5
Gramm-Rudman and the Politics of Frustration

Senators and representatives are often given to overstatement, but it would be hard to find a debate in Congress that provoked more dire warnings and more colorful use of metaphor than one in December 1985. "I pray that what we are about to undertake will work," intoned Senator Bob Packwood (R-Ore.). Representative Silvio Conte (R-Mass.) called the measure under consideration "a game of legislative chicken," Senator Daniel P. Moynihan (D-N.Y.) said it was a "suicide pact," Representative Henry Waxman (D-Calif.) a "doomsday machine," and Senator Bennett Johnston (D-La.) a "train wreck." All were talking about the same bill, formally known as the Balanced Budget and Emergency Deficit Reduction Act of 1985. but more commonly called Gramm-Rudman-Hollings (and more simply still Gramm-Rudman). This legislation provided a radical plan to balance the federal budget by FY 1991, and people were concerned because, unlike other legislative attempts to balance the budget, it seemed that this one

might actually reduce spending, drastically and unthinkingly. In brief, Gramm-Rudman called for the deficit to fall by equal increments of $36 billion each year until by FY 1991 the deficit was zero. Gramm-Rudman differed from previously enacted deficit reduction measures in that it incorporated automatic or self-enforcing provisions. The law required the president to withhold or "sequester" spending if Congress and the president did not by other means manage to reduce the deficit to the mandated level.

Gramm-Rudman was a serious, sobering proposal. If the sequesters went through as called for in the legislation, there was every reason to believe that many of the most important programs and agencies of the federal government would be greatly harmed. Much of President Reagan's defense buildup would be reversed. Even its supporters often expressed only muted enthusiasm. One author and principal proponent, Senator Warren Rudman (R-N.H.), described the plan as "a bad idea whose time has come." The House Republican whip, Trent Lott (R-Miss.), offered only "reluctant support" for the proposal, and Dan Rostenkowski, who managed the bill on the floor in the House, stated that "technically, the agreement will not work in many respects." The secretaries of Defense and State vigorously opposed the plan and urged the president to veto it on the grounds that it would produce unacceptably large cuts in their departments.

Despite serious reservations on all sides, Gramm-Rudman moved with amazing speed through Congress. It began as an amendment to a debt ceiling bill in the Senate and quickly developed unstoppable momentum in both chambers. Less than three months passed between its introduction and its passage by large majorities

in House and Senate. Because it began as a floor amendment, Gramm-Rudman never went through a formal hearing process or committee deliberation, which meant that it received far less scrutiny than other legislation of remotely similar impact. How it would work, whether it would work, and how it would affect various programs were matters on which little information was available but that did not deter courageous legislators from mortgaging federal programs to a reckless experiment.

Congress enacted this drastic measure out of a combined sense of frustration and desperation. Throughout the Reagan administration Congress had been forced to struggle with the deficit problem. Between 1981 and 1985 Congress passed four reconciliation bills and cut many billions of dollars of spending, but the deficit problem never went away. Although Congress could be distracted briefly to work on other legislation, such as the crusade against drugs, the budget issue was always still there, lurking around the corner and demanding more attention. The march of budget measures to the floor was never-ending: budget resolutions, appropriations bills, reconciliation bills, continuing resolutions—all hogging tremendous amounts of floor time and all presenting painful choices, without ever solving the problem. Gramm-Rudman at least held out the promise of actually resolving the deficit issue.

Frequently in discussing the situation that made them vote (always reluctantly) for Gramm-Rudman, legislators would state that the failure of the budget process drove them to this extreme step. Clearly the budget process had not solved the deficit problem, but we should not conclude that an unbalanced budget is necessarily the result of defective budget procedures. Actually,

the extent to which reconciliation had become a regular and accepted part of the budget process by 1985 suggests that the budget process was relatively effective at translating member policy preferences into legislation. Reconciliation and the budget process were not used more effectively for deficit reduction because, at least in part, the apparent universal agreement on the goal of deficit reduction was a mirage.

Members of Congress agreed almost unanimously that the budget ought to be more nearly in balance, but because of fundamental disagreements about how to achieve that goal it was normally impossible for a majority of Congress to agree on a significant deficit reduction package. These difficulties served as the principal impetus behind enacting the Gramm-Rudman-Hollings balanced budget law in 1985 and then again in 1987 after its enforcement mechanism was struck down as unconstitutional. Its proponents viewed this law as a means of encouraging members of Congress and the president to be more willing to compromise. To the extent that it did encourage compromise, Gramm-Rudman would make the reconciliation process more useful than ever before by providing the best and perhaps only way of implementing compromise agreements.

It was a clever and intuitively appealing idea, but Gramm-Rudman succeeded at forcing neither negotiations nor compromise. In early 1986 no effort was made to stop automatic cuts, and in 1987 Congress and the president would have allowed the automatic cuts to occur again if not for the external shock of a stock market crash. The effective functioning of the budget process is largely premised upon the existence of stable majorities in agreement on budget policy. Without such majorities

little can be done. The experience of Gramm-Rudman suggests that efforts to force either compromise or majority use of the budget process are unlikely to succeed.

Many original supporters of the Budget Act assumed that when members of Congress were forced to vote on the size of the deficit, they would have no choice but to reduce the size of the deficit, for if they did not, angry voters would remove them from office. Things have not worked out as expected. Evidently, members of Congress can vote for towering deficits and continue to be reelected. The budget process does encourage a greater degree of consistency in individual behavior, for a majority of members of both chambers must vote for a budget resolution that stipulates the size of the deficit. But if the electorate is not inclined to vote against representatives who support large deficits then the budget process does not help to exert much downward pressure on deficits.

Cost of Deficits Appears Low

Why has the necessity of voting on the size of the deficit not curbed deficits? Public opinion and electoral pressure have not caused balanced budgets to break out at least in part because of asymmetries in public opinion. The public supports balancing the budget, but it also, according to polls, supports nearly every program in the budget. Moreover, opposition to program cuts is generally more intense than support for cuts. For example, a well-funded lobbying effort supports government subsidies to beekeepers, who are few in number, although a vast number of people pay through their taxes for beekeeping without receiving any direct benefit. But no one in particular wants to get rid of the program because it

does not hurt anyone in particular. The cost is spread so thinly over the tax-paying population: no one is noticeably hurt, and no one finds it worthwhile to mobilize a campaign against beekeeper subsidies.^[1] This asymmetry exists more generally as well.

There is specific opposition to almost every possible budget cut because all such budget cuts directly and significantly hurt some probably well-organized group. A budget deficit, however, hurts no one directly. Its cost is difficult to perceive because it is so widely distributed, both across the population and over time. If the $200 billion deficits of the Reagan era had plunged the nation into a depression, caused widespread unemployment or inflation, then the political support for deficit reduction would be stronger. But because the deficits coincided with a period of strong economic growth and low inflation, they appeared virtually costless.

