No Go in the Senate
While House Democrats worked through ad hoc factions within their caucus and House Republicans retreated to their usual nay-saying position, the barriers of partisanship were not so great in the Senate.[79] and Domenici strove to build bipartisan coalitions outward from their committees. Dole enlisted Volcker to help. At a closed meeting of the Finance Committee on October 26, the Federal Reserve chairman put the antideficit case in strong terms. According to Senator Danforth, Volcker's warning galvanized a majority of each party on the committee to begin drafting an antideficit package.
On Thursday, October 27, Dole unveiled his own "2.5% solution" (as Newsweek termed it), modifying the formulas proposed before the summer recess in the House and Senate, good for three years instead of four. Dole's proposal would reduce COLAs on everything except the poverty programs by a small percentage (2.5) each year. Indexing would be changed to allow a 2.5 percent tax increase each year—a major concession by Dole, the sponsor of indexing. Corporate income taxes would face a surcharge of 5 percent for the three years. Spending reductions would be extended to discretionary programs by allowing the president to impound 2.5 percent of appropriated funds each year, with a 15 percent limit on cuts to any single program. But the political costs of cutting social security perhaps would be mitigated by a provision for funneling the savings into the medicare trust fund, which was due for severe trouble by 1991. Senators Boren, Danforth, and Wallop joined Dole in presenting this modification of their earlier proposal.
While Dole worked on a deficit package, he was also in charge of a bill to increase the debt ceiling—the classic innocent victim looking to be taken hostage—by $225.6 billion. Dole hoped that his plan might forestall such maneuvers. Nevertheless, Senator Armstrong won (70 to 15) an amendment reducing the increase to $61 billion, enough only to last until February. Armstrong argued that the February deadline increased the "bargaining power" for deficit reduction. Senators then loaded the debt bill with nongermane amendments on matters ranging from press coverage of the Grenada invasion to Japanese beef imports. Lawton Chiles failed (31 to 53) in a more germane attempt to make the debt limit increase contingent on passage of legislation mandated by the reconciliation provisions of the budget. Opponents of the debt ceiling, such as Russell Long, were arguing that to endorse the increase without taking other actions meant endorsing the deficit. "I'm beginning to get the feeling," Howard Baker remarked, "that the Senate doesn't want to pass the debt limit."[80]
On October 31 Baker moved that the bill be recommitted to the Finance Committee to remove all amendments, including Armstrong's, but he lost 27 to 68. Senators wanted neither to abandon their pet projects nor to pass the debt limit. They then defeated the amended bill, 39 to 56. Most Democrats opposed the debt ceiling because they wanted the Republicans to have to vote for the deficit.
Dole had fought for a clean debt increase. When the debt ceiling was beaten, however, he remarked that its rejection provided "an opportunity to hammer something out."[81]
In a meeting with House and Senate Republican leaders, President Reagan banged on the table and vowed to veto any debt-ceiling bill that included a tax increase. "I've never seen him that mad," reported Silvio Conte.[82] Nevertheless, Dole set his committee to work devising a package that might be attached to a debt bill. Although the senator had not chosen to take the debt ceiling hostage, he could see some advantages in the result. In exploiting someone else's hijacking of the debt ceiling, as in proposing an across-the-board formula and giving the president restricted powers of impoundment, Dole's maneuvers in late 1983 foreshadowed passage of Gramm-Rudman-Hollings in 1985.
After many sessions to consider a number of approaches, including an energy tax and cuts in medicare, defense, and farm subsidies, Finance Committee bargainers put out trial balloons for a $150 billion plan. On November 3, Howard Baker convened a meeting of leaders and ranking members of the Finance, Budget, and Appropriations committees. Domenici, Hatfield, Long, and Chiles agreed that Congress should act before adjournment; but Minority Leader Byrd, who joined the meeting, argued (as also in later public comments) that action should be avoided until the president's consent was secured. Howard Baker responded that, if the Speaker were willing to go along, he would try to win over the president.
That meeting in Baker's office was a high-water mark of the bipartisan effort. That evening, however, President Reagan rejected the whole effort. He told a group of his 1980 campaign workers that "we don't face large deficits because Americans are not taxed enough. We face those deficits because the Congress still spends too much…. And I am prepared to veto tax increases if they send them to my desk, no matter how they arrrive."[83]
Dole dismissed this statement as "boilerplate."[84] He quipped that if his committee had to consult Reagan during the president's upcoming trip to Asia, "We'll call him. If we get a bad connection, we'll be all right."[85] Reagan, however, was not Dole's only obstacle. Senator Moynihan commented that "there are things in there we [Democrats] could
not accept."[86] For example, the Speaker condemned social security COLA cuts.[87] Finance members went back to drafting a bill that would defuse some opposition, though at the cost of a smaller deficit reduction.
The Senate's reconciliation bill—$14.6 billion in spending savings over three years and $13.4 billion in revenue increases—was reported out of the Budget Committee, without recommendation, on November 4.
Meanwhile, Dole changed his larger proposal in order to defuse the president's opposition and ensure that other committees did their part for deficit reduction; $150 billion would be saved over four years instead of three, much of the tax hike would be delayed, and almost all the provisions would go into effect only if CBO certified on November 15, 1984, that spending reductions had been made. If a large percentage, but not all, had been made, that same proportion of revenue hikes would go into effect. Dole had thus adopted the president's "trigger" idea without specifying that Reagan get his preferred cuts.
At the same time, Dole abandoned the 2.5 percent chops at COLAs and tax indexing, proposing only marginal, "rounding" adjustments. His major revenue provisions now were a 2 percent tax on energy products, a 2 percent extra tax on corporate income, and a surcharge on individuals with large tax bills. Senate Finance's consideration of Dole's new plan on November 16 "quickly descended," the National Journal reported, "into a murky discussion of small and obscure reforms." On the Senate floor that day Domenici and Chiles unveiled their own plan, an amendment to bring the reconciliation into compliance with the budget's deficit-reduction totals, essentially by accepting Dole's original 2.5 percent solution but throwing out the COLA reductions, a plan better for Republicans than the budget resolution but worse than Dole's target and very different from Reagan's wishes. Although they denied any such intent, it looked as if they were challenging the jurisdiction of the Finance Committee, and Dole opposed them on those grounds. The budget leaders' plan was easily defeated by an alliance of conservative Republicans with Democrats who believed, in the words of Russell Long, that "it doesn't accomplish much to be one of the dead bodies on the battlefield after the smoke has cleared."[88]
In the early hours of November 17, Howard Baker got the debt ceiling through the Senate, 58 to 40.[89] Conferees agreed on enough debt to get the government through April and threw out the Senate's assorted riders. Congress adjourned.
No reconciliation bill had been passed; the budget resolution's revenue targets had been ignored by everyone but the liberal Democrats. "As we leave Washington," Dan Rostenkowski declared, "word of our impotence will precede us. We have put special interests on notice that
we can be pushed around. We have confessed to an already doubting nation that we are ruled by political fear, rather than economic courage." Senator Dole explained, "There are two stumbling blocks. One, Ronald Reagan; the other, Tip O'Neill. Unless we have the two giants in this town on board, we're not going to put together a deficit-reduction package."[90]
If the readers' patience has been taxed, think of the poor legislator. The meal was frustration pie. Everyone had to eat it. Just when they thought this monotonous diet had to end, they ate more than they ever thought possible. What remained was discovering newer and more fiendish ways of exasperating themselves.