Stumbling to a Showdown

By Ed Magnuson

Finally a showdown in the lengthy struggle over the new 1983 federal budget is at hand. With nothing less than the fate of the nation's economy hanging in the balance, key White House aides as well as congressional leaders agree that time is running out in the search for compromise between a stubbornly intransigent President and a suddenly unified but totally unpredictable Congress. This week is the week of decision. Yet there is no certainty whatever that either side will prove capable of reaching one.

"We keep dancing around the fire," observed South Carolina's Democratic Senator Fritz Rollings last week. "Now we must put up or shut up." Tennessee Republican Howard Baker, probably the Senate's most effective Majority Leader since the days of Lyndon Johnson, agrees: "We've got to do it this week" (see following story). Informally, the contending parties facing off along Washington's Pennsylvania Avenue have set a midweek deadline for ending four weeks of delicate, closed-door negotiations over the budget.

It is an unusual situation. For the first time in 50 years, the two houses of Congress are controlled by different parties.

Nonetheless, their leaders are in unanimous agreement that President Reagan has sent them a budget for fiscal 1983 (which begins Oct. 1, 1982) with deficits so high that they simply cannot, and will not, approve it. Even Reagan's most loyal aides know that their boss must accept a compromise budget package that will sharply lower those deficits, but they live in fear that he might not do so.

Stepping into that political quicksand, the adroit Senate Majority Leader is attempting a most difficult feat. Baker is deftly challenging the economic beliefs of a President from his own party, while trying to preserve party unity. After leading Senate Republicans into solid support of Reagan's budget and tax policies last year, he is backing their resistance this year but trying to channel it to achieve a constructive compromise with the President. All the while, Baker is struggling to prevent chaotic fragmentation in a Congress in which undisciplined procedures and election-year insecurities work strongly against cooperative action on behalf of the nation's best interests, rather than those of the individual Senators. If Baker manages to rescue his party, his President and himself from this potential quagmire, he will deserve the continued admiration of his colleagues in one of the nation's most harassed and most criticized institutions.

With the deadline looming, Washington endured a week that vacillated from a heady optimism to perhaps an overly pessimistic gloom. It ended with a general consensus that the chances of the key players reaching agreement this week were, at best, only fifty-fifty.

The darkest moment came early in the week, when Baker, seeking a few days of well-earned rest on his 13-acre estate in Huntsville, Tenn., took a telephone call from James Baker, the President's Chief of Staff. Behind the scenes, the two Bakers had gently been trying to nudge Reagan into seeing the necessity of compromise. Sounding disappointed and unhappy, Jim Baker reported that the President remained sharply opposed to an alternative budget package that would undermine his massive 1981 tax bill.

Next day the outlook brightened.

House Speaker Tip O'Neill, whose ego had been badly bruised when the President snubbed all Democratic compromises last year and rammed his dramatic budget and tax slashes through Congress, hinted vaguely at a change of heart. If Reagan were willing to accept some new taxes on the wealthy, O'Neill hinted that he might agree to some modest cuts in future cost of living increases for Social Security recipients.

In an informal Rose Garden press conference, the President seemed to signal that such a deal was not out of bounds by refusing to rule out a surtax on high income earners. He even appeared to support the efforts being made by a team of congressional budget leaders from both parties who have been meeting with Jim Baker. Later in the week Reagan sounded still more conciliatory, telling a group of editors, "We must join together to bring down deficits, bring down interest rates and revive the economy." The talks exploring a compromise were reaching "a climactic stage," he said, adding: "I want to express my strong hope that they succeed."

Reagan, however, is not personally involved in the bargaining. Neither is O'Neill, although the Speaker is represented at the talks by Missouri Democrat

Richard Boiling, Chairman of the House Rules Committee. Other key backstage dealers include Republican Senators Robert Dole of Kansas, Mark Hatfield of Oregon, Paul Laxalt of Nevada and Pete Domenici of New Mexico. For the Democrats, Congressmen Jim Jones of Oklahoma and Dan Rostenkowski of Illinois are essential players.

With his customary low-key style, Howard Baker subtly increased the pressure on the President. He telephoned the White House to report that he would be unable to restrain the Senate Budget Committee for much longer, even though it is dominated by Republicans. If there is no firm agreement on the outlines for a new budget package by this week, Baker warned, the committee would begin fashioning a package of smaller defense-funding increases, new revenue-raising taxes and entitlement-program reductions on its own. Baker said he would be powerless to stop such a move.

If that happens, however, and Congress goes its own unfathomable way, no one can predict what the outcome will be. Quite possibly, the resulting budget would be unacceptable to Reagan, thereby producing a presidential veto. That could lead to a new period of confusion and stalemate, which, at the very least, would halt all progress toward economic recovery.