Budget Balance a Low Priority

Balancing the budget is everyone's third priority, but nobody's first. Although President Reagan frequently voiced support for the goal of balancing the budget, as have nearly all members of Congress from both parties, there is reason to question their commitment to that goal. Virtually all politicians rank some spending program above deficit reduction and are unwilling to cut their favored program to achieve deficit reduction. In fact, for President Reagan, and probably most members of Congress, budgetary balance was probably at best a third priority.

When President Reagan said that he would not balance

[1] See CQ Weekly Report , April 30, 1988, pp. 1149–1152.

the budget "on the backs of taxpayers" by increasing taxes, he indicated that he ranked balancing the budget as a lower priority than maintaining low tax rates. When he argued that defense should not be cut to reduce the deficit, he stated implicitly that for him defense ranked above deficit reduction. Nearly everyone has some program or component of the budget that he or she would not reduce in order to lower the deficit—Social Security, agriculture, housing, food stamps, veterans, or whatever. Many representatives—perhaps all—regard a cut in their favorite program as worse than having a large deficit.

Moreover, nearly everyone believes that the way to balance the budget is to cut the programs that benefit constituencies other than one's own. By this means each member of Congress could probably produce a balanced or nearly balanced budget that he or she could support. Liberals might raise taxes and cut defense. Conservatives would cut various social programs. In arguing for the adoption of a controversial reconciliation bill in 1987, Representative William Gray (D-Pa.), chairman of the House Budget Committee, addressed this issue: "There are, Mr. Speaker, 535 members of Congress; and I might add, there are probably 535 deficit reduction plans. However, my friends and colleagues, we can only implement one."^[2] The same can be said as well of budget resolutions. But neither liberals nor conservatives, nor any other homogeneous faction in Congress have a clear majority; only by compromising may progress against the deficit be made. According to Gray, "There is always some pain, and none of us will be completely satisfied, but I urge you to remember tonight when you vote on

[2] Cong. Rec., daily edition (Dec. 21, 1987), p. H11967.

this reconciliation package that it is the one package that can be implemented, signed into law, and receive bipartisan support."^[3] Cutting the budget requires that different factions accept cuts in their favorite programs in exchange for deficit reduction. Throughout the 1980s the willingness to make such exchanges has been severely limited.

The only cost of not compromising is that the deficit continues to be large, but that is something all parties seem able to live with. Because deficits are only somewhat unpopular with the public but program cuts are extremely unpopular with beneficiaries, the prudent legislator prefers to tolerate large deficits than to impose costs on vocal constituencies.

As deficit reduction proposals make their way through the legislative process—from committee, to the floor, to the conference, to the president—controversial provisions are deleted in an effort to garner more votes. The tasks of both assembling a majority in the House or the Senate behind a resolution and obtaining the agreement of the other chamber and the president thus mean a gradual scaling down of the magnitude of deficit reduction. Deficit reduction proposals that begin very ambitiously in committee are trimmed at each stage until, when they finally pass, they are significantly diminished. Because members care more about protecting programs than about reducing the deficit, the price of obtaining their support is deleting some reduction or another. Thus, by the time each member of the majority needed to pass the bill has extracted his or her price, the package is unimpressive.

In 1981 comprehensiveness in budgeting aided efforts

[3] Ibid.

to reduce spending, but in other years it has not. Fragmentation was widely blamed for congressional inability to control spending prior to the Budget Act, yet various observers have noted that comprehensiveness does not necessarily hold spending down.^[4] When members of Congress place spending or deficit reduction as a top priority and are willing to reduce their own favorite programs to achieve such reductions (provided others will do likewise), then comprehensiveness will assist by allowing members to ensure that the burden of reductions will be borne more or less equally. But if an individual is primarily concerned to protect a particular program from cuts, then packaging cuts together will make him less rather than more likely to support reductions. Suppose a representative supports defense reductions but cannot under any circumstance support the limitation of Social Security COLAS. Although he can vote for a separate bill enacting defense cuts, he must vote against a bill that packages defense cuts with curtailing the COLAS.

Nearly endless wrangling over the budget in 1985 revealed clearly that, despite constant complaints about the deficit, the commitment to deficit reduction was minimal. For the White House, protecting the defense budget and low tax rates obviously ranked above deficit reduction; for the Democrats in the House, protecting domestic spending was a higher priority than deficit reduction.

[4] Allen Schick states that "an omnibus process can lead to higher spending by expanding the scope of interests that have to be satisfied." See Schick, The Whole and the Parts: Piecemeal and Integrated Approaches to Congressional Budgeting, Committee Print, House Budget Committee (USGPO, February 1987), p. 57. John Ferejohn and Keith Krehbiel also argue that under certain circumstances the use of comprehensive budgeting leads to higher rather than lower spending. "The Budget Process and the Size of the Budget," American Journal of Political Science 31 (May 1987): 296–320.

Republican leaders in the Senate seemed truly committed to deficit reduction; that is, they were willing to accept defense reductions and some tax increases to reduce the deficit, if the House would support domestic cuts. Ultimately, the White House sold out the Senate by reaching a separate agreement with the House to avoid both defense and domestic cuts, and tax increases. It was, in essence, an agreement to protect all the beloved programs by keeping the deficit high.

Having lost so badly in the presidential election in 1984, Democrats permitted the Republican Senate to take the initiative in passing a budget resolution in 1985. Although the Senate remained under Republican control after the 1984 election, passing a resolution promised difficulty because twenty-two Republican senators first elected in 1980 would be up for reelection in 1986 and would consequently hesitate to back a resolution that called for big cuts in popular programs. The SBC Republicans met frequently in caucus in an effort to put together a palatable package, but they mostly succeeded in writing a resolution that even its authors were reluctant to embrace. This resolution, called a "turkey" by one supporter, would require a freeze on domestic spending programs, eliminate any Social Security COLAs for the year, and provide for no real growth in defense. These were controversial proposals, bound to anger both the president and other conservatives for cutting defense spending and the liberals for cutting Social Security.^[5]

The proposal's authors evidently hoped that liberals and conservatives would be able to support a proposal that gored both liberal and conservative oxen. Instead

[5] CQ Weekly Report , March 16, 1985, pp. 475–478.

both liberals and conservatives, including the president, denounced the plan. A series of talks with the White House ensued, resulting in an agreement between the White House and Senate Republicans on a revised budget proposal restoring part of the COLA, providing for 3 percent real growth in defense, and calling for the outright elimination of a number of domestic programs. In late April, majority leader Bob Dole brought this package to the floor where it collapsed under the pressure of amendments. Republicans joined Democrats to pass amendments restoring full Social Security COLAs, cutting defense, and restoring funds to Medicare and Medicaid. At the end of what must have been a very frustrating day, Dole assured reporters that the damage was not permanent. "We'll put it all back together, like Humpty-Dumpty."^[6] However, unlike all the king's horses and all the king's men, Dole could put it together again. True to his word, a week and a half later he brought the budget resolution to the floor again and offered a substitute amendment to the previously amended document. The substitute was very close to the original SBC budget proposal, calling for no Social Security COLA, a defense freeze, and numerous program terminations. Dole lobbied hard to get nervous Republicans to stand behind the substitute, which they did with few exceptions. Senator Pete Wilson (R-Calif.), recovering from surgery, was carried on a stretcher into the Senate chamber to cast his vote, and Vice President George Bush broke a 49-49 tie.^[7] For Senate Republicans, on this vote at least deficit reduction emerged as a top priority.

