GOP’s Drive for Change Eclipsing Reagan Revolution

In their drive to scale back the power and reach of the federal government, the new Republican leaders of Congress often portray themselves as continuing a revolution that began during Ronald Reagan’s presidency.

But as they enter a critical new phase of their conservative campaign, it has become increasingly clear that they are pursuing changes more far-reaching than Reagan ever imagined. And they are cramming most of it into a single, monumental piece of legislation of unprecedented size and scope.

Key Elements

In committee chambers and back rooms across the Capitol, Republicans are writing key elements of that legislation, which would reach deep into the workings of everyday American life, including:

* How much the elderly and the poor would pay for their medical bills and the type of care they will receive.

* Whether students would have to pay more for college loans.

* How much taxes would be cut for businesses and families--and increased for certain low-income families.

* Whether the poor would look to the states rather than the federal government for medical and cash assistance.

* How farmers would decide what to plant and whether the government would cut their subsidies drastically.

* Whether tourists would have fewer national parks to visit.

At stake is nothing less than a redefinition of what Americans can expect from their federal government. Until now, those expectations have been set by social-welfare programs dating back to the New Deal, farm policies rooted in the Great Depression, health care programs put in place by the Great Society and education programs that flourished in the 1970s. The brash GOP effort to change all, with deep cuts in programs that benefit both the poor and the middle class, makes the Reagan Revolution look like a game of mumbletypeg.

“What Congress has undertaken this year in scope and in size eclipses anything we have done in recent memory in terms of changing the role, size and scope of the federal government--much more dramatically than anything we did in the Reagan years,” says Carol Cox Wait, a senior aide to the Senate Budget Committee in the first year of the Reagan presidency who is now president of the nonpartisan Committee for a Responsible Federal Budget.

“This is genuinely breathtaking,” notes Alan Brinkley, professor of history at Columbia University.

Not since the first 100 days of Franklin D. Roosevelt’s presidency in 1933 has Congress undertaken such an intensive and far-reaching effort to redefine the role of government in American society, analysts say.

Then, responding to the crisis atmosphere of the Great Depression, Congress created some of the welfare and other social programs that Republicans are now overhauling.

The expanse of Republicans’ ambition is taking its most vivid shape yet as House and Senate committees are struggling to meet today’s deadline for drafting proposals to comply with Congress’ seven-year budget-balancing blueprint. Lawmakers are now, for the first time this year, trying to restrain the most unrestrained part of the federal budget--the so-called “entitlements,” such as Medicare, Medicaid, student loans, welfare and other programs that automatically provide benefits to anyone who qualifies.

What is staggering is not just how much Republicans are trying to do but how they are doing it. These landmark changes are going to be rolled into one enormous piece of legislation known as a budget “reconciliation” bill, so-called because it is designed to reconcile spending and revenues with Congress’ deficit targets.

Tax Law Changes

On top of the entitlement changes, the bill also would include a raft of changes in tax law:

* Republicans’ $245-billion, seven-year tax cut, which is expected to include a $500 per child credit for families, a reduction in capital gains taxes and other new breaks for businesses and individuals.

* New restrictions on the earned-income tax credit, a tax credit or refund for working families earning up to about $27,000 that is supposed to reduce their tax burden enough to keep them out of poverty.

* Elimination of some corporate tax preferences--such as one for companies that locate in Puerto Rico--and the creation of others, including a huge cut in taxes on companies that withdraw excess assets from pension funds.

The fate of this legislative behemoth is shrouded in uncertainty. It is riddled with provisions that are expected to trigger a presidential veto. What stays and what goes when the bill would be rewritten after a veto is anybody’s guess.

As ambitious as GOP budget plans seem to be, some conservatives are still complaining that congressional Republicans are not ambitious enough. The Heritage Foundation, a conservative Washington think tank, recently complained in a report that Republicans have not done enough to uproot rather than trim wasteful federal programs. The Cato Institute, a libertarian group, has criticized Republicans for not eliminating more of the business subsidies they deride as “corporate welfare.” There are signs that efforts to overhaul farm programs and to abolish the Commerce Department may not achieve revolutionary proportions. And some lawmakers wonder if, when all the pieces of the reconciliation bill are added up, they will produce the $630 billion in savings required by Congress’ seven-year budget-balancing plan.

Nonetheless, it is remarkable that the GOP plan has gotten as far as it has in an institution like Congress, which has always been more inclined to take baby steps rather than quantum leaps in changing policy. Moderate Republicans in the Senate have slowed the pace and reined in some of the most drastic changes proposed by the more conservative GOP in the House, but even their watered-down proposals would bring landmark changes in welfare, Medicare and other venerable programs.

The last time Congress tried anything even nearly this ambitious was in 1981, in the early months of the Reagan presidency. Congress moved quickly to enact Reagan’s conservative economic recovery program: a three-year tax cut and a broad package of about $131 billion in spending cuts over three years.

Going Only So Far

Reagan’s spending cuts were guided by many of the same principles, such as consolidating many programs into block grants to states. But the Reagan revolution did not go nearly as far in transforming government entitlements. The Center on Budget and Policy Priorities, a liberal-leaning Washington research group, has estimated that the entitlement savings sought by the GOP are seven times as large as those enacted under Reagan in 1981-82. Under Reagan, Congress extracted most of its savings from incremental changes in programs, not the wholesale restructuring Republicans now are seeking.

“This is a much more fundamental attack on the causes of federal overspending,” said Stephen Bell, staff director of the Senate Budget Committee in the Reagan years and now managing director of the Salomon Bros. investment firm.

Although lawmakers fiddled with details of Medicare throughout the 1980s--cutting payments to doctors and hospitals, approving and then repealing a new benefit for catastrophic coverage, among other things--nothing approached the fundamental shift now being contemplated as Republicans try to encourage the elderly to enter health maintenance organizations and abandon traditional fee-for-service medicine and make them pay more for services.

Another watershed is being crossed in GOP plans to end the entitlement status of welfare and Medicaid for the poor--the warp and woof of the nation’s social safety net--and to give the states far more power to run their own programs. Under Reagan, Congress did little more than tighten eligibility and cut payments to states.

While the roiling debate over Medicare and welfare has dominated the political scene, Republicans are aspiring to landmark changes in other areas as well. GOP leaders have pushed legislation that would abolish the Byzantine system of farm subsidies that began in 1933. They hope to replace the system with fixed, gradually declining payments to farmers--a plan that would give farmers less money but more flexibility to decide what to plant. However, many farm state Republicans have proved as resistant to those changes as have Democratic critics and both House and Senate Agriculture Committees have deadlocked over the legislation.

The budget bill almost certainly will call for opening Alaska’s Arctic National Wildlife Refuge to oil and gas drilling and, according to environmentalists, would have a harmful effect on caribou calving grounds.