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Into the Heart of Budget Darkness

After the Senate had delayed all the appropriations in anticipation of the September 24 package, Congress passed a continuing resolution, expiring November 20, to buy time to figure out what to do with the new proposals.[51] As that deadline approached, congressmen wanted to go home before Thanksgiving. Both House and Senate leaders decided


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to wrap up all appropriations in one big continuing resolution and extend it through September 30, 1982, so they could go home. On November 12, the House appropriations committee reported H.J. Res. 357, funding twelve remaining appropriations by a total of six different formulas.[52] From the administration's standpoint, there were two main difficulties: H.J.Res. 357 ignored much of the president's September reductions and allotted too little for foreign aid. All presidents, whatever their ideology, wind up fighting Congress for a bigger foreign aid budget; it is as inevitable as the Red Sox always breaking their fans' hearts in the end. The administration promised to veto the House CR.

"It's creepy," Silvio Conte declared. "There could be a real showdown…. Those guys up there [in the White House] are really adamant."[53] Congressmen showed little interest in the 12 percent cut. Both sides would have to compromise, bringing them to the really creepy part: no one knew how to keep score.

How could anyone tell if the CR met targets for deficit reduction? The CR provided budget authority, but outlays created deficits. If two (or three) sides were to negotiate on outlays, they would need to go through the bills account by account because in each account translating BA into outlays occurred at a different rate. There was no time for such detailed work. Instead there were across-the-board formulas, applied to such a variety of bases (conference reports, probably closer to the president's wishes; House committee reports, possibly further; and so on), that no one could fathom their relation to the president's proposals. As House minority whip Trent Lott described it, "We were working with different base lines and three different sets of figures, and the computers weren't talking to each other."[54] Worse still, much of annually appropriated domestic spending—food stamps, agricultural price supports, unemployment compensation—is really entitlement. In budget parlance, these are mandatory appropriations. An across-the-board cut, without changing underlying entitlement law, makes no sense. For that matter, House Appropriations leaders believed, one should only judge appropriations bills by whether they met targets for the discretionary balance of spending. If the economy went sour and mandatory estimates rose, Appropriations should not be blamed. House Budget agreed. OMB did not. By House scoring, therefore, the CR was only $1.9 billion over the September request for domestic spending and $6.3 billion below for defense. OMB instead claimed the CR was $10.3 billion over on domestic accounts.

Robert Michel proposed that the bill be recommitted with instructions to reduce funds by 5 percent for most nonentitlements, estimating a $4 billion savings. His motion lost, 189 to 201, as eighteen Republicans joined the majority. On November 16, the House CR, of indeterminate


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cost, was passed and sent to the Senate, where, on November 19, the Senate stayed up all night to take twenty-three roll call votes and tie itself into knots.

Senate Democrats, meanwhile, unlike their House colleagues, would not support the September 30 expiration date. They wanted a number of items in the defense appropriation bill debated, particularly the MX missile and B-1 bomber. After a filibuster threat by Carl Levin (D-Mich.), supported by Hollings and Nunn, GOP leaders changed the CR's expiration date to March 30. After considering a raft of options, GOP leaders also decided to support Howard Baker's plan to reduce domestic discretionary spending in the CR by 4 percent. A comment from Congressional Quarterly illustrates the complexity of the proposals that senators were being asked to understand:

As proposed, the amendment excluded defense, military construction, foreign aid and food stamp programs from the cuts. James A. McClure, R-Idaho, outlined on the floor a complex procedure for applying the amendment that narrowed its scope substantially. He said a program would not be affected by the cut if it was in a bill that overall was at or below the president's budget, or in a section of a bill that was at or below the budget, or even in an account listing within a section that was not over budget. Programs that were still eligible for cuts would be reduced 4 percent but not below the level of the budget.[55]

Got that? Good. Nobody else did.[56]

This new Republican proposal, which gave the president maybe about half of what he wanted, passed the Senate. On the evening of November 20, twenty-eight senators and twenty-one representatives met to resolve their differences in conference. It was a Friday night, so even though the previous CR would expire at midnight they had some time for negotiations. The major differences were over defense, which the House had reduced and the Senate had not, maybe $2 billion in domestic discretionary spending, and a similar amount of foreign aid. As the conferees wrangled, they finally decided that to represent the administration and make sense of the numbers they needed some help from Stockman. The budget director was glad to be wanted after two weeks of abuse stemming from the Atlantic article; he settled down with his pocket calculator and began pricing options.