Under firm Democratic control, the House had no trouble passing a budget resolution. Their resolution

[6] CQ Weekly Report, May 4, 1985, p. 817.

[7] CQ Weekly Report, May 11, 1985, pp. 871–874.

passed shortly after the Senate adoption of a resolution and matched the magnitude of deficit reduction in the Senate proposal but by markedly different means: the House resolution allowed a full Social Security COLA and cut defense more deeply than the Senate resolution.

The conference committee quickly bogged down when neither side would agree to significant compromises. The Democrats intended to use Social Security as a campaign issue in the 1986 election so the House conferees naturally opposed any reduction in the COLA which would erase an important distinction between the two parties and sacrifice a potent electoral issue. Senate Republicans would give no ground on defense, particularly if the House would give none on the COLA issue. After a month of fruitless negotiations, the conference broke up on June 25.

Two days later, amidst dire prophecies about the possible demise of the entire budget process, the Senate conferees countered with a new proposal, one that put taxes on the table for the first time that year. House conferees immediately welcomed this gesture as a positive sign. The Senate conferees, who acted on their own initiative without the blessings of either the president or the Senate leadership, evidently hoped that if the Senate showed a willingness to raise taxes then the House would agree to the COLA cuts.

Whatever promise the new Senate proposal might have held for breaking the deadlock was quickly destroyed by President Reagan, who was evidently disturbed by the prospect of a tax increase and a defense cut. At a White House cocktail reception for the House leadership, President Reagan and Speaker O'Neill reached a separate agreement on a budget "framework."

In a remarkable display of concerted indifference toward the deficit, Reagan and O'Neill agreed to (1) forego tax increases, (2) accept the higher Senate defense spending level, and (3) not cut the Social Security COLA. This agreement appears to have resulted from a mutual recognition that the pursuit of deficit reduction threatened programs they valued more, so they agreed to protect their favorite programs and eschew deficit reduction. Representative Jack Kemp (R-N.Y.), the presidential aspirant who untiringly supported low tax rates, reportedly convinced the administration to accept the House position on Social Security in order to avoid tax increases. In addition, sixty-seven House Republicans urged Senate Republicans to give up their insistence on COLA cuts; they did not want their party associated in the minds of voters with Social Security cuts. One may question the political sagacity of the Senate Republicans, who had voted in favor of Social Security cuts and whose conferees had raised the possibility of tax increases, but scarcely their commitment to deficit reduction.

The Reagan-O'Neill framework produced a major defeat for the cause of deficit reduction and a personal embarrassment for Bob Dole, who had led the fight against the deficit and urged reluctant Republicans to vote for his resolution. They had done so, at risk to their political careers, and now their president had betrayed them by "caving in on the COLA issue."^[8] The deal provoked anger and frustration among Republicans in the Senate. Dole accused Reagan of "surrendering to the deficit." "If the President can't support us, he ought to keep his mouth

[8] CQ Weekly Report, July 13, 1985, p. 1357. These are Bob Michel's words.

shut," opined Charles Grassley (R-Iowa), who was up for reelection in 1986 and who had voted for the COLA cuts. "That [the framework] was not an agreement of the 50 guys who jumped off a cliff over here," said Alan Simpson (R-Wyo.), in reference to those who voted for the COLA cut. Some Democrats were disturbed by the behavior of their leaders. Representative Mike Lowry (D-Wash.) complained that "O'Neill and Wright were so stuck on COLA's, they would give away the world for COLA's."^[9]

With the Speaker of the House totally opposed to COLA cuts for Social Security and the president utterly against tax increases, could there be any hope for deficit reductions? Was there nothing to do other than wait for the election of a new president or a new Congress? At this point, when all other opportunities seemed to have been exhausted, Gramm-Rudman appeared on the scene.

The Invention of Gramm-Rudman-Hollings

Gramm-Rudman-Hollings (GRH), or just Gramm-Rudman, was invented in the wake of the absurd conclusion to the 1985 debate over the budget resolution, a debate that must have fully convinced any remaining doubters that the desire to reduce the deficit was not sufficient to encourage Congress to effectively use the budget process.

Since first entering Congress in 1979 Phil Gramm has been an ardent warrior against government spending and the deficit—first as a member of the House and then

[9] Ibid., p. 1358.

since 1985 as a senator. Gramm achieved an extraordinary degree of notoriety and influence for a representative of such limited experience through his cosponsorship of the Gramm-Latta I and Gramm-Latta II substitutes in 1981. Gramm and then majority leader Jim Wright introduced H.R. 1981 to require the president to "sequester" federal spending to meet legislated deficit targets. This bill died a quiet death in the 97th Congress but rose from the grave four years later to terrorize Washington.

By October 1985 the Treasury Department would have borrowed nearly all the money it could borrow under existing statutory authority, so when Congress adjourned for an August recess members knew that soon after their return the Senate Finance Committee would have to prepare a bill to increase the federal debt ceiling and allow the Treasury to continue financing the relentless federal deficit. Debt ceiling bills are seldom easy to pass, but this one would be particularly difficult as it would raise the ceiling to over $2 trillion. Just three years before, in 1982, the ceiling broke the $1 trillion mark for the first time. Doubling the nation's debt in such short order was a record to neither take pride in nor run for reelection on; it only magnified the natural reluctance of the Senate to vote for a debt ceiling increase. Yet however much senators dreaded having to vote for the bill, it had to be passed; otherwise the government could borrow no more, throwing the government into chaos.^[10] Given the dire consequences that

[10] Unlike most observers, Senator Steven Symms (R-Idaho) questioned the status of the debt ceiling bill as "must" legislation. He proposed a defeat or presidential veto of the debt bill as a means of reducing spending. "If Congress chose to raise the debt ceiling, he [the president] vetoes it…. If … he is not allowed to borrow … he would be in a position to say he was responsible to establish priorities of spending and put the government on a cash basis overnight, which might mean furloughing workers, reducing the pay of federal workers, freezing pay…. I think a prudent position for the President would be to take a look at this." No other senators endorsed Symms's approach. Cong. Rec., daily edition (Oct. 3, 1985), p. S12576.

would follow their failure to pass, debt ceiling bills "and the equally 'must pass' continuing resolution are traditional vehicles for a wide variety of initiatives on the part of enterprising senators"^[11]—of whom Phil Gramm was certainly one.

