A Political and Fiscal Thicket : Congress Showdown Near on Deficit Curb

Congress, plunging headlong into a political and fiscal thicket as tangled as Medusa’s snaky locks, has undertaken to accomplish in just two weeks what years of exhortation and elaborate legislation have failed to do--tame the federal budget deficits that threaten to hamstring the U.S. economy.

And the vehicle being touted for achieving this remarkable breakthrough is a relatively simple plan that supporters hail as a stroke of legislative genius but critics decry as poor policy-making, constitutionally flawed and political flim-flammery.

The Senate-passed scheme, being debated today before a House-Senate conference committee as part of the must-pass legislation to raise the national debt ceiling to $2 trillion, would mandate a series of ever-smaller deficits, shrinking to zero by 1991, and direct the President to make sweeping, across-the-board spending cuts in almost every federal program each year if Congress failed to do the job.

The genius of this approach, say its supporters, is that it takes advantage of a basic truth about the American political system: It tends to take decisive action on major problems only when spurred by a crisis. The Senate plan is designed, in effect, to create such a crisis every year until the deficit is gone. “It puts a gun at everybody’s head,” Rep. Newt Gingrich (R-Ga.) said approvingly.

If that means passing the buck to the President, Rep. Delbert L. Latta of Ohio, the leading Republican on the House Budget Committee, called it the only way to force the spending cuts that Congress has ducked for years. As he said on the House floor: “We will be able to say to our favorite few back home or our favorite group, ‘Oh, we didn’t make those reductions, the President did.’ ”

The proposal specifically allows Congress to waive its fiscally stringent provisions--but only if it votes to do so in full public view. If that happens, Gingrich said, voters will have an easy opportunity “to throw all the rascals out.”

Hailed as Brilliant

While advocates hail the device as brilliant, critics and opponents say it has serious problems.

James Sundquist, a scholar at the Brookings Institution here, for example, called the complicated mechanism for forcing deficit cuts “a far cry from the way a responsible government ought to be run. Everybody is in a position to pass the buck--the President to the Congress, the Democrats to the Republicans, and so on.”

“And nobody can be held responsible because nobody is responsible,” Sundquist said of the measure, which must be acted on quickly because House-Senate conferees must agree on a formula to raise the ceiling by the end of the month to keep the government solvent.

In terms of the Constitution, Chairman Peter W. Rodino Jr. (D-N.J.) of the House Judiciary Committee challenged the proposal’s transfer of power to the White House. “The President . . . will be able to exercise interpretative discretion in determining exactly what aspects of programs are to be cut back, and to what degree,” Rodino said in a letter to one of the House conferees on the bill. “These are matters traditionally--and constitutionally--within the Congress’ law-making power.”

‘Difficult Choices’

And other Democrats see the proposal--known as the Gramm-Rudman plan after its primary sponsors, Republican Sens. Phil Gramm of Texas and Warren B. Rudman of New Hampshire--as nothing more than a political trick to bail out members of Congress who fear that voters in next year’s elections may punish them for letting the national debt double in size in just the last five years.

“This proposal fails to make any of the difficult choices that will be necessary to solve America’s runaway deficits,” Sen. Gary Hart (D-Colo.) said. “Instead, it buys political cover for senators worried that their reelection is imperiled by their earlier fiscal irresponsibility.”

“It’s perceived as a way to get 22 Republican senators past the 1986 elections,” a House Democratic aide added, referring to the fact that 22 Republican Senate seats are up for election next year while only 12 seats now held by Democrats are at stake. A shift of only four seats to the Democrats would swing control of the Senate away from the GOP.

Bite Is Postponed

Opponents note that the controversial plan is designed so that its spending cuts would not bite into federal programs until after the 1986 elections. And they suggest that Congress, with next year’s elections safely out of the way, is likely to do what it has done before in similar situations: pull the teeth from the Draconian measure before voters feel its bite.

Democrats on the conference committee are striving to move up the effective date of the bill so that its consequences would be felt before the elections. But if that move fails and the bill passes anyway, many critics suspect that lawmakers facing reelection in 1988 will take similar action to postpone harsh spending cuts and protect themselves from being hurt politically.

