Supplemental Appropriations
The year 1982 began quietly enough. Much of the government was still running on the December 1981 Continuing Resolution (for FY82), which
would expire by the end of March. The administration chose not to hold the CR hostage for further spending cuts because the Gang-of-17 negotiations had begun and such a conflict would not encourage deal making. Therefore, after bizarre maneuvers regarding legislators' taxes—which we will ignore for the moment but will confront later—the previous CR was extended with bipartisan support but without attention to the budget targets from the previous year.
Instead, the administration chose to use a supplemental appropriation for a number of other programs, such as Guaranteed Student Loans and sewage treatment grants, as a vehicle for spending reductions. OMB proposed rescissions of more than $9.4 billion, mostly in subsidized housing but also in education programs. It proposed new rules for student loans to shave $400 million from the $1.3 billion extra cost.
Congressional opinion about the education rescissions in particular, and rescissions in general, was best indicated by the remarks of Senator Ted Stevens (R-Alaska), the majority whip, in an Appropriations hearing. He told Ms. Harrison of the Department of Education that to rescind the funds would mean grantees had been misled. She replied that Reagan's administration and previous administrations had opposed the program involved. "But successive Congresses have disagreed," Stevens reminded her, and "the president signed that bill last year." "That's why we are proposing a rescission," Ms. Harrison explained. "I think the Department is just buying itself a fight," the senator responded. "There is a de facto breaking of a commitment as far as the Government is concerned…. You people are not reading Congress correctly if you think you are going to get away with this."[3]
With the rescissions, and the pay raises still unfunded, the administration created an "urgent supplemental appropriation" proposal that would reduce budget authority by about $5 billion (subtraction under the guise of addition, a rather neat trick). House Appropriations, unimpressed, rejected almost all the rescissions, although it agreed to defer $3.8 billion. It then added some social spending, reporting a bill that would increase budget authority by about $5 billion.
This large but straightforward difference of opinion was then complicated by the demands of the housing industry for relief from the effects of recession and high interest rates. Republican representatives Tom Corcoran of Illinois and Thomas B. Evans, Jr., of Delaware wanted to take $1 billion from the synfuels program and use it for a new mortgage subsidy program. Majority Leader Jim Wright, an ardent defender of synfuels, objected. With the housing industry in desperate shape, however, the Corcoran and Evans proposal might well have passed with heavy Democratic support. Democratic leadership did not want Republicans to get credit for helping housing. Instead, after a delay, the Democrats
produced both a housing proposal that did not take the money from synfuels and a rule that allowed a vote on that amendment, legislation on an appropriations bill, but not on the Corcoran and Evans plan. Seeing little chance of Democratic defections on the rule, Republicans let it ride, and then, although Stockman promised a veto, most Republicans voted for the housing money.
Senate Appropriations acceded to most of the housing rescissions that the lower chamber had rejected. The Senate committee then tacked on a $1 billion appropriation and a five-year $5 billion authorization for a different mortgage subsidy plan, this one designed by Richard Lugar. Making the bill still more controversial, Appropriations Committee members also added provisions regarding senators' tax deductions that could increase their incomes.
Senator Lugar insisted his housing plan was a way to fight unemployment; William Armstrong (R-Colo.) argued that Lugar's plan would only pave the way for bailouts of other troubled industries; the administration fervently opposed Lugar as well. On this issue, the organs of responsibility," opposed as they were to spending programs, backed the administration. "Getting down the deficit," Time quoted a real estate economist, "is the only solution."[4]Newsweek reported, with similar skepticism, that "it happens every recession: mindful of plunging economic indicators and—more to the point—upcoming elections, Congress scrambles to bail out the industries feeling the most pain."[5] Reagan risked little media opprobrium for threatening a veto. Because the public at large and the interests involved might be less convinced that aid to housing or for jobs was bad, legislators still wanted to appear to be helping.
In conference the two houses split the difference on mortgage assistance and allowed most housing rescissions. The bill that emerged was still more than $4 billion over the administration's request, so Reagan vetoed it on June 24. A move to override failed when House Republicans supported the president, 131 to 53. Democrats thereby got those Republicans on record against housing aid.
Appropriations and Democratic leaders now turned to devising a supplemental that might get signed. They created, and the House passed, a "fat" and a "skinny" supplemental. The fat bill, H. R. 6682, did not contain the new mortgage subsidies and a number of other items that could wait until the next round; however, it provided lower rescissions and more spending than Reagan had requested. After the Senate passed the fat version on June 25, Reagan immediately vetoed it. Two days, two bills, two vetoes. For good measure, Stockman told Hatfield that the skinny bill, H. R. 6685, also would be vetoed. After those two bargained for a bit, Senate Appropriations reported an amended H. R. 6685 that rescinded more subsidized housing funds.[6] On the floor, a Democratic
effort to restore the $3 billion conference version of the mortgage subsidy program was tabled, 48 to 44. Now Republican senators were on record against housing aid.