Taking advantage of the situation, Senators Phil Gramm, Warren Rudman (R-N.H.), and Ernest Hollings (D-S.C.) offered their deficit reduction proposal as an amendment to the debt ceiling bill on September 25, 1985. A combination of factors—the frustrations from the previous months of largely fruitless efforts to cut the deficit and the anxiety surrounding the debt vote—contributed to a rush of support for the amendment. It would be far easier for a senator to explain to constituents a vote for a $2 trillion debt bill if it was also a budget balancing bill. The speed with which Gramm-Rudman developed support was startling. This piece of legislation promised fundamental changes in public policy yet entered the Senate agenda without the benefit of committee hearings, deliberations, or any kind of systematic expert consideration. Within little more than a week Robert Dole had embraced the concept and offered a version of Gramm-Rudman as an amendment to the debt bill. After another week the Senate had adopted the amendment. Equally startling was the breadth of the support enjoyed by Gramm-Rudman. The amendment

[11] This description of the debt bill is from Harry Havens, "Gramm-Rudman-Hollings: Origins and Implementation," Public Budgeting and Finance 6 (Autumn 1986): 9.

passed on October 9 by a bipartisan vote, 75-24, with the support of Ted Kennedy (D-Mass.), Carl Levin (D.-Mich.), and other liberals not known for their attacks on government.

The Speaker of the House, the chair of the Ways and Means Committee, and other influentials within the House did not support Gramm-Rudman and would have preferred a "clean" debt bill. But a quick reading of the sentiment of the House showed strong support for Gramm-Rudman and convinced them that an effort to scuttle it would fail. Consequently House leaders bent their efforts toward producing a more workable, less destructive version. For the next two months House and Senate conferees sought to rewrite the Senate-passed measure, which even its advocates conceded was badly written and probably incapable of achieving its purposes.^[12] Meanwhile the Treasury Department- struggled against time and the debt ceiling, trying to keep the government going until Congress managed to raise the debt ceiling.

On December 6, the conferees announced an agreement, which was quickly adopted by both chambers. President Reagan signed the bill December 12. The principal features of the conference agreement were a fifty-fifty division of sequesters between domestic and defense spending, extremely limited presidential discretion in allocating cuts (except in the defense area in the first year), and the complete or partial exemption of many programs from sequestration. The agreement required that the budget be balanced by FY 1991.^[13]

[12] CQ Almanac, 1985, pp. 467–468.

[13] The schedule of maximum allowable deficits was: FY 1986—$171.9 billion; FY 1987—$144 billion; FY 1988—$108 billion; FY 1989—$72 billion; FY 1990—$36 billion; FY 1991—no deficit!

The Logic of Gramm-Rudman

Gramm-Rudman embodies a simple idea. When enacted in both 1985 and 1987, it established a series of maximum deficit levels, descending in equal annual increments to zero, and called upon the president to withhold sufficient funds to prevent the target deficit from being exceeded. The first version introduced in the Senate gave the president great discretion in allocating the cuts, but as the proposal advanced various amendments gradually circumscribed the president's authority. The form of Gramm-Rudman finally enacted in 1985 left the president with virtually no discretion. Distrusting the judgment of the executive branch, Congress established strict rules in the legislation to govern the sequester process.

First, many programs were totally exempt from the cuts while others were subject to limited cuts. The most important of these were Social Security and interest on the federal debt, but others were excluded as well, such as food stamps, Aid to Families with Dependent Children, and other programs mostly providing benefits to the poor.^[14]

The second rule required that half the reductions

[14] Other totally exempt programs include: veterans' compensation, veterans' pensions, earned income tax credit, child nutrition, women, infants and children program (WIC), various federal agencies such as the TVA, Indian claims, and so on. Gramm-Rudman also established a category of programs characterized as "Automatic Spending Increases" (ASI) which are entitlement programs with automatic adjustments for inflation. For these programs, only the regularly scheduled increases are subject to sequestration. See Senate Budget Committee, Gramm-Rudman-Hollings and the Congressional Budget Process: An Explanation, 99th Cong., 1st sess., Committee Print (USGPO, December 1985) for a listing of the programs that fit into various categories.

come from the defense side of the budget and the other half from everything that remained.

Third, in allocating the cuts, all programs that were not either (a) exempted from cuts or (b) subjected to only limited cuts must be reduced by a uniform percentage. That is, the president could not decide to reduce some programs by a greater percentage in order to grant others a measure of relief. The weight of the cuts had to be allocated equally across programs.^[15]

A discussion of the technical provisions of the deficit reduction plan can never fully convey the potential horrors of Gramm-Rudman. Balancing the budget by means of sequesters would threaten the health and effectiveness of whole departments, agencies, and programs of the federal government. At the time GRH was passed, the federal deficit for FY 1986 was expected to be around $220 billion. According to GRH, then, $110 billion would have to be cut from both the domestic and defense budgets by FY 1991.

Consider first the domestic side of the budget. Total outlays for FY 1986 were expected to be about $723 billion. Most of that was exempted from cuts in one way or another—$202 billion in Social Security, $137 billion in interest, $61 billion in various low income programs, $48 billion in programs with automatic increases, $87 billion in other programs with various special rules, and so on. According to estimates of the Brookings Institution the total of domestic outlays subject to the full percentage reductions was $203 billion, and the total of all

[15] For an excellent explanation of the rules governing sequestration and an account of how the General Accounting Office implemented the first sequestration in early 1986, see Havens, "Gramm-Rudman-Hollings," pp. 4–24. Havens is assistant comptroller general of the United States.

unprotected domestic and defense outlays combined was $478 billion. Brookings also estimated that deficit reductions of $176 billion would be required to satisfy Gramm-Rudman.^[16] For the entire deficit reduction to occur through sequestration would mean an utter disaster for the unfortunate agencies subject to percentage reductions.

