A Thicket of Thorns
As Republicans plotted procedural maneuvers to hold their factions together—and reduce the deficit a bit—Democrats searched for ways to unite themselves, embarrass the Republicans, and outbid them on the deficit.
As a minority, Senate Democrats did not control procedure. They could, however, use the Senate's loose structure, including the threat of filibuster, to resist Republican innovations. Lawton Chiles, their leader on Senate Budget, strongly believed in the budget process and balanced budgets. More partisan Democrats, such as Majority Leader Byrd, did not want the Republicans to deflect attention from the deficits themselves to a deficit-reduction package—exaggerated because it was spread over three years and from an overstated defense base. Senate Democrats, therefore, wanted to force votes on a budget resolution.
On March 22 the Senate Democratic conference endorsed a Chiles package that allegedly would save $50 billion more than the Rose Garden package. Chiles held defense to 4 percent real growth per year and raised taxes by about $25 billion more than the Rose Garden total, by deferring the first two years of income tax indexing. The Chiles package showed that conservative Democrats, not just Ted Kennedy and other liberals, wanted to raise taxes and reject the president's defense numbers. Other Senate proposals would show the same pattern of conservative support for less defense spending and higher taxes.[34]
In the House as well conservative southerners were moving toward their liberal Democratic brethren. House Democrats spent most of March in internal debate about (a) what their budget should include and (b) how it should be packaged. They finally settled on George Miller's "pay-as-you-go" plan, which he had been pushing since 1982. He would establish as the base current spending and revenues (as increased in future years by inflation). Then any increment of spending would have to be paid for by new taxes. Because the proposal's major increments were in defense, Miller's plan offered the administration a simple choice: if it wanted the military buildup, then it should pay for that buildup. The plan was particularly attractive to liberals because it rejected the existing baselines that favored defense.[35]
Nonetheless, support for Miller revealed just how much of a bind liberals were in. Focusing attention on paying for defense discomfits conservatives; yet if everybody assumes the vast majority of increases will go to the military, then liberals can hardly be happy. To say that any new spending demands new taxes does not sit well with advocates of government activism. Imagine how few new programs would be started if each also included a tax hike! Such a rule would radically transform the budgetary process.
The House Budget Committee resolution of March 28 created three classes of programs: those increased by 3.5 percent, slightly less than the projected 5.2 percent inflation; those fully adjusted for inflation; and those increased by 3.5 percent above inflation. The latter increases, in defense and mostly means-tested entitlements, were to be paid for by
new taxes. The total of increases and new taxes was not coincidentally, nearly the same as that in the Ways and Means bill.[36]
Democratic leaders were improving at a strategy of substantive and procedural inclusion by which they helped their policy minorities feel like they were well treated. Thus, veterans' benefits were favored, giving the southerners a sign that they were heard. The leadership also allowed many amendments on the floor, so members could see that the whole House, not the leadership alone, prevented any package that reduced the deficit by more than the Budget Committee's plan. Although nobody would propose a higher deficit, nobody could pass a lower one.
Freshman Democrats, led by Representative Buddy MacKay of Florida, who wanted to apply new taxes to deficit reduction, not to new defense and poverty spending, had a chance to see that only 108 members agreed.[37] The Republican leaders' budget plan increased the Rose Garden's deficit reduction by freezing discretionary domestic programs below inflation for three years instead of one and by assuming some management savings suggested by the Grace Commission; that received only 107 votes. Another, more conservative Republican proposal (raising hardly any revenues, but adopting even more Grace Commission spending reductions) was rejected 51 to 354. Purely to embarrass their rivals, the Democrats forced a vote on Reagan's original budget, which won only the lonely vote of Jack Kemp.
The House handily defeated three alternatives sponsored by Democrats. The Black Caucus budget funded new social spending with big defense cuts and tax hikes to produce easily the biggest deficit reduction, $324 billion. It won 76 votes, tapping as always the hard core of liberal sentiment. The Conservative Democratic Forum proposed a $225 billion package that obtained extra savings by shaving 2 percent off indexing of both benefits and revenues. It showed that the boll weevils were putting deficit reduction ahead of both conservative change in government priorities and the safety-first politics of ducking the COLA issue, but it received only 59 votes. The third, and most popular, alternative, from the DSG, would have held most spending, including defense, to inflation adjustments and would have raised income taxes by delaying indexing. DSG's plan also revealed sentiments: liberals now felt they could oppose any defense buildup; it won all of 132 votes.