Democrats' strategy was to get spending increases if they could, but, if not, they at least wanted to get the Republicans on record against them. David Mayhew's classic analysis of position taking applies here:
A congressman can hardly be blamed if there are not enough right-thinking members around to allow him to carry his motions. He's fighting the good fight…. We do not ordinarily think of losses as being politically harmful. We can all point to a good many instances in which congressmen seem to have gotten into trouble by being on the wrong side of a roll call vote, but who can think of one where a member got into trouble by being on the losing side?[7]
The president also might believe there was political mileage in using his veto against big spenders. He, however, had more stake in the results. People understand if their representative is outvoted; they may be less sympathetic if their president loses. The president's inside-the-beltway reputation for effectiveness is particularly important, for it shapes how seriously other political actors take those preferences.[8] Reagan therefore had to care more about winning.
With a few minor changes, the skinny bill passed the Senate, and everyone went home to celebrate Independence Day. When the House returned, it tried but failed to override the veto of the fat bill and then went to conference on the skinny bill. More money was taken out of subsidized housing and spread around on more popular programs. (For various reasons, including being a fairly ineffective use of money, subsidized housing construction, the primary target, was less popular than almost anything else.) Stockman accepted the resulting package; Howard Baker commented that in any case a veto would have been hard to sustain.[9] The skinny bill was a draw. It provided $390 million more new spending than the administration requested, accepting most housing but no other rescissions.
The appropriations committees' rejection of most domestic spending cuts would be ascribed by Stockman to the politicians' appetite for constituency pork. Yet there were at least two other sources. First, the administration itself tried to deny that its cuts would do harm, while Congress found those arguments incredible. "The impression you give us," Senator Andrews (R-N.D.) told an administration witness, "is that somehow or another you have found a magic way of doing exactly the same thing that has been done years ago for two-thirds of the cost." Andrews did not believe in magic.[10] When told by agency officials that local governments would make up cuts in federal aid to libraries, Senator
Hatfield replied that they were wrong and they knew it.[11] Appropriations members built a record against the cuts. Second, Appropriations elders did not see major policy changes as part of either their jurisdiction or budgeting. "Tell me," Sidney Yates (D-Ill.) of the House Appropriations Interior subcommittee asked the director of the National Park Service, "about the historic preservation fund. Has Congress repealed the basic legislation for which you are eliminating all funds?" "No, sir," replied Mr. Dickerson. "Why are you eliminating the funds then?" asked the chairman. As a senior Republican on House Appropriations commented to us about eliminating programs. "You can do that, but you have to do it in the authorizing committees."[12]
In July OMB requested a new FY82 supplemental, including the annual pay raise, $2.4 billion in new defense authority, and $5 billion more for the Commodity Credit Corporation (CCC). As the agricultural sector's problems mounted, the CCC was turning into an unstoppable money pump. Defense, CCC, salaries, and foreign aid increases accounted for $14.2 billion of a $16.3 billion administration request.
House Appropriations accepted mandatory increases like pay raises and CCC, but otherwise it gave the president none of what he wanted. The supplemental provided only one-sixth of the requested defense funds. House Appropriations also reduced extra medicaid funding, saying that it could wait until FY83 action. These reductions enabled the committee to add about $1 billion to such programs as community service employment for the elderly, education for the disadvantaged, college student aid, and interstate highways—that is, many programs the administration had been working all year to reduce. Yet the defense reductions kept the House committee bill well under the president's proposed spending. It passed easily on the floor. Senate action basically followed the House.
Because their version called for $1.8 billion less than the president's request, members of Congress could argue that the bill was fiscally responsible, differing only marginally from the president's request. Actually, members had rejected his policy preferences and imposed their own on almost every plausibly discretionary item. OMB therefore urged a veto of the bill, supported by political advisers who felt that a veto would mollify conservatives upset about the tax increase. On August 19 Senator Stevens warned that "I don't think anything is to be gained by vetoing this one. A veto would be overridden in the Senate."[13] Mark Hatfield warned he would fight all future defense increases if the president vetoed. Reagan vetoed the bill anyway, denouncing it as a billion dollar budget buster.
Democratic leaders did not expect to override Reagan in the House. But with Silvio Conte leading the effort, the override succeeded, 301 to
117. Members had been infuriated by the president's claim that they had busted the budget; Reagan seemed to be saying that fiscal responsibility meant not just his totals but his priorities. Of course, within Reagan's moral economy, that was exactly what fiscal responsibility did mean; but Congress did not agree. To everyone's surprise, Senate leaders now had to take sides on the veto. Hatfield flew back to Washington on a red-eye flight to lead the override forces.
