The House Divided

The left wing of the Democratic party wanted to cut defense if the budget were to be balanced. Yet such a plan would go nowhere in the full House, never mind in the Senate. Giaimo therefore chose to write off some portion of the liberals, for example, the Black Caucus, and rely, if necessary, on Republican support to pass the first resolution.^[4] Republicans had never delivered as many as twenty votes for a resolution; it took quite a leap of faith to imagine that, with the Democrats reeling in a presidential election year, the GOP was going to help them pass a budget.^[5] Yet he had no safe alternatives.

Giaimo first worked to get as much agreement as possible among the rest of the Democrats. Two days of private caucusing by HBC Democrats yielded some agreement.^[6] On March 20 HBC approved, in principle, a package of $16.4 billion in cuts (as adjusted for new estimates of inflation) from Carter's January spending levels. They were not about to cut big entitlements like social security. The major areas available for cuts were therefore the federal bureaucracy itself—its pay, benefits, and staffing—and aid to state and local governments^[7] (which, after all, were running surpluses).

The cutbacks included the state share of General Revenue Sharing, a proposed antirecession package for local governments, half a billion dollars from the CETA program (which unofficially funded local governments), a billion from a 2 percent reduction in agency operation and administrative costs, and another billion from federal civilian and military retirement benefits. Cutting the Postal Service subsidy would save $836 million.

In order to keep some liberal support, Giaimo shaved defense slightly. He positioned himself as resisting spending of any type, a stance that

might elicit support from budget balancers. Democratic votes were used to beat attempts to raise defense. Giaimo maneuvered enough votes among Democrats to join with Republicans and beat an amendment, sponsored by David Obey and endorsed by Carter, to raise revenue sharing for local governments by $500 million. Giaimo's plan also allowed a $10 billion business tax cut—on the condition that the budget still be balanced.

Giaimo's tactics worked within the committee. He recognized that "it isn't the kind of budget that liberals and city people can vote for."^[8] Ranking HBC Republican Delbert Latta (Ohio), however, proclaimed, "You ended up in the same place where we wanted to end up—and that's with a balanced budget and a tax cut."^[9] As a result, in final committee vote on March 26, the budget survived the defection of six committee liberals, passing 18 to 6.^[10]

Committee passage did not say much about the House floor. All sorts of factions wanted changes. At the end of March the administration finally released its budget. Carter's plan looked much like Giaimo's, with two conspicuous exceptions: the $500 million in aid to cities and funding for Saturday mail delivery. The differences foreshadowed a liberal challenge. Republicans meanwhile worked on their own substitute. Giaimo's plan might be acceptable, but they would try to do better.

The House leadership wanted to pass a meaningful budget that united Democrats. Reacting to extended brawls in previous years, the majority leadership brought the budget resolution to the floor in early May under a complex rule that allowed eight amendments (and several amendments to those amendments) ranging from a Black Caucus substitute that would raise social spending by $5.3 billion to a Republican plan that would cut spending by another $15 billion, allowing a larger tax cut. The GOP plan, developed by the Republican House leadership, foreshadowed future Reagan/Stockman cuts. It

Tightened eligibility requirements for entitlement programs, especially in the nutrition area, for savings of $7.9 billion.

Consolidated categorical into block grant programs for health, education and social services, accompanied by cuts of $7.1 billion in the program totals.

Repealed antirecession aid to cities and public service jobs programs, while creating new rules for revenue sharing that would effect a further cut in categorical grants. These proposals totaled $8.8 billion.

Cut a variety of government domestic activities, for example, the third class mail subsidies and regional development, totaling $6.5 billion.

Froze federal hiring and cut budgets of federal regulatory agencies, for savings of $5.4 billion.^[11]

The differences between Republican and Democratic proposals in 1980 resembled those in 1981. Neither party wished to take on the giant universal entitlements of social security and medicare. Both parties were willing to cut intergovernmental assistance. But Democrats wanted to maintain national control of policy, allowing for later program increases; Republicans wanted to reduce programs and federal control permanently by consolidating categorical grants into block grants, which give recipient states more choice about using the money. Some Democrats were willing to cut poverty programs by reducing program eligibility, on the grounds that the pain of cuts could be limited by better targeting benefits for the needy. Other Democrats, however, worried more about missing somebody who needed benefits, and they were reluctant to go as far as the Republicans along these lines. Both parties viewed the federal employee payroll as a relatively painless place to find cuts. Republicans, however, saw these cuts as an opportunity to reduce the activity of federal regulatory agencies.

Democrats saw budget cutting as something they were forced to do by the needs of economic management; they could clean out a few rather moldy programs. But, for Republicans, the deficit fight was an opportunity to redirect the course of American government. They would use greater social spending cuts to finance greater defense spending, as well as tax cuts; Democrats understandably were unenthusiastic about these objectives.

Giaimo won the first round of the struggle. He beat off a $5.1 billion shift from domestic spending, sponsored by Marjorie Holt (R-Md.) and Phil Gramm (D-Tex.), by telling conservative Democrats that defense was sure to go up after conference with the Senate.^[12] He also beat a proposal by David Obey, who was supported by the president and Speaker, for a $1.2 billion increase in social spending. Most Democrats followed Obey, but Giaimo had all but 36 (urban) Republicans, many southern Democrats, and a group of budget-balancing moderates, enough to win by twelve votes. On May 7 Giaimo's plan passed, 225 to 193.^[13] Unfortunately for Giaimo, the Senate had a different plan.^[14]