As Winners, Bush and Congress Can Be Heroic on Deficit

Now that the miserable presidential campaign has ended, George Bush and his Democratic opposition face what is always a difficult task: They must eat their respective campaign words, and quickly, in order to address several can’t-wait national issues.

Most urgent of all, the President-elect and the Democratic Congress must agree on a compromise budget package that will keep federal budget deficits coming down steadily, within the Gramm-Rudman-Hollings guidelines, without choking off economic growth. The package canbe assembled only by combining defense and domestic spending cuts, tax increases and entitlement-program discipline--all politically painful.

This will mean that Bush will have to renege promptly on his “read my lips” no-new-taxes pledge; at the same time, he will have to keep America strong without benefit of Pentagon budget increases. One or more currently budgeted weapon systems will have to be canceled. For their part, the Democrats will have to drop their sanctimonious defense of Social Security and other entitlement programs and agree to some formula--most probably taxation of benefits above middle-income level--that will attack the deficit on that front. To make it happen, boththe new Republican President and the new, even more strongly Democratic Congress will have to cooperate, resisting the impulse to point fingers of blame, so that they share the political heat.

The first steps clearly must be taken by Bush. He is by nature a generous man, and undoubtedly will continue the conciliatory gestures toward the opposition that he began on Election Night. But he quickly will need to move beyond gestures.

Bush could gain great ground by doing two things immediately: First, he could put aside his previous hostility toward the bipartisan National Economic Commission, which will be issuing an interim report next month concerning deficit reduction, and support its invaluable role of public education; it could help him prepare public opinion for 1989 policy changes. Second, he could meet immediately with Democratic and Republican congressional leaders to begin a good-faith effort toward a mutually acceptable budget package to be presented in January.

Both of these steps would be bolstered if, having named James A. Baker III as his secretary of state, he additionally were to name without delay his prospective secretaries of defense and the Treasury, the chairman of the Council of Economic Advisers and the director of the Office of Management and Budget. If, as anticipated, he designates experienced, serious and moderate people for these jobs--and tells them to begin working now with congressional leaders--he will gain a head start on the presidential honeymoon.

Would the Democratic Congress respond to such initiatives? The answer is an unequivocal yes. Despite the tough nature of the Bush campaign against Michael Dukakis, congressional Democrats at this point are less angry with Bush than they are with Dukakis for losing what they regarded as a winnable campaign. Beyond that, every senator and representative, of both parties, knows that he or she will face political agony in the 1990 elections if the deficit is not credibly reduced, a recession strikes and voters begin to look for incumbent scapegoats.

Immediate presidential-congressional cooperation also will be necessary to address several other looming issues, all economic. The savings-and-loan industry requires a 1989 bail-out that will consume many billions of taxpayer dollars. The so-called Baker Plan for the management of Third World debt has run its course; a new bipartisan plan, inevitably involving debt write-downs, must be framed. The Uruguay round of multilateral trade negotiation in GATT (the General Agreement on Tariffs and Trade) must be successfully pursued, lest new international trade wars break out. And the executive branch, Congress and federal regulators must, with the recent reemergence of merger and takeover activity, ensure that financial markets are stable and that dangerous levels of new private debt are not being accumulated.

Every one of these issues is politically sensitive and subject to posturing by Republicans or Democrats. None can be effectively addressed unless the new President takes initiatives now to create an era of good feeling.

George Bush has a good chance of getting this done. Unlike Ronald Reagan, he is not an ideologue. It is not his nature (at least it hasn’t been) to draw lines in the ground between himself and Congress. In addition, he should not have to worry about swallowing too soon oneor more campaign-season pledges. Our history indicates that the American people are willing to forgive a new President anything for the first 100 to 120 days of his term. The American memory is short, and its spirit is hopeful.

We are at one of those junctures at which a right or wrong policy turn could affect us deeply, on many fronts, over the next decade. The right turns are apparent, and Congress is willing to take them if the new President will rise above partisanship. The opportunity is here for George Bush, if he will take it.