Nobody can say exactly what shaped that vote. An administration leader said, simply, "They'd [the Republicans] been up the mountain too many times." A House Republican staffer who was deeply involved said, "It was just a tactical error by OMB. What overrode the veto was just the older Americans' money. I never regarded that as other than a tactical success by the elderly lobby…. It proved nothing but don't screw around with the elderly."
Certainly part of Reagan's problem was money for jobs for the elderly. The program, that no one except Stockman wanted to close down, was out of funds. Even Reagan, after vetoing, backed off and explained he had not known about the older Americans money. Mark Hatfield used money for the elderly as an example of why Congress should set priorities:
I have swallowed hard many times. I have literally held my nose on occasion in order to be a part of the majority party … to demonstrate the capability of the majority to govern….
There comes a time in a person's life when conscience and principle transcend all the affections and loyalties of the party and to one's president….
The President may later claim an oversight, but we cannot…. The question is simple and straightforward. Will the Congress, which passed this measure by substantial majorities, kowtow to David Stockman in his singleminded desire to eliminate programs of great value and importance to the people of this Nation, or will Congress assert its own priorities and prerogatives and responsibilities?[14]
Even Senator Domenici supported the override. The stakes had been exaggerated on both sides, he argued; clearly the bill was no budget buster so there was no point to a confrontation that would shut down the civil service. Howard Baker supported the president but without urgency. "They did their regular whip checks," one aide recalled, "but did not make it a big issue." When the vote was taken, the Senate overrode the veto, 60 to 30.
In politics, why something happened may be less important than why people think it did. Robert Michel's interpretation was telling: "The principle reason we lost was that you cannot make a good argument that
Congress was busting the budget. You couldn't make a good argument on the numbers. Maybe, for the long haul, the administration could learn something from this"[15] Indeed. One lesson was that Conte and Hatfield could beat the White House. Another was that legislators were much less susceptible to pressure when they could not accurately be accused of swelling the deficit. Unlike events in 1981, Congress, not Stockman, was keeping score; if a bill fit Congress's scorekeeping, a veto might yield only an embarrassing defeat.
The supplemental veto override of September 10, 1982, therefore, was a watershed in the battle over priorities. The override also revealed the strength of pressure to restrain deficits. It succeeded where others failed because total spending fell below the amount requested. Congress would not explicitly increase deficits.
Appropriators, meanwhile, had been working on FY83 appropriations. The House committee had always taken pride in appropriating (by hook or by crook) less than the president requested. But Reagan went too far; the second session of the 97th Congress ended up appropriating $7 billion more, including later revisions, than the administration's estimates over the course of 1982. Congress kept the increase that low by chopping $18 billion on the defense side; in fact, it appropriated about 10 percent more for domestic discretionary programs than the president had requested. The committees treated the president's proposals not as a neutral upper bound but as a partisan position, worth consideration only to the extent that Reagan and his partisans in Congress could force its consideration.
Without the president's budget as a guide, appropriators resorted to two other standards. One was the previous year's policy, expressed as the CBO baseline. The huge deficits made spending above that level taboo, but, because of the recession, cuts below it were also questionable. The other standard was the spending allocated to the appropriations committees under the first budget resolution. They acknowledged that the resolution's totals constrained them but refused to accept budget committee assumptions about the line items.[16] They ignored the resolution's priorities, being quite blunt about their opposition to domestic cuts.
Appropriators established the priorities within their allotted spending through the budget act 302(b) allocation process. Under 302(b), each committee had to report a division of the resolutions totals among its subcommittees. In 1982 hardly anyone outside the appropriations committees knew what a 302(b) was. Yet the 302(b) within Appropriations would soon become almost a second budget process, potentially as contentious as that of setting priorities in budget resolutions. Conflict was limited because entitlements and revenues were excluded. Yet, in terms
of results—particularly defense versus domestic—the 302(b)s were very important because appropriations spend money; budget resolutions do not.
In both House and Senate, full committee staffers would go to each subcommittee and ask the clerks how much they "needed." Clerks would consult with their chairs, who usually checked in with the ranking minority and other subcommittee members. Some subcommittees would accept Budget Committee assumptions as guidelines; most would not. Subcommittee chairs had to trust the "big" chairman's judgment of what kind of distribution would be both supported by other leaders and helpful to passage on the floor. A House subcommittee chairman commented that "it's a very subtle process. It really works out to be the staff acting as buffers with all the subcommittee chairmen." Members defer to the staff and Chairman Whitten because "it's easier. It avoids the recriminating and hostility."
