Restoring the American dream - Republican Contract with America - Cover Story

Nation's Business, May, 1995 by Roger Thompson

They came. They voted. They delivered.

The hyperactive new Republican majority in the House of Representatives rammed through most of its 10-point Contract With America in just 93 days--warp speed for an institution long plagued by chronic gridlock.

Exhausted, the representatives paused April 7 to celebrate with a campaign-style victory rally on the steps of the Capitol, where they had unveiled the Contract six months earlier. Then they rushed home for a three-week recess to tell their constituents they had kept their promise to advance the cause of smaller government, less regulation, and lower taxes. The Contract made at least a down payment on all three.

"While we've done a lot, this Contract has never been about curing all the ills of the nation," declared House Speaker Newt Gingrich, R-Ga., in a nationally televised speech April 7 marking the completion of the Contract. "One hundred days cannot overturn the neglect of decades."

After four months of frenetic activity and intense, sometimes bitter debate-- especially on welfare reform, tax cuts, and term limits the House Republicans welcomed a chance to recoup and return to their core message: The Contract is just the first installment on a larger plan to restore the American Dream's tarnished promise of personal freedom, economic growth, and prosperity for this generation and those to come.

Says Haley Barbour, chairman of the Republican National Committee: "Government is too big for its britches, and we're not getting our money's worth for our tax dollars. That's part of what's happened to the American Dream. It's been undermined by huge deficits and debt."

But not for much longer if the House Republicans pull off the next phase of their revolution: dramatically shrinking most major federal programs, possibly scrapping the income-tax system in favor of a simplified tax system, and balancing the federal budget by 2002. Ending deficit spending, according to one GOP estimate, would be a boon to the economy, translating into a drop of about 2 percentage points in interest rates for such things as home mortgages and automobile, credit-card, and business loans.

For small-business owners like Carol Ball, chief executive officer of Ball Publishing Co., in Greenville, Ohio, the GOP is delivering a message of fiscal and regulatory restraint that is long overdue.

Big government, says Ball, "simply makes everything cost more. It costs more to do business. It costs more to pay people. It costs more to buy supplies. The cost of the paperwork [federal bureaucrats] impose upon us is unbelievable. There's no such thing as a good regulation in my book."

"The agenda in the Contract, in many respects, is the Chamber's agenda," says Bruce Josten, senior vice president for membership policy of the U.S. Chamber of Commerce. By overwhelming margins, respondents to a Where I Stand poll in the January Nation's Business said they support the Contract. "It's a commitment to the American people and largely reflects the views of business, as the [poll] results indicate," Josten says.

Ultimately, says House Majority Leader Richard K. Armey of Texas, small firms will benefit handsomely from the Contract's commitment to less government and lower taxes. Small businesses, he says, "will be greater in number and more successful, as more people are given relief from the burden of taxation and regulation."

It won't happen, though, unless the Senate climbs aboard the Contract bandwagon. Senate GOP leaders caution that much of their House colleagues' handiwork will be altered in the months ahead. And it remains to be seen how much of it will become veto bait for the Clinton White House.

Some key parts of the Contract already have been lost, although perhaps not irretrievably. The term-limits bill fell 63 votes short of the two-thirds majority--290 votes--needed for passage in the House. But it was the first time a term-limits bill had made it to a floor vote in either house of Congress. And the Senate rejected a balanced-budget amendment to the Constitution by one vote. Both measures are likely to come up again, however.

Meanwhile, the Democrats have hammered away at House Republicans, contending they have been overzealous in cutting programs for the young, the elderly, and the poor. Recent polls show that a majority of Americans worry that the GOP band in the House is going too far in cutting social programs.

House Republican leaders counter that their actions are being distorted for political gain. "I'm sure you've all heard the dire cries that we are going to take food out of the mouths of schoolchildren," said Gingrich during his April 7 televised speech. "The fact of the matter is that all we did was to vote to increase school-lunch [program] money 4 1/2 percent every year for the next five years and give the money to the states [in block grants] to spend."

Nonetheless, Republican strategists confidently view their success with the Contract as positioning them to slam-dunk the Democrats in next year's presidential election. "It's very simple," says Ed Miller, senior research analyst for Luntz Research, the Arlington, Va., polling firm that testmarketed the Contract with voter focus groups. "If the Republicans follow through and do what they said they would do, they will be the permanent majority."