A Procedural Revolution
Though the House and Senate could not agree on the contents of the budget, they had agreed on a potentially much more significant matter: a procedure to enforce the first resolution's targets. The procedure was reconciling the first resolution; in 1981 it would provide the means by which Ronald Reagan would win his spending cuts.
The leadership of both houses concurred that the spending cuts and tax hikes in the resolution had to be enforced. Even Speaker O'Neill, no fan of budget cuts, was convinced to accept new procedures so as to make the budget resolution stick. Now, if you can't agree on what you want to do, making agreements binding does seem premature. But, as they argued endlessly over defense spending, legislators might find some cuts on which they could agree. Majorities certainly favored reducing the deficit while making budget resolutions that would bear some relation to government's fiscal policy.
Under the Budget Act, reconciliation—a strange name for a very conflictual process—was supposed to occur on the second, binding, resolution. If the law existing at the time of the Second Resolution did not jibe with that resolution's targets, Congress could instruct committees to report out legislation to reconcile spending and revenue law to the targets. Although the committees would decide on the details of their savings, reconciliation clearly infringed on their formal authority (a committee's choice of whether to act at all is the heart of its power) and informal relationships (if the budget process could force changes in agriculture policy, then interest groups had to cultivate the budgeters). The committees had a legitimate complaint; ten days was far too short a time for drafting legislation.
During debate on the FY80 Second Resolution in 1979, the Senate could see that supplemental appropriations to cover the annual federal pay raise and costs of "appropriated entitlements," such as food stamps and the Commodity Credit Corporation, would force spending over the totals. Therefore, the SBC draft resolution instructed seven different
committees to cut projected spending by more than $4 billion. The two biggest targets, Appropriations and Finance committees, resisted. In a caucus, Senate Democrats negotiated a compromise, scaled-down reconciliation plan, but House Democrats, in their own caucus, rejected reconciliation.
In conference on the second resolution, HBC Chairman Giaimo led the fight against reconciliation, arguing that he couldn't "take on seven committees in the House" over it. In a separate vote on the conference agreement, reconciliation was beaten 205 to 190. Giaimo had argued that it was too late to make reconciliation work. Committees should be given a chance to comply voluntarily, but they did not.
Preparing for the FY81 budget battles, some Senate staffers had a brainstorm: Why not try reconciliation during the First Resolution? That would solve the scheduling problem, a big advantage for the budget committees, whose staffers, of course, wanted their own process to control subsequent action. By reconciling on the First Resolution, the budget committee might get at entitlements directly. In fact, as Allen Schick notes, that would shift the focus from legislation enacted during the current session (mostly appropriations) to that taken in previous years—thus plugging a big hole in the Budget Act.[19]
Reconciling to the First Resolution implicitly meant turning the resolution's figures from provisional targets into binding totals, thus changing the whole nature of the budget process. Although reconciling wasn't part of the Budget Act, the omission was resolved by referring to the act's "elastic clause," allowing a resolution to add to the act's enforcement mechanisms "any other procedure which is considered appropriate to carry out the purposes of this Act."[20] Where members of Congress so eager to show that they could cope with the deficit, the real issue, that they would willingly abandon old ways of doing business?
In general, leaders of authorizing, subject matter committees had the most to lose. And Republicans (who usually lost in authorizing committees anyway) had most to gain because reconciliation would force Republican spending-reduction proposals onto the committee agendas. Thus, in 1979 House Minority Leader John Rhodes (R-Ariz.) said that he considered "reconciliation so important" that he "would be willing to vote for this budget, even though the spending figures are way out of line."[21]
Most important, however, was the attitude of the Democratic leadership in the House. Normally attentive to committee chairmen, Speaker O'Neill had to worry also about his party's image. When Giaimo and other budget balancers like Jim Jones demanded that he support reconciliation, O'Neill agreed. A powerful group of sixteen committee and subcommittee chairmen, led by Morris Udall (D-Ariz.) of Interior, protested
reconciliation in a "dear colleague" letter. Significantly missing from the list were Chairman of Ways and Means Al Ullman (D-Oreg.), Chairman Richard Bolling (D-Mo.) of Rules, and Thomas Foley (D-Wash.) of Agriculture. Bolling, a close confidante of Speaker O'Neill, might have been able to swing him against reconciliation. Yet Bolling was a reformer who believed, as did the Speaker, that budgets should be party documents. He thought it was a close call, making the legislative process messier than ever, but decided it would be an observable instance of majority choice. With Bolling and Ullman, House Budget's first chairman, supporting reconciliation, Speaker O'Neill gave the complaining chairmen no help, and they prepared for a floor fight.
Both House and Senate budget committees included in their draft resolutions reconciliation instructions to authorizing committees requiring about $9 billion in spending cuts. There was little debate in the Senate about this new reform. Debate in the House on the budget resolution included a watershed vote on the Udall amendment to remove reconciliation instructions. Chairman Udall lost badly, 127 to 289. The institutional significance of the vote and the attitudes revealed in debate justify more discussion than the lopsided margin suggests. Many events in the Reagan years were foreshadowed by arguments made there.
Conservative Republican Delbert Latta provided the basic rationale for reconciliation:
When we are presenting a budget to the American people supposedly in balance, and there is about $9 billion worth of revisions which must be made in present law in order to obtain that balanced budget, can we truthfully say that we have passed a budget resolution which is in balance, without providing the mechanism, namely reconciliation, to bring about those $9 billion in savings? You know the answer as well as I do. You cannot do it with a straight face.[22]
Representatives Udall and Neal Smith (D-Iowa) provided the most fundamental objection: in making reconciliation instructions, the Budget Committee was in the business of deciding which programs could best be cut, without possessing the substantive knowledge of the authorizing and appropriations committees.
