Gulf, Economy May Throttle Congress’ Plans

Two crises, one international, the other domestic, have cast a dark cloud over the agenda of the 102nd Congress even before it convenes Thursday.

A war in the Persian Gulf or a deep economic recession at home--or both--could seriously hobble Democratic leaders’ plans. They would like to fill major gaps in health care, raise taxes on the rich while lowering them on the middle class, overcome President Bush’s 1990 vetoes of civil rights and family leave bills, craft a new energy policy and shore up beleaguered banks.

By the same token, war or recession could deal a heavy blow to the President’s own legislative goals. They include his plan for reshaping the banking system, a package of tax measures to stimulate savings and investment and proposals to give more power to parents and the poor in choosing schools and subsidized housing.

“The gulf and the economy could very well determine what the agenda of the next Congress will look like,” said Rep. Leon E. Panetta (D-Carmel Valley), chairman of the House Budget Committee.

In fact, the gulf crisis is so predominant at the moment that congressional leaders have indicated that they will cancel a three-week recess scheduled to begin right after the lawmakers are sworn in.

House Majority Leader Richard A. Gephardt (D-Mo.) suggested Saturday that Congress may debate a pair of competing resolutions. One would authorize the President to attack Iraq if it fails to withdraw from Kuwait by Jan. 15, the deadline set by the United Nations. The other would demand that economic sanctions be given a year or so to work.

Whatever uncertainties the new Congress faces, one thing seems clear: Partisan combat that exploded at the end of the last session will escalate in anticipation of 1992 races for the White House, the Senate and a host of redistricted House seats.

White House Chief of Staff John H. Sununu already has thrown down the political gauntlet, saying that Bush will push for a constitutional limit on congressional terms, a move obviously aimed at shrinking the Democrats’ 101-vote margin in the House and 12-vote edge in the Senate.

“Broadly speaking, I think the Congress will be much more partisan, much less legislatively oriented, much more inclined to engage in conflict with the President, much more in search of opportunities to differentiate the parties,” said Thomas Mann, a Brookings Institution analyst.

Even if the United States avoids a costly war in the Middle East and a sapping downturn in the economy, Congress will encounter tough new fiscal curbs on legislative initiatives. The five-year, $490-billion deficit reduction package enacted last month placed tight spending caps on most defense and domestic programs and required any new programs to be financed with tax hikes or spending cuts.

“With appropriations capped, dividing up the pie will be a big area of contention,” House Majority Whip William H. Gray III (D-Pa.) said in an interview. “Do we buy B-2 Stealth bombers or do we buy C-5 planes for deployment of troops to Desert Shield? On foreign aid, do we want to give military aid or economic development assistance?”

If there is a deep recession, a decision will have to be made on whether to lift requirements in the Gramm-Rudman deficit-reduction law that call for even further trims in the federal budget deficit.

“The question becomes: Should we go ahead with deficit reduction measures in a downturn, or will countercyclical measures (such as job-creating public works projects) be needed?” Gray said.

The cost of the massive Desert Shield operation is sure to be fiercely debated, even if there is no war or prolonged deployment. There are two key budgetary issues: Should U.S. allies be pressured to shoulder more of the burden, and should U.S. costs be paid out of the regular Pentagon budget (at the expense of other programs) or be financed in separate legislation--perhaps with an income surtax?

“There is a real question about whether our allies’ commitment extends beyond just giving the U.S. a few dollars and offering to hold our coat while we do the fighting against Iraq,” said a Democratic leadership aide.

Democratic leaders plan to move early to revive two bills vetoed by Bush during the 101st Congress. One would reverse Supreme Court decisions that made it more difficult for women and minorities to sue over alleged job discrimination. The other measure would require businesses to provide workers with up to 12 weeks of unpaid leave to care for a new child or a seriously ill family member.

“Even if the Democrats fail to override Bush’s vetoes again, it will serve a political purpose,” analyst Mann said. “But I think family leave is a much better political issue for them. It’s something the average citizen supports, while the civil rights bill is vulnerable to the charge that it calls for hiring quotas. That one is potentially devastating for the Democrats.”

