Obstacles to Budget Deal Not Just Mathematical

If the political donnybrook over the U.S. budget boiled down to a matter of simple arithmetic, the recent deal to end the government shutdown could be the final act in a confusing, lengthy melodrama.

But it does not. To understand why balancing the budget remains an elusive fantasy is to consider a fateful combination of forces that continue to swirl around the negotiating table and interfere with a sweeping accord.

Deep-seated philosophical differences, the mighty pull of presidential politics, growing distrust and intraparty tensions all have greatly complicated the task facing negotiators. Moreover, Republicans have united behind a budget proposal that has proved controversial with much of the public.

“In the end, it’s in the interest of the president and Republicans in Congress to get a deal,” contends Thomas Mann, a political analyst at the Brookings Institution. “But I wouldn’t bet the family fortune.”

President Clinton’s decision to submit a seven-year balanced budget has clearly infused new life into the troubled talks aimed at balancing the budget by 2002. But beyond the fog of charges and countercharges, proposals and counterproposals lurks underlying realities that continue to make progress difficult:

* Deep philosophical differences over the role of government, fairness in tax policy and treatment of the poor remain towering obstacles facing the negotiators. This is the real fight--over America’s domestic priorities for years to come. The government shutdown has been a diversion.

* Clinton, who has taken a hard line toward compromising on his spending priorities, has been encouraged by public opinion polls that show him clobbering Republicans on the issue.

* Divisions in the GOP have created tensions. Senate Majority Leader Bob Dole (R-Kan.), who would rather be campaigning for the White House than saddled with a budget impasse in the Capitol, has shown growing impatience with House Republicans.

Last week’s deal to put 280,000 federal employees back to work represented a major retreat by House Republicans, who had viewed the shutdown as a lever to be exploited in negotiations to balance the budget by 2002. In backing down, however, they were acknowledging more than a failure of strategy: Despite the brave rhetoric, they in effect were conceding the difficulty of getting a budget agreement, period.

One of the many reasons such an accord has been elusive is the most obvious: Simple as it may sound, the two sides’ proposals are strikingly different, and this reality is not altered by Clinton’s surprise decision to put a new plan on the table that achieves a balance in 2002.

In the matter of taxes, the GOP seeks a $245-billion cut, while the White House has proposed $87 billion in cuts (to be offset partly by loophole closings).

Some may perceive fertile opportunities for compromise in such numbers. But others see fundamental matters of principle. GOP budget plans are animated by a desire to slash bureaucracy, shift programs to the states and ease regulation. Clinton has been open to some movement in this direction, albeit a great deal less than Republicans demand.

“It is not the financial numbers that are blocking our progress,” Clinton said over the weekend. “It is political ideology.”

Perhaps no issue better illustrates the philosophical gulf between the sides than Medicaid. Republicans would seek $133 billion in savings through a slower growth rate, while Clinton would save $52 billion.

On health care for the poor, it turns out that bridging the difference in dollars is the easy part. The real wrangling is about thorny issues of government and social responsibility: Republicans have demanded that the program be shifted to the states, thereby ending Medicaid’s status as a federal entitlement. And that idea is abhorred by the administration and Democrats generally who view it as tearing a hole in the federal safety net.

Anti-government Republicans and the White House also part company on federal programs in training, education, environmental protection, worker safety, research and other areas.

Realities arising from the 1996 presidential election also cast a huge shadow over the budget negotiations. These pressures have sown division within Republican ranks and encouraged the administration to attack GOP proposals rather than compromise with them.

The latest polls, for example, show that Republicans, who a year ago were confidently girding for the budget fight, have failed to make their case with the electorate. In contrast, Clinton continues to prevail in the contest for public opinion.

For example, a CBS News poll conducted Jan. 2-3 found that 50% of voters described the president as concerned about what is best for their families in the budget battle, while just 37% gave Congress that credit.

Similarly, 44% of voters blamed the GOP for the shutdown, and 33% blamed the White House.

Such findings have not added pressure for a quick deal to balance the budget. Rather, they have encouraged the White House to rail against “extremist” House Republicans and hammer proposed GOP spending curbs for health care, the working poor, welfare, education and the environment.

The budget controversy also has widened a schism between Senate and House Republicans, who now are struggling to come up with a political strategy to replace the shutdown as a weapon.

The GOP is not the only party wrestling with divisions over the budget, however. The White House reportedly has met stern pressure from House Democrats who oppose restricting annual cost-of-living increases paid to beneficiaries of federal programs. Budget negotiators are tempted to move in this direction because subtracting just one percentage point from the consumer price index, as applied to benefit hikes, would add up to more than $200 billion in savings over seven years.

Beyond the whirlwind of political pressures complicating an accord is the complex arithmetic of the budget itself.

Even as they agreed to submit a plan that passes muster with the Congressional Budget Office, White House officials argue that the CBO numbers should not be accepted blindly. Conditions may prove more ebullient than forecast, they argue, adding that changes in government policy may affect the course of the economy.

As a result, the administration has proposed spending nearly $200 billion more if the economy performs according to the forecast of its own Office of Management and Budget.

For all the policy and political differences that separate the two sides, some see powerful arguments in favor of a deal.

Many analysts believe that a protracted dispute inevitably will backfire on both sides, reflecting yet more gridlock and empty promises in Washington. Agreeing on a budget plan would send a resounding message to the contrary.

Clinton could benefit, goes the thinking, if he were seen as delivering on a budget plan that led to a leaner, more efficient bureaucracy and won plaudits on Wall Street, while keeping mainstream priorities.

And Republicans, as the real source of balanced-budget fervor, would benefit by delivering an agreement that backed up the basic promise they made to voters last year.