By Saturday evening, the conferees were willing to accept the House proposal, more or less. When most participants went home around 1:30 Sunday morning, they thought they were near a deal, but they most certainly were not.

Stockman went back to OMB, fed that bargain into his computer, and decided that the new bill's changes in budget authority would not yield


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the outlay reductions—roughly those in the Senate's bill—that he had defined as an acceptable compromise. Therefore, a Senate Appropriations source recalled,

Stockman recommended a veto on grounds of outlay. On Sunday morning there was a meeting in Howard Baker's office with Baker, Laxalt, Hatfield, McClure, Garn, Schmidt, Stevens, Jim Baker, Freidersdorf, and Stockman, and to a man the senators said, tell the president to sign it! Jim Baker said thank you very much, went downtown, and an hour later called back and said, "we're gonna veto it."

Conferees were upset. Referring to comments about "balancing the budget with mirrors," Senator Mark Andrews proclaimed that "we all thought we had done the job. But Stockman found he was using the wrong mirror, so he got himself another mirror."[57]

Congress had good reason to distrust Stockman's numbers, aside from his own statements in the Atlantic . At that point, House Appropriations, which had been building its computer system since 1974, was far ahead of either OMB or CBO on the technical side of scorekeeping. House Appropriations had a simple position on outlays: they should be ignored. Its staff and leaders said then, and say to this day, that outlays are a swamp; everybody should stick to things (i.e., budget authority) that are actually in the bills. Ultimately even OMB had to admit that House Appropriations had a point: One top official recalls that "we wanted to do the technically impossible"; another said that he "found out after that November veto that our numbers were as screwed up as on the Hill."

Nevertheless, House Republican leaders showed their loyalty to the president by opposing the conference agreement. Angry House Democrats chose to pass the bill so Reagan could veto it; then he would be blamed for shutting down the government on Monday morning for lack of funds. Reagan, however, expected to get credit for a veto against spending. This made the loyalist vote a bit difficult for senators to determine, as the Congressional Quarterly describes:

Majority Leader Baker gave conflicting signals on how he wanted party members to vote. At first, he announced his support for a vote to approve the conference report in order to get it to the president. But, in a debate that was repeatedly interrupted by laughter, Democrats relentlessly needled Baker about the contradictions of his position. "Do you vote for or against this conference report if you are trying to be a friend and supporter of the president?" asked J. Bennett Johnston, D-La. Finally Baker threw up his hands and urged members to vote however they felt. "All I want to do is make sure we get rid of this thing once and for all. As far as I am concerned, we could have a vote and you can vote it up or you can vote it down, but just vote it and get it over with."[58]


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They voted it up; H.J.Res. 357, passed on nearly straight party-line votes by House Democrats and Senate Republicans, was sent off to the White House. Reagan, who privately had been arguing that economic and deficit problems were separate, then vetoed the bill, shutting down much of the government on November 23 and going on television to declare that spending $2 billion more (maybe) than he had been willing to accept risked "higher interest rates and inflation, and the continued loss of investment, jobs and economic growth."[59]

Under guidelines prepared after the 1980 near-misses, many functions did continue; but nonessential employees of many agencies were told to secure their files and go home. The White House made a point of phoning lawmakers to tell them that White House tours for their constituents had been canceled on account of the budget impasse. Everybody having made their points, House Democrats then extended the old CR. They wanted it to expire on February 3, but, when the Republicans insisted on December 15, the Speaker only mildly resisted Conte's motion to change the date. The new CR passed both houses with ease.

The political implications of the CR fiasco far exceeded what small effect it may have had on policy. It foreshadowed years of byzantine battles over scorekeeping, posturing by all sides to make the other look bad, and conflict over priorities masquerading as a contest over fiscal policy. It fed Senate Republicans' distrust, later converted into a sense of betrayal by the administration. And it made the stakes not only policy but also tests of will among the factions controlling parts of the government. Most of all, the erosion of the September offensive, from a serious assault on the deficit to a conflict over about 2 percent of domestic discretionary spending, showed how much the tide had changed in four months. No longer the initiator and leader, the administration was now just one player, better at blocking action than controlling it.

Everybody went home for Thanksgiving, where Robert Michel hoped that they might "have a little bit of wine and turkey, and all the rest … back with the home-folks, and come back here with a fresher view."[60] When everybody returned from Thanksgiving, everyone was fresher, but nothing was easier.


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