"Pay-as-you-go" was bitterly denounced by Republicans. Minority Leader Michel called it "pray-as-you-go," given the defense slowdown.[38] Phil Gramm scoffed that "it's kind of crazy to talk about pay-as-you-go when you have a $175 billion deficit."[39] Yet, as the votes on alternatives showed, there was, if anything, more sentiment for lower defense spending than for bigger domestic cuts. Tapping what substantive agreement
existed, the House Democratic plan won by the biggest margin ever for a first resolution in the House, 250 to 168.[40]
House Democratic leaders pushed forward. On April 11, the Ways and Means tax bill, H. R. 4170, came to the floor under a closed rule. After only three hours of debate, it passed easily 318 to 97. The next day, Democrats brought up a spending reconciliation (H.R. 5394) mandated by the budget resolution passed only the week before. Under the formal budget process, reconciliation was supposed to follow agreement between the two houses on a budget resolution, but the House was not about to wait around for the Senate. House leaders wanted to claim credit for action on the deficit, and they also wanted to make sure the action occurred. Support for the formal budget process took a back seat.
Spending reconciliation hit a snag when provisions that related to freezing physicians' fees under medicare were beaten by a coalition of Republicans and rural Democrats. Rural members feared that a sole resident doctor, so common in some areas, might refuse care under the rules being proposed; House Republicans (and the American Medical Association) won that fight. The GOP failed, however, to eliminate Henry Waxman's (D-Calif.) spending increases for certain poverty programs. Waxman (like his ally, the late Phil Burton) was a liberal who played hardball. In politics, Waxman was building a machine, funneling campaign money from his Los Angeles base to other Democrats whose needs were greater than his own. In policy, he kept finding "motherhood" ideas for program expansion—proposals that would be hard for Republicans to oppose. The 1984 batch included the Child Health Assurance Program (CHAP), expanding medicaid coverage for maternal and pediatric care. CHAP and a few other ideas were worked into the reconciliation package. The bill, which despite those increases would save $3.9 billion over three years, passed, 261 to 152.
By April 12 the House Democrats had established their control of the lower house, with votes on a budget resolution, spending reduction, and tax increase bills. Armed Services had already acted to reduce the administration's defense authorization to a 5.5 percent real increase—below the Rose Garden, surprisingly low for that committee. The House leadership soon gave Appropriations a green light to begin reporting bills even if no budget resolution was agreed, using the House-passed version for guidance. As Democratic factions warred over the presidential nomination, they united within the House, providing a semblance of coherent party government. Unfortunately for fans of order, a different party controlled (if barely) the Senate. Without the services of a rules committee, Howard Baker had more trouble managing his majority than did Tip O'Neill.
Baker and Domenici had cooperation from some key players. Reagan himself visited the Hill on March 21 to lobby his party for the Rose Garden package. Knowing the Rose Garden was the best deal the military could hope for, John Tower worked hard to push it through. Chairman Dole whipped his tax hikes and spending cuts through Finance. Business Week reported that "lobbyists quickly lowered their profiles, and the members snapped into line behind Dole. In a matter of days, in fact, they voted for the whole $73.8 billion deficit-reduction package including $25.8 billion in spending cuts, by 22-0."[41] Finance voted out the Deficit Reduction Act of 1984 (DEFRA) on March 21, and Senator Baker planned to attach it to the leftover reconciliation from 1983, along with the appropriation caps and various other Rose Garden deals. Even as the president lobbied his party and Finance reported out its bill, however, the Republican strategy in the Senate began to run into trouble.