Negotiations at Gunpoint

In debate over the proposal, its supporters always resented the emphasis their opponents placed upon the destructiveness of the sequesters. The purpose of the plan, they explained again and again, was not to balance the budget by means of automatic cuts—which they agreed would be destructive—but to encourage an end to the political stalemate that had prevented progress against the deficit in the previous several years. The purpose of Gramm-Rudman was to change fundamentally the nature of the budgetary debate. Without it the result of a failure to enact a deficit reduction package merely continued the status quo—large deficits. With Gramm-Rudman the consequence of no agreement on how to reduce the deficit is frighteningly large cuts in programs, mindlessly applied. The automatic cuts were to scare Congress and the president into passing legislation satisfying the deficit targets. Representative Leon Panetta (D-Calif.) explained: "The theme in what we did was to make this thing so irrational, so ugly that it works as a club."^[17] The threat of their favorite programs

[16] Henry Aaron et al., Economic Choices 1987 (Washington, D.C.: Brookings Institution, 1986), pp. 54–64; in particular, see Tables 3-1, 3-2, 3-3, and 3-4.

[17] Panetta's comments were quoted by Mel Levine (D-Calif.) in the Cong. Rec., daily edition (Dec. 11, 1985), p. H11891.

being beaten to death by "Grammbo" would force Congress and the president to face up to the deficit problem, or so the proponents argued.

Many members of Congress pointed out the political stalemate in Congress and the unwillingness of legislators to cut programs in exchange for deficit reduction. Gramm-Rudman, they believed, would put an end to this. According to Representative Dick Cheney (R-Wyo.),

At present when we sit down under existing law and negotiate over the budget, there are five items on the table: Defense, domestic spending, Social Security, taxes, and the deficit. The President always takes defense off the table; congressional Democrats always take domestic spending off the table; everybody takes Social Security … and taxes off the table. So the only thing to negotiate over is the deficit. What Gramm-Rudman does is to change that process. Gramm-Rudman takes the deficit off the table first and says to the Congress and the President that in the future, "When you put a budget together, you have to negotiate on those four other items."^[18]

Leon Panetta provided a similar diagnosis:

We are in a logjam; everyone acknowledges that. … We know where the answer is…. We have got to limit defense spending, we have got to limit entitlements and we have to raise revenues to pay the bills. Those three have to be put together if you are really serious about dealing with the deficit. But nobody wants to move; nobody wants to move.^[19]

[18] Ibid., p. H11879.

[19] Ibid., pp. H11883–11884.

Panetta contended that Gramm-Rudman would break apart the logjam. Representative Jim Jones (D-Okla.), a former Budget Committee chairman, commented, "We need a new mechanism which will force the Congress and the President to face the harsh realities of our current economic crisis … and put an honest deficit-reduction package on the table."^[20] Confronted by the possibility of automatic cuts that would endanger valued programs on both the domestic and defense sides of the budget, the president and members of Congress from both parties would become much more willing to negotiate and compromise.

Democratic supporters of Gramm-Rudman sought to force upon the president a terrible choice—between allowing the sequesters to go through and have his defense buildup torn down or agreeing to tax increases as a way of avoiding the sequesters. Neither result would be satisfying to a president whose two proudest achievements were cutting taxes and increasing the defense budget. Jack Kemp agreed with the Democratic interpretation of Gramm-Rudman and opposed it for the reasons they supported it: "This enforced deficit reduction mechanism will … impose draconian budget cuts in needed defense programs, and add enormous pressure on President Reagan to accept tax increases. In short, this plan threatens the entire Reagan revolution."^[21] But Republicans could hope that the threat of large domestic cuts would make the Democrats face up to the need to exercise greater control over entitlements. The consensus among the supporters was that threatened automatic cuts would force negotiations; no supporter seems to

[20] Ibid., p. H11887.

[21] Ibid., p. H11900.

have favored the sequesters as a means of balancing the budget.

Some opponents, notably Bennett Johnston, disputed the typical view that GRH would force the president to the bargaining table. Johnston contended that the president, unalterably opposed to tax increases, would be unwilling to negotiate away the most significant achievement of his presidency.

Now, you say, "Well, yes, [the automatic cuts are] a train wreck but the Congress can avoid the train wreck by doing something else." Well, by doing what? By getting together with the President and cutting $50 billion out of this budget? … Why, the President said he is against raising taxes and he is against cutting the defense budget. So just where is this meeting of the minds going to come together … ? Who thinks the President is going to get together with us that quickly? Why, if he does, he is going to have to back up not on one statement … [but] on his whole political career, on the theme of his Presidency.

Could Gramm-Rudman force a consensus? Nobody knew for sure, but in passing the legislation they gambled that it would.

Sequestration in 1986

More concerned as they are with the next election than the one following it, members of Congress tend to discount the future very heavily, and this makes it easier to vote for budget reductions scheduled far off in the future. The original budget balancing plan submitted by Phil Gramm and his colleagues did not provide for any

sequestration in the first year after its enactment. Sequestration would not take place until after the 1986 election, that is, not until after the twenty-two Republican senators newly elected in the Reagan surge of 1980 had faced their first reelection challenge. In negotiations with the Senate, House conferees adamantly insisted that if balancing the budget was good, balancing it sooner was better. They refused to go along with postponing Gramm-Rudman and succeeded in scheduling the first deadline for reductions for spring 1986.

Economic and budgetary projections in early January 1986 estimated that the deficit for the year would be approximately $220 billion, far in excess of the maximum allowable deficit of $171.9 billion. Under normal Gramm-Rudman rules, about $38 billion would have been cut from the deficit,^[22] but special rules for FY 1986 effectively limited the reduction in that year to $11.7 billion.^[23] Technically Congress had the option of preparing legislation to narrow the deficit gap by $11.7 billion and thus avoid the automatic cuts. But Congress had not yet passed the reconciliation bill from the previous year, and members were so tired and battered from enacting Gramm-Rudman that no one had any stomach for trying to pass another budget-cutting bill. The sequester was allowed to proceed uninterrupted. On February 1 the president issued the sequester order, effective March 1. The real test of Gramm-Rudman would have to wait.

[22] A deficit of $220 billion was $48 billion over the maximum allowable deficit. The normal rules permitted an excess of $10 billion, so the total reductions would have to be $38 billion; half of that would come from defense and half from domestic.

[23] See Gramm-Rudman and the Congressional Budget Process, App. X, pp. 28–29, for a description of the special rules governing the FY 1986 sequester.