Political brawling over taxes, which marked the tumultuous debate over the deficit-reduction package this year, is almost certain to resume in 1991. Although Bush has indicated that he will drop his push for a capital gains tax cut, he is expected to renew other proposals to spur economic growth. In response, Democrats are primed to continue their drive for “tax fairness.”

Gephardt said that a surtax on millionaires “could be part of an overall proposal . . . to fund a real income tax cut for the middle class.”

One part of such a relief package could be a cut in the Social Security payroll tax, an idea heavily promoted by Sen. Daniel Patrick Moynihan (D-N.Y.). Senate Minority Leader Bob Dole (R-Kan.) proposed Sunday that any such tax cut be financed by an increase in Medicare health insurance premiums paid by the wealthy.

Some congressional Republicans are wary about re-entering the tax swamp so soon after Bush broke his no-new-taxes pledge in this year’s budget talks.

“I think we’ll be very skittish about addressing the tax issue again, at least in the first year of the new Congress,” said Rep. Jerry Lewis (R-Redlands), chairman of the House GOP caucus. “While some of us would like to see a capital gains tax cut to stimulate the economy, we demonstrated our willingness to blow that up the last go-round.”

Lewis was alluding to the bitter internal fight among House Republicans over the ill-fated budget summit agreement reached by the White House and bipartisan congressional leaders. Lewis and House Minority Leader Robert H. Michel (R-Ill.)--who supported the agreement--were pitted against rebels led by House GOP Whip Newt Gingrich (R-Ga.). The insurgents helped force a new agreement, but Democrats appeared to wind up scoring the most political points.

Michel, trying to head off more internecine warfare, recently called on his Republican colleagues to unite behind the President’s program next year.

“Every single working day we are 101 votes behind. But every single day we are also one big vote ahead--armed as we are with the President’s veto power,” Michel said, referring to Congress’ ability to sustain a presidential veto with only one-third of the House or Senate. “Presidential leverage is our political kung fu.”

All 21 vetoes cast by Bush in his first two years in office have been upheld.

Key members of both parties, preeminently Senate Majority Leader George J. Mitchell (D-Me.), are moving for major changes in the health care system. Their goals include health insurance for the more than 20 million Americans who are currently uninsured, and subsidies for the millions in expensive nursing homes.

“I think there will be a serious focus on this,” Panetta said. “The trouble is when you look at any restructuring of the health care system, it takes you right back to the pocketbook and whether you can afford any change.”

A Mitchell bill two years ago called for spending $13 billion a year on nursing home care alone.

Leaders also are seeking a new energy policy to reduce the nation’s enormous dependence on oil from the troubled Middle East. Advocates of increased offshore drilling and exploration in the Alaska National Wildlife Refuge will square off against those stressing conservation and renewable energy sources.

A new wave of legislation to protect industries threatened by imports is likely to spring up if world leaders fail to revive talks aimed at lowering trade barriers. Bills promoting exports also are expected.

Meanwhile, the Senate Ethics Committee will continue an investigation of five senators that could lead to major changes in the campaign finance system and rules governing how lawmakers deal with federal regulators.

There will be pressure for reform even if the committee takes no action against the senators, who helped a major contributor, Charles H. Keating Jr., battle federal banking officials as they moved to close his Lincoln Savings & Loan Assn.

In the highly charged ethics climate, the Senate’s 100 members also may feel compelled to stop taking speaking fees, known as honorariums, from special interest groups. House members already have adopted such a ban in exchange for a pay raise that will boost their congressional salaries to $125,100 per year on Jan. 1.

Senators make only $101,900 but are allowed to accept about $23,000 in honorariums. If the senators give up those fees, they undoubtedly will want a compensating pay raise.

But there’s a rub: The move might anger a lot of voters.

Staff writer Bill Eaton contributed to this story.