The right wing wanted domestic cuts guaranteed. From the Republican left (so to speak), Lowell Weicker complained that the agreement "just absolutely would raise havoc with spending in health, education, and science."[42] Other Republicans such as Slade Gorton, Nancy Kassebaum, and Charles Grassley wanted bigger deficit reductions. Mark Hatfield resisted plans to bypass the budget resolution because he wanted a budget debate that might change the balance between defense and domestic. Democrats agreed, feeling they were being denied a place in policy making by Baker and Domenici's planned tactics. Russell Long threatened to filibuster by reading the entire U.S. Code.[43]
Senate Republicans were torn between the desire to do more than the Rose Garden and fear of delay. The Gorton-Kassebaum-Grassley faction favored debate in order to forge consensus on bigger defense reductions; yet they feared delay even more, endangering the Finance Committee bill given their conservative colleagues' suspicions. Moderate Republicans and Democrats wanted quick action as well because the financial markets were getting skittish. Interest rates were climbing; bond and stock prices sliding; as usual, the bad news was blamed on (CBO) projections of mounting deficits. "When the prime rate jumps, so should Congress," declared Bob Dole.[44] The difficulty was that considering alternatives is a powerful norm in the Senate; many members would object to being rushed on a major issue like the budget, and they could use procedure to slow things down.
"Domenici will not show a lot of patience with delay," his top aide, Steve Bell, warned in April.[45] Patience, however, was Domenici's lot. He and Baker allowed the Budget Committee to meet and consider alternative plans. That short delay was enough to abort Baker's plan to attach the Rose Garden agreement to H.R. 4169. That leftover reconciliation involved some COLA delays that had to be programmed into the computers
by early April. The Senate, therefore, passed H. R. 4169 (67 to 26) on April 5, while budget committee members maneuvered over a resolution and Howard Baker searched for an alternative vehicle. He found it in an already rather deceptively named House-passed tariff bill. "When it's finished," the majority leader declared, "the Federal Boat Safety Act will carry a cargo of valuable commodities."[46]
Finance's package, DEFRA, reached the Senate floor on April 9. Democrats immediately began delaying tactics in order, as Chiles's top aide Richard N. Brandon declared, "to get the real numbers and deficit figures on the board."[47] Meanwhile, the badly divided Senate Budget Committee struggled to pass a budget resolution.
The most complicated maneuvers involved a budget plan prepared by Republicans Kassebaum and Grassley with Democrat Joseph R. Biden, Jr., of Delaware. These three took the idea of a freeze seriously and proposed freezing everything —defense, domestic discretionary, and entitlement spending (entitlements would grow with population, but COLAs would be canceled)—for FY85. Joined by Max Baucus (D-Mont.) at a later point in the debate, the sponsors explained their proposal:
Unfortunately, the major [other] proposals still are more political than substantive. Although they are supposed to reduce the deficit significantly, most of the proposed reductions come not in 1985 but instead in the elusive "out-years."
This kind of deferred solution won't convince the American people that Congress is serious about reducing the deficit. It won't convince the managers of our financial markets that Congress is serious about reducing the deficit. And it doesn't convince us, either.[48]
They hit all the right notes: a freeze would be "fair," "simple," "right"; it would stop the growing interest bill and protect "our children's future."
If deficit reduction were the overriding criterion, the "K-G-B" freeze (as it was rather ominously dubbed) would have been a nearly ideal plan.[49] The catch was that most Democrats were uncomfortable with important parts of the freeze. Some Democrats conceded that they would not vote to cancel social security COLAs in the real life of legislation.[50] Republicans who suspected as much could feel good about the freeze only if they believed the Democrats were sincere; otherwise, it would ratchet defense down but change little else.
In the Budget Committee on April 11, John Tower declared that the defense freeze would "almost be tantamount to unilateral disarmament." Pete Domenici told members they should oppose the freeze because its social security COLA elimination was unrealistic. Because he had proposed such things before (and would again), that argument sounded strange in his voice; under election-year circumstances, however, Domenici
was counseling moderation in deficit reduction. Yet the freeze carried, 10 to 9, with heavy Democratic support. Then Bob Kasten switched his vote, declaring that "I didn't anticipate this vote would take on a political tone." As the margins changed, Democrats who didn't want to be associated with the social security provisions jumped off the wagon, while Republicans who wanted to posture against the deficit but not to torpedo their party climbed back on. The K-G-B plan was a strange kind of trolley: only popular so long as it wasn't going anywhere. In the end, it lost 7 to 13.[51]
Party battle lines having been drawn, the SBC then defeated Chiles's Democratic plan (described above) 11 to 10 and endorsed the Rose Garden package by the same margin. Thus, on April 11 the Rose Garden proposal passed its first hurdle. Barely.