Nullification and Reenactment

The most ticklish issue in designing the final Gramm-Rudman compromise was establishing a mechanism to "trigger" the sequester process and determine when deficit targets were not met. First, the trigger had to be beyond the immediate control of Congress. If Congress were responsible for initiating sequesters, then Congress would also have the power to terminate them, which it presumably would always do. Some agent outside Congress had to be responsible for beginning the process. Second, the trigger had to be beyond the immediate control of the president and the Office of Management and Budget because members of Congress did not trust the executive branch. As Harry Havens explains, "the level of details in the rules is a reflection of mistrust of the executive branch on the part of both the House and the Senate. Nowhere is this distrust more evident than in the structure of the trigger mechanism. Congress was flatly unwilling to leave control of this powerful machinery exclusively in the hands of the president or his Office of Management and Budget."^[24] The Congressional Budget Office was considered for the job but rejected on constitutional grounds. Congressional negotiators gave responsibility for determining that the maximum allowable deficit under law would be exceeded, and thus the power to trigger the sequester process, to the General Accounting Office (GAO), the government's auditor. To ensure independence in auditing government accounts the GAO was positioned anomalously between the executive and legislative branches.

[24] Havens, "Gramm-Rudman-Hollings," p. 10.

The head of the GAO, the comptroller general, is appointed by the president but is in large measure responsible to the Congress, which has the power to fire him. The organizational independence of the GAO and its reputation for impartiality made it an ideal agency to be trusted with the trigger.

There was a serious question whether this arrangement was legal, however. Immediately after Gramm-Rudman was signed into law, Representative Mike Synar (D-Okla.) brought suit in federal court, challenging the law on constitutional grounds.^[25] The district court panel of three judges that considered the case in early 1986 ruled that, by vesting the power to trigger the sequester process in the comptroller general, the act violated the constitution. The president appoints the comptroller general, but the capacity of Congress to remove the head of the GAO made that office subservient to Congress.^[26]

The Supreme Court, acting with dispatch, promptly heard arguments in the case (Charles A. Bowsher v. Mike Synar et al. ) and affirmed the district court ruling by a 7-2 decision. The court declared the automatic reduction procedure "unconstitutional on the ground that it vests executive power in the Comptroller General, an officer removable by Congress." In this case the court argued—as it did in Chadha v. INS (1983)—that the legislative branch may legally issue binding directions to the

[25] Anticipating the constitutional challenge, the drafters of Gramm-Rudman had written into the law rules providing for expedited judicial review. See The Congressional Budget Process: A General Explanation (1986), pp. 105–106.

[26] See Lance T. LeLoup, Barbara Luck Graham, and Stacey Barwick, "Deficit Politics and Constitutional Government: The Impact of Gramm-Rudman-Hollings," Public Budgeting and Finance (Spring 1987):83–103, for a lucid account of the progress of Gramm-Rudman through the courts.

executive branch only through enacting a law that may be vetoed by the president: "To permit the execution of laws to be vested in an officer answerable only to Congress would, in practical terms, reserve in Congress control over the execution of laws…. The structure of the constitution does not permit Congress to execute the laws; it follows that Congress cannot grant to an officer under its control what it does not possess."^[27]

The court's decision killed Gramm-Rudman. Without the comptroller general's report to the president, the automatic quality of the plan was lost, and unless the deficit ceilings were automatically enforced they would not be enforced at all.^[28]

Anticipating that the comptroller general's report would not be constitutional, Gramm-Rudman incorporated a backup provision that called upon both House and Senate Budget Committees, acting as a Joint Committee, to initiate legislation directing the president to effect the sequestration. This would be constitutional because the president would have the opportunity to veto the triggering legislation and stop the process. But the backup plan was flawed: it allowed Congress to decide whether to enforce the deficit ceiling.^[29]

[27] Quoted in ibid., p. 97.

[28] When the Supreme Court struck down Gramm-Rudman in 1986, it also ruled the March sequesters unconstitutional. Congress had to act to preserve that sequester, which it did by passing a bill to take the place of the comptroller general's report. See CQ Almanac, 1986, p. 580.

[29] The maximum allowable deficit for FY 1987 was $144 billion. In August 1987 a CBO-OMB report indicated that the deficit would be approximately $163.4 billion, nearly $20 billion over the target, and called for across-the-board sequesters of 5.6 percent in defense programs and 7.6 percent in unprotected domestic programs. However, because the law allows for a margin of error of $10 billion Congress only had to reduce the projected deficit by $10 billion. The Joint Committee prepared resolutions to initiate the sequester, but Congress did not enact them, claiming that a pending reconciliation bill would satisfy the deficit target. The projected deficit in FY 1987 was so close to the Gramm-Rudman target because of a one-time revenue windfall from enacting the 1986 tax bill. See CQ Almanac, 1986 , p. 580.

Gramm-Rudman was dead, but it would not stay in the grave. The Reagan administration had been pleased at the Supreme Court decision striking down the enforcement provision. Although the president had warmly embraced the concept of an automatic budget balancing plan, shortly after he signed the bill into law the Justice Department joined the side of Mike Synar and others to have the bill overturned. But in summer 1987 the government again ran out of borrowing authority, creating the need for another bill to increase the debt ceiling. Phil Gramm announced his intention to use this as an opportunity to fix the trigger and revive his budget-balancing plan. Of his determination to revive his plan for automatic budgetary balance, Gramm said, "this is a war that is not going to be called off."^[30] The administration, displeased that the defense buildup might again be threatened by automatic cuts, privately lobbied Gramm to end his crusade against deficits. Insinuating that his efforts would comfort the Russians, administration representatives reportedly asked Gramm to abandon his effort in order "to keep Ivan from the gate." Gramm noted that "there are certainly people at the Pentagon who are nervous about it."^[31] But he did not relent.

Political forces aligned rather differently the second time around for Gramm-Rudman. In 1985 the Republicans in Congress had been in the vanguard while Democrats

[30] CQ Weekly Report, July 18, 1987, p. 1571.

[31] CQ Weekly Report, Aug. 8, 1987, p. 1789.

tagged along in the background. In 1987 roles were partially reversed. Prominent Democrats were among the plan's most energetic supporters while Republican leaders hung back and voiced their growing doubts. Senate Budget Committee chairman Lawton Chiles (D-Fla.) and Ways and Means Committee chairman Dan Rostenkowski both supported the revival of Gramm-Rudman because they believed that the threat of defense cuts would force the president to accept tax increases. As Rostenkowski explained, "When you want to get somebody's attention, kick his dog."^[32] In his capacity as Ways and Means Committee chairman, Rostenkowski had special problems that he believed Gramm-Rudman might help solve. The FY 1988 budget resolution called upon the tax committees to produce legislation yielding $19.3 billion in new revenues in the first year and $63 billion over three years. Reagan, true to form, swore again and again that he would veto any tax increase. Members of the Ways and Means Committee were naturally reluctant to vote for any tax increase, but the likelihood that their labors would only provide the president with an opportunity to veto a Democratic tax increase and denounce Congress anew made them quite unwilling to vote for new taxes. Gramm-Rudman was useful to Rostenkowski because it might make the president more likely to sign a tax bill, and that in turn would make it easier to get a tax bill out of the Ways and Means Committee.