Liberal John Seiberling (D-Ohio) stated one dilemma: "If we do not have reconciliation in the first budget resolution … we have gone through a charade…. On the other hand, … the committee on the budget cannot possibly develop the knowledge and expertise to substitute for the authorizing committees and the appropriations subcommittees."[23]
Chairman Giaimo continually emphasized that "you, the Members of this great House of Representatives"—not the Budget Committee—
would be the ones to impose any instructions on the committees.[24] In other words, Budget was not grabbing power. He was right in that members could vote for different instructions if they wished. If Budget drafted instructions, however, it inevitably decided on substance; otherwise, how could it decide to which committees the cuts should be assigned?
The choice was really what kind of error to make: bad decisions on programs or an unacceptable total. Jim Jones called reconciliation "the litmus test" of how much the House cared about budget balance.[25] The budget totals, Richard Ottinger (D-N.Y.) argued, were nonsense.
The entire assumptions on which this budget was formed have evaporated…. [Yet] the Budget Committee says … the only important thing before the Congress … is to see to it that those ceilings are maintained…. Why bother? People who cannot afford an adequate diet should not have adequate diets. But we have got to keep that budget ceiling.[26]
The strongest statement of the traditional liberal's distrust of spending constraints was made by Representative James C. Corman (D-Calif.), chairman of the Subcommittee on Public Assistance and Unemployment Compensation of the Committee on Ways and Means. He raised a basic question: How would budget constraint change the conduct of politics?
The draft reconciliation instructions assumed that Ways and Means would find $4.2 billion in revenues or spending savings, mainly by extending income tax withholding to interest income. Administrations and the Treasury had wanted that change for years; Corman had no quarrel with the idea. But, he argued, everybody knew that, politically, withholding was a nonstarter. Ways and Means would never do it. (He was right and wrong simultaneously, as we shall see!) Ways and Means certainly would not cut social security, Corman continued. Because the committee had to get the money somewhere, it would come from the weakest group, the constituents of Corman's subcommittee: "It will come from a very narrow base of people, the poorest of us, and they will be seriously affected. That is my problem."[27]
Having served in the House for twenty years, Jim Corman knew how hard it was to win liberal victories. He saw a politics of interests against interests; if times were tough, then the weakest would be shouldered aside in the scramble for what was left. How, indeed, could it be otherwise? His younger Democratic colleagues, however, were far more confident. In reply to Corman, they argued in terms that will look familiar when we meet a man who was otherwise their nemesis: David Stockman.
Richard Gephardt, a member of the Ways and Means Committee. argued that if withholding were impossible there were other choices:
cuts previously staved off by powerful special interests would, when the issue was clear, suddenly become possible:
Do we want to cut off orphan children, do we want to hurt people who really have need or do we want to pass higher user fees on people who have private aircraft?… I would like to have that debate go on in the House…. We can bring these things out of our committee and pass them on the floor if people see that as the stark choice they have to make.[28]
Echoing Gephardt, Tim Wirth mentioned aviation and tobacco tax breaks. In short, if an open argument about justice, not clandestine politics, was at issue, then the good guys would win.
These mostly younger members saw reconciliation as a matter of procedural honesty; they believed it would favor their side because they were right. George Miller of California, a very liberal member of the Watergate class of legislators, declared that he would support reconciliation because for years Republicans had voted for more defense spending, then castigated Democrats as spenders, while themselves voting against budget resolutions. With reconciliation making the budget meaningful,
Nobody again will be able to run off with the entire store…. Those people who are interested in the defense of this country and interested in it in the sense of any contract that will go to their district must be good, will no longer be able to create a deficit at my expense, and no longer will many of us have to pay for their sins.
He described reconciliation as a way to prevent a "deficit that is there for no other purpose than to protect the special interests in this country, many of whom tell you at the end of the letter, 'By the way, I believe in a balanced budget.'"[29]
Seiberling added, "We are never going to reassert priorities, we are never going to get tax reform, we are never going to get that kind of liberal democratic program that I think this Congress is, to some extent, deserting" without reconciliation! Only a process that forced the hard choice would force the right choice.[30]
Thus, a faction of liberals—frustrated by years of being blamed for deficits, convinced enough of Keynesian theory to believe deficits had something (if not a lot) to do with inflation, and dedicated to government as a way to redress economic injustices—saw a tough budget process as a means toward better policy. Gephardt, Wirth, Miller, and Seiberling were arguing that, as David Stockman would put it later, in a budget crunch "weak claims," not "weak clients," would lose.
Probably most supporters of reconciliation saw it mainly as a way to reduce the deficit. Certainly that was most Republicans' stated reason. Liberal support for reconciliation nevertheless was crucial: it kept the
Udall vote from being close, and it divided Democrats. Consequently, the principle of reconciliation was established in a nonpartisan manner, making it a stronger precedent in 1981.
The liberal political theory for reconciliation turned out to have some holes. Corman was at least as right as Miller, for the notion that the right side can be determined by clearly posing choices is questionable. Even some conservative calculations may have been a bit off: reconciliation would become the vehicle for a series of tax hikes after 1981. Some authorizing committees would find that reconciliation had advantages; a lot can be tucked away in a large package. Whatever its consequences, reconciliation was established when the Udall amendment lost on May 7, 1980.