While Democrats have been quick to criticize the Senate Republicans’ plan, they are in the awkward position of having no counterproposal of their own. The House passed a simple debt-ceiling increase without tacking on any deficit reduction proposal.

Impossible to Ignore

And for all of their reservations about Gramm-Rudman, many Democrats believe it is politically impossible to ignore.

“While there are some Democrats who feel we can stonewall the issue, I think most feel there is no question we have to devise an alternative,” said California Rep. Leon E. Panetta (D-Monterrey), a member of the House-Senate conference committee. “This not a question of being able to simply walk away from the thing. If we try that, Gramm-Rudman will pass the House in the form that it passed the Senate. So the real challenge is to clean it up and make it as fair and as constitutional as possible.”

The difficulty is that it remains unclear exactly how the Senate mechanism would work.

A few spending categories would be entirely exempt from the automatic ax--most notably Social Security old-age and disability benefits and interest payments on the national debt.

Presidential Discretion

Throughout the rest of the budget, however, Comptroller General Charles A. Bowsher, who is the head of Congress’ General Accounting Office, warned a House committee last week that Gramm-Rudman would leave the President substantial discretion in imposing across-the-board cuts. The President could determine, for example, how deep the Medicare program should be cut, Bowsher said.

While the Gramm-Rudman formula gives the President strict orders to cut all budget accounts by the same percentage, there is room for argument over whether some kinds of federal spending would fall outside the restriction and thus be subject to presidential discretion. One of the spending categories in this gray area is defense contracts.

In fact, the President is explicitly authorized to exempt defense contracts where the government is legally bound to pay up or where penalty clauses would make it as expensive to break the contracts as to honor them. That is a potentially significant loophole because such penalty clauses are common and 40% of the defense budget is in the form of contracts.

‘Potential Pitfalls’

And Norman J. Ornstein, an authority on Congress at the American Enterprise Institute here, suggested that Reagan might simply refuse to implement across-the-board cuts in the defense budget. The proposal’s sponsors say they could take the President to court, but Ornstein called that solution “ridiculous.”

“The plan is workable in a narrow legal sense,” he said, “but I don’t think it’s workable in a political sense. . . . There are so many unknowns that no one can foresee all the potential pitfalls.”

If the Gramm-Rudman plan is designed to force Congress to face up to its duties, the measure’s roots have been nourished by plain, old-fashioned political fear.

Although the deficit remains an abstraction to many voters and has yet to produce an identifiable crisis, officeholders in both parties have become increasingly concerned that the dire predictions of many economists would come true some day: dragged down by the mounting debt, the economy would slide into a deep slump--and voters would blame Congress for failing to cut the deficit in time.

‘Center Point of Concerns’

“I think most members, whether Democrats or Republicans, were going back to their districts with the deficit as their principal focus when they spoke to constituents,” Panetta said. “When they talked at Rotary or Kiwanis clubs, it became the center point of most of their concerns.”

That concern was particularly sharp for Senate Republicans, whose narrow, 53-47 majority will be in jeopardy in next year’s elections. Their political worries were heightened when they went on record in favor of cutting annual Social Security benefit increases to cut the deficit, only to have the ground cut out from under them when the President from their own party withdrew his early pledge of support and opposed such a step.

For those Republicans, it was easy to put deficit reduction above President Reagan’s own cherished goal of tax reform. “There are an awful lot of people in the Senate--Rudman is an example--who have stated that they think this (deficit reduction) is far and away the most important thing that Congress has to do, the most urgent priority, and if we fail in this, they’re not terribly eager to be back,” Sen. Pete Wilson (R-Calif.) said.

As for Democrats, the Gramm-Rudman proposal stimulated their own political insecurities about the enduring stigma of being the party of big spenders. “Our people don’t have great credibility with the public on the deficit,” an aide to a Democratic House leader admitted. “You look at the polls and you can see we’re still getting clobbered on this.”

Thus, despite their uneasiness with the prospect that Gramm-Rudman would lead to deep cuts in domestic spending, many Democrats have not been able to resist its political appeal. Tellingly, although 20 Democrats voted against it on the Senate floor, 27 Democratic senators voted for it--including such liberals as Edward M. Kennedy of Massachusetts and Carl Levin of Michigan.