Controlling Arms and the Deficit : Progress on One, but None on Other

The beginning of any new Administration opens a window of opportunity. With a new mandate--in this case, a sweeping 49-state victory--the President has, by convention, 100 days to define his program and order the nation’s priorities.

When the electorate renewed President Reagan’s mandate last November, the message seemed to be this: “We like the peace and prosperity the country is now enjoying. Keep it up.” If you probed a little deeper, however, you found that people were worried about two problems that threatened to undermine those conditions. One was the federal budget deficit. The other was arms control.

What saved the President was the fact that the voters had more confidence in the Republicans than in the opposition Democrats to handle both problems. The voters were really saying, “Keep it up. But try to give these two problems a little more attention. We are confident you can do it.”

Amid much fanfare, the United States and the Soviet Union have agreed to resume arms control negotiations. So far, so good. Now, what about the deficit?

So far, not so good.

Reagan has stated his goal rather clearly: to get the federal deficit, now projected at more than $200 billion, down to $100 billion by 1988. But the Administration has been completely unable to come up with a plan to meet that goal. The best the President has been able to do is propose spending cuts that would result in a $139-billion deficit by 1988, and he has already been forced to reverse himself on some of those cuts. Reagan’s plan has been pronounced “dead on arrival” by congressional leaders.

Instead of presenting him with an opportunity, the 1984 election created a political problem for the President. Under challenge from Walter F. Mondale, who said Reagan had secret plans to raise taxes and cut Social Security benefits, Reagan was forced to rule out both options. Then, in December, he hemmed himself in still further by rejecting any significant cuts in defense spending. The result is that the Administration is unable to come up with a politically feasible deficit-reduction plan.

The Democrats, who still control the House of Representatives, have no intention of bailing the Administration out. Their answer to the deficit problem is to freeze defense spending and then, if necessary, raise taxes.

The only source of initiative left is congressional Republicans. And so the Administration, having fumbled early in the game, has decided to let the Republicans in Congress carry the ball. The good news is that they accepted it enthusiastically. The bad news is that they started running off in two different directions.

The Senate Republican majority, led by Bob Dole (R-Kan.), has promised to come up with a plan by Feb. 1--a few days before the President’s official budget message--that would cut next year’s deficit by at least $50 billion. One likely component will be an across-the-board spending freeze, including defense and Social Security, although even that would not be enough to meet their announced goal. Still, Senate Republicans got some much-needed encouragement last week when Federal Reserve Board Chairman Paul A. Volcker told them that $50 billion in spending cuts could produce a reduction in interest rates.

The Republican minority in the House has somewhat different ideas. They see deficit-reduction as only one among many goals. House Republican leader Robert H. Michel (R-Ill.) pointed out that interest rates are already coming down, without any action to reduce the deficit. “When interest rates decline,” he said, “it tends to ease up on the urgency of the deficit problem.”

Last week, the House Republican Research Committee, calling itself grandiosely “the Committee for the First Hundred Days,” produced its own policy agenda--a wish-list of 252 proposals ranging from tax reform to a subminimum wage for teen-agers, urban enterprise zones, a freeze on U.S. contributions to the United Nations, no major defense cuts and several new tax credits and deductions.

What does all this have to do with the deficit? Not much. As Michel said, “Not everybody is so possessed with this deficit that every document that is published has to have a bearing on deficit reduction.”

The spirit that infuses the House document is that of Rep. Jack Kemp (R-N.Y.), a policy entrepreneur with thinly disguised presidential ambitions. Kemp operates from the premise, which he and many others believe is shared by Reagan, that economic growth is the answer to the deficit. Therefore, what the government must do is create a “conservative opportunity society” by removing all the disincentives to growth that have been codified into law (mostly tax law) as a result of the entrenched power of special interests.

Kemp and his colleagues, as self-styled populist Republicans, reject the “gloom and doom” approach of the Republican majority in the Senate and, in particular, their obsession with the deficit. The deficit, the Kemp faction believes, is an “elitist” concern encouraged by big business and the Federal Reserve Board. House Republicans claim that they are closer to the spirit of Reaganism because, like the President, they oppose cuts in defense spending and entitlement programs. And what would they do about the deficit? The same thing the President would do--pass a balanced budget amendment to the Constitution and give the President veto power over specific items in appropriations bills.

To Senate Republicans, who represent the more traditional, Establishment-oriented conservatism of the GOP, the great evil is the deficit, and spending cuts are the only acceptable way of dealing with it. To House Republicans, the party’s anti-Establishment Young Turks, the great evil is taxes and deep spending cuts represent an unnecessary political risk; the party cannot hope to gain populist support unless it preserves basic entitlement programs and maintains a strong national defense.

Where does Reagan stand? For the past four years he has very carefully kept a foot in both camps, never veering too far in one direction or the other. To Reagan, and to most Republicans, deficits are evil and taxes are evil, but the greatest evil of all is government. The President does not go as far as the Senate Republicans in saying that all other objectives must be sacrificed to reducing the deficit. And he probably would not agree with House Republicans that cutting taxes is more important than anything else. Both deficit reduction and tax reduction are means to an end, namely, curbing the size and influence of government. In the true Republican faith, that is an end in itself.

What President Reagan intends to do this year is let Senate and House Republicans fight among themselves and come up with some kind of budget compromise. The President will not have to violate his own political commitments. As in previous years, he will sign the budget as a matter of necessity while attacking Congress for not meeting its responsibilities.

It is total loyalty to Ronald Reagan that holds the Republican Party together. But what happens in 1988, when Reagan retires and Dole and Kemp will be among the principal contenders? Will Reagan’s charisma transfer to Vice President George Bush? As with many charismatic leaders throughout history, Reagan may see his followers fall out among themselves over who represents his truest and most faithful vision.