On April 13 around 5:00 a.m. (the leadership wanted to finish before Easter) the DEFRA tax bill passed as an amendment to H.R. 2163 (that handy Boat Safety Act). Amendments made only minor changes. Finance had done its job well by ferreting out a relatively less contentious set of revenue raisers; the Senate passed Finance's package, 76 to 5. The next stage, in which Howard Baker would try to add the more contentious spending caps to the growing Boat Safety bill, would be far more difficult.
Though it was formally a reconciliation fight, the Senate debate that began during the week of April 23 looked a lot like a budget-resolution debate, as senators proposed a variety of comprehensive packages. Because it involved real legislation, it was also more serious. Senators drafted nearly forty amendments. "Believing that the one offered last would have the best chance of prevailing," ten senators asked Baker to give them the last shot.[52]
Senators quickly disposed of conservative plans offered by Senators Helms (27 to 68) and Symms (11 to 84). The fight then moved to two rival freeze plans—a Hollings-Andrews and the Kassebaum-Biden-Grassley-Baucus proposal. Hollings had more taxes and defense, and less deficit, than the K-G-B plan. Each would reduce COLAs. Neither did very well. Hollings was defeated 57 to 38 on May 2. The Kassebaum plan, supported by several normally Republican groups, including the Chamber of Commerce and National Association of Manufacturers, was expected to do better. "It's fair. It exempts nothing. It is a cut now, not in later years," NAM Vice President Paul Howard explained.[53] These business groups could accept the defense cut produced by a nominal freeze; but defense advocates, and most senators, could not. Majority Whip Ted Stevens called the freeze so "drastic that it would require the draw down of our troops committed to the defense of our interests abroad."[54] That freeze was beaten, 65 to 33.
Never let it be said that the deficit has not been reduced because plans
for larger reductions were not offered, or because no "fair" plans were put forward, or because the packages were not big enough to be worth the pain. On the Senate and the House floors in 1984, as in other years, there were plenty of large, balanced proposals. They kept losing because more pain means more opponents.
After the freezes were defeated, the situation recalled 1983: a Republican plan, a Democratic plan, and a group of moderate Republicans torn between party loyalty and program preference. On May 8 the Democrats almost won. Chiles's plan lost on a tie vote, 49 to 49, with Hollings and Glenn absent; 6 Republicans had joined the unanimous remaining Democrats. We suspect that in a pinch one Republican could have been switched; nevertheless, Republican leaders had to see that vote as a bad sign. Other Republicans, like Gorton, might switch the other way.
In a way that presumed $37 billion less for defense and $20 billion more in domestic spending than the Rose Garden agreement, Republican moderates Chafee, Weicker, Andrews, and Stafford proposed combining defense and domestic caps, allowing Appropriations to determine priorities later. Howard Baker replied that without the caps the budget package would collapse; that is, Reagan would veto the tax bill. The leadership managed to table Chafee's amendment 48 to 46 only after Charles Percy (R-Ill., facing a difficult reelection fight) switched his vote. Now Baker and Domenici really had to worry. Of the six absent senators, five (Hart, Inouye, Tsongas, Glenn, and Mathias) could be expected to side with Chafee if he tried again.
It looked as if the Rose Garden plan would fail by one or two votes. But if the Rose Garden failed, then maybe no DEFRA act, a veto war over domestic spending, and lots of bad publicity about the split in the Republican party would follow. Howard Baker had no choice but to pay off the moderates as cheaply as possible. After a few days of negotiating he worked out a deal to take unspent budget authority of $2 billion from synfuels and spread it around other domestic programs. Baker told the conservatives the extra money would not increase the deficit because it already had been appropriated for synfuels. The argument was a bit disingenuous—synfuels was highly unlikely to spend the money—but it worked. Democrats blasted the moderate Republicans for settling so cheaply when Chafee's much larger amendment had so nearly won. "You don't have a majority," was Weicker's reply," for any significant decrease in defense spending or for any meaningful increase in education and health programs."[55] And Stafford looked to the conference that, he asserted, "will reduce military expenditures significantly toward the House's figures. That always happens.[56]
On May 17 the amendment, adding spending caps and other savings
to the heavily loaded Boat Safety Act, carried 65 to 32. Republicans were unanimous; they were joined by mostly conservative southern Democrats. The entire package, as amended, then passed the Senate 74 to 23, winning more liberal support with its tax provisions. The next day the Senate quickly adopted a budget resolution to conform to its reconciliation (instead of the other way around) and sent everything off to conference.