On a Collision Course : Presidential politics is forcing Clinton, Dole and Gingrich not to compromise on the federal budget

Kevin Phillips, publisher of American Political Report, is author of "The Politics of Rich and Poor" (Knopf). His most recent book is "Arrogant Capital: Washington, Wall Street and the Frustration of American Politics" (Little Brown)

"It's beginning to look a lot like Christmas" is Washington's latest musical answer to when Congress and the President will finish their political posturing and come up with a compromise federal-budget plan that keeps the federal government from shutting down. And that's if nothing goes wrong.

Powerful circumstances are converging. For the first time in U.S. history, the President, the Senate majority leader and the Speaker of the House are all running for President (or talking about it) simultaneously. This isn't mere gridlock--the Capital has become a political gladiator's ring.

Meanwhile, reducing the federal budget deficit has become an annual theater piece, a stage set for the fiscal version of Democratic and Republican (and now independent) jockeying. From the ill-fated Gramm-Rudman law 10 years ago, to the "budget summit" of 1990, to this year's proposed balanced-budget constitutional amendment and the extremist legislation now clearing Congress. There is always some great budget solution cooking in Washington, but it never succeeds for long, because of a) phoniness, b) impracticality, c) a recession or d) all the above.

Voters have become justifiably contemptuous. Disbelief in Washington has broken the previous record, set in 1994. Demand for a new alternative political party or a third choice for President is surging. So is insistence that Washington's lobbies and omnipresent special-interest groups, with their ability to warp and stall government policy, be brought under control.

This political backbiting is what we should expect from a broken-down party system. The House and Senate are the first Republican Congress to face a Democratic President since 1948. But the radical House is as different from the more cautious Senate as it is from the Democratic President. And the Democratic minority in Congress and their supposed leader in the White House, President Bill Clinton, are barely on speaking terms.

Clinton wants to triangulate--to be equidistant from both congressional parties, his fellow Democrats as well as the Republicans. Senate Republican leader Bob Dole (R-Kan.), in turn, is the first Senate leader this century to be the front-runner for his party's presidential nomination. Previous Senate leaders who have made serious presidential bids have failed--including Dole himself in 1988. He may be failing again, but in the last six months or so, he's had to pander on cultural and economic issues, including the budget, to sustain his candidacy with the GOP's conservative revolutionary faction.

If Dole hadn't been placating his party's hard-core right--led by House Speaker Newt Gingrich of Georgia, Sen. Phil Gramm of Texas and other presidential rivals--the GOP budget wouldn't be nearly as extreme in its cuts in Medicare, Medicaid and welfare, and in its tax breaks for business and upper-bracket individuals. But Dole has not only given in--he has paid a political price. His approval ratings have dropped from the 50%-55% range to 40%-45%; he now trails Clinton in trial heats by as many as 12 points. He's even in some danger of losing the GOP nomination race if Colin L. Powell jumps in. Sadly, the real Dole--the old Dole--would be doing better than this unnaturally harsh Dole.

But Gingrich and Gramm have not simply tried to force Dole to support their cultural and fiscal positions. Insiders assume Gingrich wants Dole to lose his race for the presidency in 1996, so Clinton will be in office four more years. Although Gingrich makes periodic noises about running for President next year, the conventional wisdom is that he wants to wait until 2000--by then his own radical image would have dissipated.

Clinton is the second reason the extreme GOP budget legislation now passing through Congress has gotten so far. As a man who would rather cut a deal than defend a principle, he has been "triangulating" himself into a midpoint between the congressional Democrats and congressional Republicans--thus pulling his position farther to the right on Medicare cuts and upper-bracket tax cuts than he would have guessed back in the spring. But he's not in a bad political position--you could say "opportunism pays"--because the Republicans have moved so far over on the harsh, hard-line right.

Which brings us back to the budget and deficit-management farce, which has been on the American playbill for a decade now. Farce is a fair description, because the Gramm-Rudman deficit-reduction mechanism, created in the mid-'80s, broke down and the deficit exploded in the recession of 1990-92. Clinton's 1993 tax increases did bring the annual deficit down to under $200 billion a year, less than 3% of gross domestic product, but there's no doubt that burgeoning entitlements and tax preferences threaten to run it up again.

Partisan politics is a central part of the problem. The Democrats have been willing to raise upper-bracket taxes and cap tax entitlements and loopholes, but they are loath to touch medical or senior-citizen entitlements such as Medicare and Social Security. The Republicans, in turn, are willing to slice up health care and entitlement programs for the elderly, but they refuse to lay a meaningful finger on corporate welfare or tax preferences for business and investors.

That is why their budget bill, which will soon be finalized and sent to the President, is such a study in unfairness, opportunism and the pervasive influence of backstairs lobbying. The deficit is to be eliminated by the year 2002--but not by any shared sacrifice. Even as the poor, the elderly and students must prepare to give up hundreds of billions of dollars in federal-program support from now to 2002, tax preferences--mostly for corporations, investors and the richest 25% of American families--are scheduled to grow by about a third and to total about $3.5 trillion over the next seven years. Packaged as "deficit reduction," this has to be one of the decade's biggest rip-offs.

The irony is that, in the end, it probably wouldn't even be successful deficit reduction. The current business cycle will be six years old in March; when the next recession comes, the deficit will rise again, as it did in 1990-92. Cuts in Medicare, Medicaid and education spending would be partly restored under pressure from fearful voters, but the fat cats and corporations could be expected to double their lobbyists' fees to make certain that their 1995 tax breaks remain in the Internal Revenue code.

So Clinton should not merely veto this disgrace when it gets to his desk--he should throw away his political triangulation meters, opportunism memos and equivocation kits and, instead, make a simple demand: Sacrifice must be shared. If it isn't, he should say, there will be no December deal, no splitting of the difference, no Yuletide hornswoggle. And if Congress goes home after his veto without passing the necessary follow-up budget compromise, he'll call them back for a special session Dec. 27--and demand they act on behalf of the interests of the many, not the lobbyists for the few.

President Harry S. Truman called a special session at the Republican 80th Congress in 1948, and won his gamble--and reelection. It might not work for Clinton now, because the fiscal stakes are higher, there are 10 times as many lobbyists and his courage is suspect.

But the farcical interplay of second-rate national leaders and third-rate national fiscal policy has gone on long enough. Let's call a legislative turkey a legislative turkey and shift to a new deficit-reduction program that takes as much money from tax loopholes as it does from Medicare. And let's demand a seven- or 10-year program that anticipates the next recession and settles for getting the deficit down to 1% or so of GDP by the first few years of the next century. That would be better than Canada or the major European nations.

If the leaders of the Republican and Democratic Parties can't manage this, then promoting a new party or third alternative choice for President ought to be January's top priority.*

* GOP TARGET. Please see related article on M2.

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