Ironically, the uncertainty persists even though both Republicans and Democrats on Capitol Hill agree on the general outline of a compromise that would almost surely win broad bipartisan support. It could include a 4% surcharge on taxable incomes of $40,000 or more; a 50-per-gal. increase in the excise tax on gasoline and some kind of energy tax increase, such as a $5-per-bbl. fee on oil imports. The increase in military spending would be cut from Reagan's proposed 11% to 7%. Raises in Social Security benefits now scheduled for next July would be delayed for three months, then pegged at perhaps 3% below the cost of living price index, rather than tied directly to it. The result could be a much needed $80 billion slash in the 1983 budget deficit.

Without some such reduction, the impending deficits are fearful to contemplate. By Administration accounting, Reagan's proposed budget will produce a $101.9 billion imbalance, with deficits of $93.8 billion and $81.8 billion to follow. The Congressional Budget Office, which has no motive to look on the bright side, assumes that Congress will not make further drastic cuts in federal social programs and foresees a 1983 deficit of $180 billion, which could rise to $220 billion and $240 billion in 1985.

Whether those immense deficits, by far the highest in American history, can be avoided depends on personalities as well as politics. With an almost messianic faith in the viability of his economic program, the President finds it hard to change direction and admit that those deficits are glaringly at odds with his campaign promise to balance the budget before the end of his four-year term. Democrats, on the other hand, know that the President and his party have been wounded by the recession; with an eye on this fall's elections, they are not all that eager to rescue Reagan from what they regard as his own economic folly.

Such partisan, self-serving postures make no sense when the stakes for the nation are so high, and when economic collapse would deservedly bring down the wrath of the voters on incumbents of both parties. Clearly, however, the President and the Republican candidates have the most to lose in the November elections, and Reagan remains the key to a solution. If he agrees to a reasonable compromise, it is unlikely that O'Neill, that other stubborn Irishman, would have either the clout or the desire to block it. Despite his bluster, the House Speaker would not want to be blamed for any new stalemate that worsens the economy.

Yet even if all the key actors in the Washington drama reach general agreement on what must be done about the budget, there is still no certainty that Congress would approve it either swiftly or as a coherent whole. Predicts Democratic Congressman Leon Panetta of California, a member of the House Budget Committee: "If anyone thinks that this is going to be a nice, neat package, with everybody jumping up and down and passing it in a few hours, well, that's not going to happen." Why? The very nature of today's Congress works heavily against a rational, orderly resolution of urgent national problems.

As the budget stalemate has pointed up all too clearly, members of Congress may well be so obsessed with partisan politics and their own re-election chances that they are simply unable to act decisively to help rescue a deeply troubled economy. Contends Idaho's Republican Senator James McClure: "We've got to exert responsibility. The country is hurting. I think Congress should make the decision to cut the deficits even if the President won't. And if we don't, the public ought to blame Congress." But Colorado Democrat Gary Hart, a member of the Senate Budget Committee, disagrees. "You don't force a budget down the President's throat," he says. "He's the key player and the key roadblock. Nothing will move before the President does. The buck stops on his desk."

But the fact that there is an internal debate within Congress over whether it can and should lead or only react to presidential initiatives shows how uncertain the two houses have become about their own role in the Federal Government. If Congress is unwilling to exert its power over the purse, it has lost its grip on its most fundamental constitutional mandate.

The self-doubts on Capitol Hill stem from last year's divisive battles over President Reagan's economic program. Until 1981, Congress had been making considerable progress in taking charge of the budget. In a series of post-Watergate reforms, it had reacted sharply to Richard Nixon's attempt to use the weapon of impoundment by refusing to spend money specifically appropriated by Congress for certain purposes. It passed legislation banning this practice. It also created a highly professional Congressional Budget Office and two new budget committees in the House and Senate. These committees were given authority to set spending limits for key budget items, enforceable on all other relevant committees when approved by each chamber of Congress in a single sweeping vote.

But last year Reagan shrewdly showed that this procedure, known as "reconciliation," could also be turned against Congress. By demanding a single up or down vote, he managed to get his own budget cuts approved in toto and prevented them from being chewed up, committee by committee.

Unfortunately, the result was a bill that--whatever its economic merit or lack of same--ranks as one of the sloppiest pieces of legislation ever approved by Congress. It was a shambles of bits and pieces, containing unnumbered pages and handwritten notes. Yet Congress was awed by a President who claimed a mandate for change and had a gift for persuading the public. It tamely adopted a budget that made a mockery of the recent reforms and insulted the legislative process.

