programs and largesse over the past weekend alone, and, the official added, "a lot of it is going to people who'll end up not even voting for us." Finally, the President's team missed an opportunity by writing off the Republicans. Bill Cohen of Maine, Jim Jeffords of Vermont, John Chafee of Rhode Island, Dave Durenberger of Minnesota and others all have more liberal voting records than some Democrats who voted no. "The irony is that during his campaign, he said he'd work with both sides and promised to deal with everyone," said a leading Democratic Senator. "Then the White House whippersnappers decided that since they'd been screwed for 12 years by Republicans, they didn't need the G.O.P." The cost of that decision will become clear over the next 18 months, as candidates look to the 1994 midterm elections. The Republicans' united front, however opportunistic, left G.O.P. lawmakers in a strong position if the economy turns sour in the short term. Indeed, rebel Democrats cited their electoral vulnerability as the reason for ditching the President. "Many members view this as the decisive vote they'll cast in office," said Bill Richardson, a Democrat from New Mexico and one of the House's chief deputy whips. "They imagine the negative 30-second TV ads that will be used against them." Even lawmakers who were not at risk at the polls could not, out of envy or ego, bring themselves into line. Senator David Boren, having gone on record praising Clinton's package, proved himself once again a loyal servant of the oil and gas interests and almost single-handedly killed the President's broad-based energy tax. Once Boren won that battle, he kept coming back for more. In the end nothing was enough, and he voted no. Likewise Sam Nunn, who kicked and screamed over every proposed military cut, including helicopters that don't fly, said he could not in good conscience vote for the plan because it didn't go far enough to reduce spending. The most brazen of all was Ross Perot, who took to the airwaves to denounce the President for raising taxes far less than he himself had promised throughout his campaign. Pressed about where he would find the extra spending cuts he called for, Perot told reporters that he had forgotten to bring in his charts. For all that was accomplished last week, none of it will endure unless health-care costs come down. After 1997, even by the President's own forecasts, the deficit will shoot up again under the pressure of more recipients drawing on Medicare and Medicaid. "Health care has become a built-in disaster machine," says M.I.T. professor Rudiger Dornbusch. If Clinton could simply slow the growth of health-care costs--from 12% this year down to 8%--he would do more for the budget of the Federal Government, for every corporate budget and, over time, for every household in America than anything this deal and every other deficit deal combined ever anticipated. But to truly rebuild America's economic health, Clinton will first have to build a more powerful, principled governing coalition. "America cannot afford to have you take the low road of the too easy compromise," Senator Kerrey warned the President in his Friday soliloquy. "Get back on the high road...you were at your best." To do so, Clinton will need to make good on a host of last-minute promises given last week, above all that the cutting has just begun. He will need to retrieve the right to stonewall, to say to lawmakers that their parochial interests will not compromise a national need. And above all he will have to win back the trust of voters who no longer believe in charts, or promises, or calls to sacrifice from those who presume to lead them out of harm's way. </body> </article> </text>