Bennett Johnston continued to argue that the president would not cave in to threats. He was joined in his opposition by a substantial number of Democratic senators as well as by a surprising new ally, former Senate

[32] CQ Weekly Report , July 11, 1987, p. 1515.

Budget Committee chairman Pete Domenici (R-N.M.), who had ardently supported Gramm-Rudman in 1985. He had come to the view that President Reagan was so strongly opposed to tax increases that he would rather risk the sequester process than accept taxes. Skepticism about the wisdom of Gramm-Rudman was reportedly widespread among Republicans, but because they were so closely identified with the proposal and had argued for it so strongly in 1985, it would be extremely embarrassing for Republicans to defect wholesale in 1987. The president was similarly trapped by his previous words and deeds. Having frequently berated Congress for its supposed irresponsible ways and having repeatedly asked Congress for a balanced budget constitutional amendment, he could not veto a balanced budget proposal without losing face.^[33]

Despite such deep misgivings the proposal moved forward through the legislative process. On September 23 the House passed, 230–176, a new, improved, and constitutionally sound Gramm-Rudman budget-balancing law; the Senate did likewise, 64–34. The president signed it into law, and Washington stepped into the ring for another round with Grammbo. The Gramm-Rudman "fix" set FY 1993 as the new year of the balanced budget, as opposed to FY 1991 in the original.^[34] It avoided the constitutional difficulties of its predecessor by vesting the power to trigger sequesters in the Office of Management and Budget, an agency unambiguously executive in nature.

[33] CQ Weekly Report , Sept. 19, 1987, p. 2234.

[34] The revised schedule of maximum deficits was: FY 1988–$144 billion; FY 1989–$136 billion; FY 1990–$100 billion; FY 1991–$64 billion; FY 1992–$28 billion; FY 1993–no deficit!

Does the Sequester Threat Encourage Compromise?

In 1987 as they had in 1985, the supporters of Gramm-Rudman claimed it would force Congress and the president to compromise with each other, if only to prevent disaster. This logic, however, was never fairly tested, and it is unlikely that it ever would be. If a member of Congress values the protection and preservation of an individual program more than balancing the budget, he or she would never vote to subject the program to automatic reductions. Someone who values deficit reduction above particular components in the budget would not need Gramm-Rudman. Accordingly, as Gramm-Rudman made its way through Congress its evolution was similar to that of budget resolutions. To ensure majority acceptance in two chambers, more and more programs were protected from cuts. By the time the proposal had been amended in the Senate and gone through a conference committee it was greatly altered. To gain the support of liberals, programs providing benefits to the poor were exempted from cuts. To gain the support of southern Democrats. veterans' programs were protected. Reagan, of course, retained the power to prevent tax increases.

Gramm-Rudman was intended to end a logjam, to break an impasse, and to encourage compromise. But by the time the negotiations were ended and the bill passed, the programs that members cared about most were protected from sequestration. There was no increased incentive to negotiate. Individuals who wanted most of all to protect Social Security could do so, as before, by refusing to negotiate. The evolution of Gramm-Rudman from a proposal under which all programs

would suffer to one under which some programs were protected concerned Representative Trent Lott: "Once we exempted certain programs from sequestration … we made the automatic spending cut approach more thinkable and doable, and we made it that much less likely that Congress would face up to its responsibilities to order priorities and make those cuts in a more reasoned and reasonable manner."^[35] Under sequesters, President Reagan's defense budget would take a beating, but he could still ensure through his veto that taxes would not rise. Gramm-Rudman would not initiate, as Representative Boulter hoped, "the beginning of a great national debate to force us to make choices."^[36] Instead, Congress made its choices and set its priorities in deciding what programs to exempt from the sequester process.

Fall 1987 provided the first good test of the notion that Gramm-Rudman would encourage compromise, and the test confirmed the fears of Bennett Johnston and Pete Domenici. The new rules for sequesters required minimum deficit reductions of $23 billion in FY 1988 to prevent sequestration. The Democrats pushed a reconciliation bill (including $12.3 billion in new revenues) through Congress. While this bill, if enacted, would partly satisfy Gramm-Rudman it did not satisfy the president, who promised to veto it. Republicans in Congress wondered openly why the Democrats even bothered to complete action on the measure.

Once again the political system was deadlocked. The Democratic offer, the reconciliation bill, was on the table, but it was rejected outright by the president. Reagan and other Republicans let it be known that they preferred

[35] Cong. Rec. , daily edition (Dec. 11, 1985), p. H1 1878.

[36] Ibid., p. H11884.

to allow the across-the-board reductions to take place than to consider higher taxes. "Arithmetic suggests that defense may not do much worse under automatic cuts than under conventional legislation in the Democratic led Congress," Congressional Quarterly reported. There were also significant advantages to allowing the sequesters to proceed: "Under automatic cuts, they get the reductions in domestic programs that Reagan sought, no tax increase and many opportunities to blame Democrats for savaging the military."^[37] Democrats saw political advantages for themselves in the situation, expecting that if Reagan vetoed their reconciliation bill and allowed the sequestration to occur, the public would blame Republicans. In addition, they liked the idea of cutting defense.

The bargaining and compromise that the proponents of Gramm-Rudman had so confidently predicted was nowhere to be seen. Both sides seemed more concerned with protecting their constituencies and their reputations than with actually balancing the budget or reducing the deficit. Both sides gave every appearance of happily accepting the "train wreck" in order to blame it on the opposition. This was politics as usual.

Sequestration would surely have taken place in 1987 but for the intervention of a random event—a stock market crash of over 500 points in just one day. On "Black Monday," October 19, a long bull market came to sudden and sickening end as Wall Street experienced its biggest single day decline in stock prices.^[38] Stock

[37] CQ Weekly Report , Oct. 3, 1987, p. 2394.

[38] In the Black Monday crash, the Dow Jones Industrial average lost 22.6 percent of its value, nearly twice the 12.8 percent decline in stock value of "Black Tuesday," October 28, 1929. Approximately $500 billion of wealth was lost in the decline. CQ Weekly Report , Oct. 24, 1987, p. 2573.

markets around the globe tumbled similarly, and the world wondered whether this was an accident or the precursor of bigger declines yet to come. In the days following the crash the market exhibited tremendous volatility, generating concern about what could be done to restore investor confidence and avert an all-out disaster. As stockbrokers, economists, politicians, and newspaper columnists sought to explain the event, they gladly heaped blame on the large federal deficit and the inability of Washington to control it.

