Play hardball - budget showdown - Editorial

National Review, Nov 6, 1995

IN RECENT weeks, President Clinton has been on the offensive. He is buoyed by the early budget feelers sent out by Congress, by his own rebounding poll numbers (an astronomical -- for him -- 61 per cent favorable rating) coupled with the corresponding dip in those for Congress, and finally by the seeming success of the charge that the GOP is cutting Medicare to pay for tax cuts for the rich. So, Clinton vetoed the appropriation bill that funds Congress --even while admitting it is properly austere -- just to poke Bob Dole and Newt Gingrich in the eye. This bravado ignores a fundamental fact of the coming budget showdown: to win re-election President Clinton has to adopt the main elements of the GOP agenda. House Democrats can afford to be intransigent --they have safe liberal seats. The President doesn't, and he can't be seen as standing in the way of a balanced budget, or welfare reform, or even tax cuts.

That is easy to forget, given the difficulty the Republicans have had defending parts of their agenda, particularly tax cuts. Republicans organized a masterly drive to defend their Medicare reforms over the August recess; if they hadn't, some of the poll numbers would look even worse than they do. But the case for tax cuts was never made with the same thoroughness, leaving the way open for the Democrats' favorite charge. Which is as bogus as it is desperate. About $160 billion of the Republicans' Medicare savings goes to shoring up the Medicare Part A Hospital Insurance Trust Fund; according to the Medicare trustees' report, Part A -- funded through payroll taxes -- needs just about $160 billion of savings to stay solvent. The rest of the savings are in Medicare Part B, which is financed from the general budget. Can these savings be characterized as paying for tax cuts? No more than the $900 billion of other Republican savings. By what strange math does all this fund a mere $245-billion tax cut? And remember, $169 billion of the tax cut is funded through the interest savings the Congressional Budget Office estimates will accrue from putting the budget on a glidepath to balance.

The Democratic game here, played to perfection in 1990, is to shove Republicans off their principles and then denounce them for apostasy. The 1990 tax increase made it possible for Bill Clinton to outflank George Bush on that issue. Democrats are ready to do the same this year: insist with all their might, with conventional opinion at their back, that Republicans abandon their promise, then a few months later begin ripping them as untrustworthy, as typical Beltway politicians. They'd also love to be able to throw the tax- increase charge at Republicans -- President Clinton gave it a tentative go recently in his weekly radio address -- without the tax cuts to provide interference.

Republicans should be holding firm on the full $245 billion of tax cuts, already a compromise number. They can't water down their deficit-reduction plan, which the public -- despite some softness on the specifics -- clearly favors. Nothing would guarantee the extinction of the Republican majority as surely as backing off the promise of a zero deficit by 2002. Welfare reform --which the end- welfare-as-we-know-it President will have big problems vetoing -- should be as tough and far-reaching as the Senate will allow. Only on Medicare reform should Republicans be willing to give a little - - provided the dollars come out of spending cuts elsewhere in the budget, not out of the pockets of taxpayers through scaled-back tax cuts. In keeping with congressional Democratic practice throughout the 1980s, all this should be made as unpalatable for the President as possible. On the details -- e.g., the appropriation riders relating to abortion and labor -- it's the President's base, not the Republicans', that should be made to give.

No one remembers the details of budget squabbles. President Bush wasn't hurt by closing the Washington Monument for a day or two in 1990. He was crippled by his inability to articulate an agenda and wrest it from Congress. So, too, no one will remember the details of how Republicans got President Clinton to sign their agenda. But they will remember that the heart of the Contract made it into law, and that it was the resolve of the Republicans that made it happen. For winners, hardball is the only game in town.