House subcommittees reported bills that purported to spend less than the 302(b) allocations. Rather than let underestimations of entitlements force reductions in discretionary spending, subcommittees wanted to force Stockman to raise his estimates. Although the bills more or less conformed to the budget resolution, amounts were well over the president's budget in many categories. Appropriators and Democratic leaders, therefore, had to devise a way around the president's veto.
We do not know if anyone plotted the subsequent strategy explicitly; perhaps no one needed to. Our sources claim it happened naturally. House Appropriations held the DOD bill hostage pending satisfactory settlement on other contentious measures. The DOD subcommittee waited until early December before reporting out its measure, but everything else was reported out by September 29. In the end, the most contentious domestic-spending bills would be wrapped into a continuing resolution package with defense; if Reagan vetoed, therefore, he would be vetoing something he badly wanted as well as activities he proposed. This use of the continuing resolution would informally but significantly modify the budget process.
As Congress passed TEFRA and the supplemental FY82 appropriations and as FY83 appropriations worked their way through the process, Congress also had to pass the second reconciliation bill. A second reconciliation? one might ask. Wasn't the whole idea of reconciliation to put everything into one big package? Well, yes, that is what everybody said. In 1981 all the commentators remarked on the brilliant strategy of one big vote, but it required the House leadership's cooperation, which was no longer (in fact, far from) forthcoming. Democratic leaders decided that there was no reason to make life easy for their opponents by creating
a package. Instead, they brought up separate reconciliation bills for separate votes.
Nothing interesting happened in the separate votes on Veterans and Banking, but the agriculture committees became creative. The budget resolution assumed that food stamps and other nutrition programs would be reduced. The Senate committee mostly complied, although its food stamp savings were less than convincing. With the Commodity Credit Corporation hemorrhaging and farmers in real trouble, Senate Agriculture also felt it could do something more constructive. The Senate side endorsed changes in farm programs of the "pay now to save later" variety. Encouragement of farm exports and controls on production would cost money up front but would also raise prices and reduce yields, thereby increasing farm incomes and (hopefully) reducing federal obligations under the commodity loan and price-support programs. The House committee cut food stamps less and projected billions in savings from new efforts to reduce yields of milk, wheat, and corn.[17] In the short run, the wheat and corn plans would have put cash directly in the hands of farmers.
OMB claimed that the House committee and CBO savings estimates were off by about $3 billion. In fact no one knew. The administration's credibility on the subject was limited; after all, OMB had projected spending cuts in 1981 and now in the course of 1982 was to request nearly $17 billion in extra funding for the CCC (the $10 billion in FY82 supplementals and another $6.7 billion in December). Meanwhile, something had to be done about both costs and the farmers, so the House ignored OMB's criticisms. The Agriculture Committee proposals passed easily. The only strong challenge was on food stamps, where Delbert Latta's larger reductions were defeated when enough gypsy moths voted with the Democrats to balance boll weevil defections.
The Post Office and Civil Service Committee, which was expected to cap Civil Service Retirement (CSR) COLAs at 4 percent, not only refused to do so but proposed minimal other savings in place of that cap. It thus became the first committee to defy reconciliation. The committee's bill was brought to the floor under a rule that kindly allowed Republicans to undo the damage with an amendment placing the 4 percent cap on the pensions of two million politically active federal retirees (and, by extension, another two million military retirees). "We are not considering reconciliation in the context of fiscal responsibility," complained Minority Leader Michel. "We are being forced to consider individual bills tailored to embarrass and frustrate those in the House who supported the budget resolution in June." It was convenient to forget that Republicans had forced a similar situation in 1980. Leon Panetta replied that "members
cannot come here and support a budget resolution that calls for certain cuts and then hide from the ability to vote up or down on those cuts."[18] "I challenge you to offer the amendment" to reduce CSR COLAs, chided Post Office and Civil Service Committee Chairman William Ford (D-Mich.).[19] Republicans were not about to take that dare. They challenged the rule but lost 240 to 170; the Post Office Committee package then passed with equal ease.
The conference agreement followed congressional inclinations to restrict agriculture production, interfering with the market. It met civil service pension targets through some extremely creative drafting. CBO had to score the package as meeting the targets, but in the end it wasn't close.[20] The final bill claimed savings of $13.6 billion over three years, substantially more than the committees had been ordered to achieve. Nobody could tell if the claim were true. The bill was generally reported as a victory for Reagan and the budget process, but it is a strange set of cuts that hurts few constituents. As on TEFRA, the administration had negotiated unsuccessfully on programs.