The onset of Gramm-Rudman automatic spending reductions on October 20 underscored the impression that Washington was incapable of dealing responsibly with pressing political problems. According to Warren Rudman, "the falling of the Gramm-Rudman … ax tells [Wall Street] that the government isn't working, and that they don't want to hear."^[39] The sequester order was issued by the president on October 15 but would not become permanent until November 20. Congress and the president had until then to produce deficit reductions worth $23 billion in order to roll back the sequester. Whether or not they could avert sequestration quickly became invested with tremendous significance.

To say that the stock market turmoil resulted from the federal budget deficit was ludicrous because the market had been on a steady rise for several years, in each of which there had been a very large deficit. Nonetheless, the budget deficit immediately became a popular scape-goat for the disaster, with members of Congress agreeing that the failure of the government to reduce deficits was at least partly responsible. President Reagan held a press conference within days of Black Monday and announced

[39] Ibid., p. 2571.

that he would meet with congressional leaders in an effort to reduce the deficit, "with everything on the table."^[40] Bipartisan meetings began on October 26. The stock market had done what Gramm-Rudman could not—it introduced a sense of panic and desperation that made deficit reduction a high priority.

With the financial markets in a continuing turmoil, and with Wall Street watching and waiting, the budget negotiators began their meetings under tremendous pressure to agree. "A sense of apprehension, even fear, seems to have gripped negotiators on all sides of the table," Steven Roberts of the New York Times reported. "With the financial markets watching their every move, lawmakers say this is not the time to play their usual political games with the budget."^[41] Bennett Johnston explained that among the negotiators "the feeling is that the markets are really looking at what we're doing. We're very conscious of the markets." An unnamed Republican senator expressed hope that Wall Street remained depressed because "that's the only way we'll get together. We've got to keep the pressure on."^[42] The pressure was kept on by the opinion of a partner at the investment firm of Goldman, Sachs & Company, widely shared, according to the New York Times , that "the market would react negatively to a budget cut of only $20 billion." A Wall Street economist said that a cut of only $23 billion, the minimum needed to avert sequestration, "certainly cannot help the markets."^[43]

[40] R. W. Apple, Jr., "Reagan Says He'll Negotiate With Congress on the Deficit," New York Times , Oct. 23, 1987, p. 1.

[41] Steven Roberts. "Parley on Budget Opened," New York Times , Oct. 29, 1987, p. 29.

[42] Ibid.

[43] Robert A. Bennett, "Wall St. Sees Market Drop in a Small Budget Cut," New York Times , Nov. 19,1987, p. 15.

The goal of the conferees was to produce a reduction in the deficit of greater magnitude than the $23 billion sequester, and to this end they continued meeting over a period of several weeks. The negotiations were not easy, for Democrats continued to protect their favorite programs while the Republicans tried to protect theirs. But the talks held out promise of producing an agreement because, for now at least, all sides were less interested in scoring political points and more interested in reaching an agreement. The White House showed new flexibility on tax increases and Democrats showed greater flexibility on domestic spending. By November 10 one participant could say that "I think people see the outlines of a plan through the mist,"^[44] and on November 20 an agreement on a deficit reduction of $30 billion was signed. The agreement called for $11 billion in revenue increases and spending cuts of $12.8 billion, of which $5 billion would come from defense. A variety of other measures, including $5 billion in asset sales, brought the total up to $30 billion. This was larger than the absolute minimum necessary to halt sequestration but not as large as some negotiators had hoped for. Apparently the group had come close to agreement on a much larger reduction involving highly controversial limits on entitlement COLAs, "but the idea was dropped when neither administration negotiators nor congressional leaders could figure out how to limit the political damage to their colleagues' satisfaction."^[45]

Briefly, the stock market crash increased the importance to legislators of reducing the deficit and increased

[44] Jonathan Feuerbringer, "Accord Held Near on Deficit Figures," New York Times , Nov. 11, 1987, p. 1.

[45] Jonathan Feuerbringer, "Agreement Signed to Reduce Deficit $30 Billion in 1988," New York Times , Nov. 21, 1987, p. 1.

their willingness to exchange program reductions for deficit reductions. For once, it appeared that the cost of not reducing the deficit might be real and terrible. Constituents did not create much incentive to reduce the deficit, but the possibility of another stock market crash did. However, as the impact and memory of the horrors of Black Monday began to recede, the willingness to compromise declined accordingly.

The passage of Gramm-Rudman can be taken as evidence of the futility of the budget process and reconciliation. Because the budget process did not work, it can be argued, Gramm-Rudman was needed. However, Gramm-Rudman in 1987 shows how effective the reconciliation process is. When there was a general agreement, not just on the desirability of reducing the deficit, but on the means as well, the reconciliation mechanism facilitated its speedy enactment. After the 1987 summit agreement emerged, the House and Senate moved to implement its provisions by passing a reconciliation bill and a continuing appropriation.

The reconciliation bill included a number of controversial spending reductions, yet its enactment was never in serious danger. Members of the Senate Agriculture Committee were required by the agreement to produce $2.1 billion in savings over two years. They did not want to, but they did. "It is a chaotic situation," Senator David Pryor (D-Ark.) said. "We're about to make some very bad decisions for farmers and rural America because there is a gun at our head. The leadership has drawn a box around us, with tight parameters."^[46] Enacting the package of deficit reductions might have been endangered had Republicans revolted and refused

[46] Ward Sinclair, "Senate Panel Agrees to Cut Farm Programs," Washington Post , Dec. 5, 1987 (LEGI-SLATE Story No. 53059).

to support them because of included tax increases. Speaker Jim Wright announced that votes would be "needed on both sides of the aisle." Whether the legislation would pass depended, in Wright's view, on the level of support it received from the president.^[47] House Minority Leader Bob Michel and President Reagan were able to persuade sufficient numbers of their own party to support the package; it passed both chambers and became law.

The summit agreement as implemented satisfied Gramm-Rudman in fact as well as on paper. The "maximum deficit amount" for FY 1988 was $144 billion, which, with a cushion of $10 billion added, meant that the deficit could be no larger than $154 billion. The actual deficit for the year was $155.1 billion. The $1.1 billion excess is exceedingly modest by congressional standards.

When deficit reduction does not appear to be the top priority of most members of Congress or the president, and when legislators seem more concerned with protecting programs that benefit their constituents, what can be expected of budgetary procedures? Very little, it would appear. As Tom Foley (D-Wash.) had said in the debate over Gramm-Rudman: "No rule or statute or constitutional amendment can require human beings to agree to something."^[48]

[47] Mary Thornton, "Wright Says Deficit Bill Needs GOP Votes," Washington Post , Nov. 23, 1987 (LEGI-SLATE Story No. 52342).

[48] CQ Weekly Report , June 6, 1987, p. 1173.