Worse was to follow. Stunned by their defeat on the budget, fearful that they would be blamed for obstructing the President's program to rebuild the economy, the Democrats not only gave in on his demands for tax cuts but tried to go him one better. Indeed, both parties embarked on the biggest tax giveaway in U.S. history: $750 billion over five years. "It was wild," says an aide to Howard Baker, recalling the night the tax bill passed. "There must have been 400 lobbyists standing in the Capitol corridors. It was a free-for-all." As Congress added some $150 billion in tax cuts to the $600 billion that Reagan had already proposed, only one Republican Senator--Maryland's Charles Mathias, a liberal--had the courage to vote against the bill. Baker categorized the tax program as a "riverboat gamble," and Congress clearly played the game irresponsibly.

With everything going his way, Reagan also blew a golden chance to place controls on the escalating costs of sacrosanct entitlement programs like Social Security. Without consulting Capitol Hill veterans or trying to prepare the ground, he suddenly sprang on Congress a politically naive scheme to cut off minimum benefits from people about to retire. The uproar that followed, particularly from Democrats, was inevitable, and the Senate squashed the scheme by a mortifying 96-to-0 vote. Each party thus is now jockeying to push the other into taking the lead, and the heat that is sure to follow, on reducing cost of living increases for Social Security recipients. This has significantly complicated the search for compromise.

While Reagan overreached, Congress seemed to lose its nerve. It is failing this year to push on with a basic housekeeping agenda. Such widely praised landmark laws as the Voting Rights Act of 1965 and the Clean Air Act of 1970 are expiring this year. Almost everyone agrees that they must be renewed, yet relatively minor but firmly held partisan and ideological differences have rendered extension uncertain. Because of worries about the deficits and cuts in social programs, Congress may decide to fund foreign aid by a continuing resolution that simply renews the current $7.8 billion package for another year, rather than raising it to the $8.2 billion proposed by Reagan.

Action on new legislation remains highly doubtful, even on bills that will not cost much money. Nearly all legal authorities agree, for example, that the federal criminal code is outdated and needlessly complex. But a revision jointly proposed by two unlikely senatorial partners, Edward Kennedy of Massachusetts and Strom Thurmond of South Carolina, will probably fail to pass again this year. Reforms in the immigration law have been repeatedly urged since 1978, but a new act appears dead once again. Says Political Scientist Norman Ornstein of Catholic University in Washington, D.C.: "Across the board, there is less action in Congress this year. There are fewer committees meeting, and there is less action on the floor."

What has gone wrong? Preoccupation with the budget is not the answer. Basic changes in the way Congress operates, as well as in new members' attitudes toward the institution, have made Congress a balky, erratic, negative body.

The record turnover in congressional membership is striking. Fully 55 of the 100 Senators are in their first term, and 207 of the 435 members of the House have been there less than six years. A decade ago, there were 35 freshman Senators and 141 Representatives who had served three terms or fewer. Many of the newcomers have neither the respect for Congress nor the experience in shaping legislation that can be acquired only through years of service. There is considerable tension, in fact, between the oldtimers and the freshmen. "The intellectual and educational level of Congress has increased," says Democratic House Leader Jim Wright. "But the moral stamina in terms of basic integrity and guts has declined. Members are now more concerned about image and less about substance."

The old hands see sectarian differences among the newcomers. The Republican rookies tend to feel a greater loyalty to their party than do the Democrats because the Republican National Committee has more computer-collected campaign funds to distribute. But the younger Republicans also tend to be more rigidly ideological and militant on issues than their predecessors. Arizona Congressman John Rhodes gave up his post as Minority Leader two years ago, largely because he got fed up with the daily grind of trying to reason with unreasonable newcomers. By contrast, many recently elected Democrats ignored local party organizations, made it to Congress on their own, and thus have little sense of loyalty or obligation to their ostensible leaders in Washington. Tip O'Neill, who does not enjoy having to meet regularly with the Democratic freshmen, complains about their shifting values. "The old liberals are concerned about the poor, the senior citizens and the indigent--people," he says a bit nostalgically. The "new liberals are concerned about clean air, clean water--issues."

The institutional reforms passed in the mid-1970s did more than overhaul the budgetmaking process. They were designed to break the stranglehold on legislation held by powerful committee chairmen, often crusty autocrats and disproportionately Southern conservatives who attained power by virtue of seniority, not skill. One not wholly unexpected result has been that even relative newcomers now wield considerable power. Eager to make their mark, but lacking expertise, they tend to produce sloppily drafted laws. Example: an energy bill produced by the Senate Finance Committee was intended to assist Northerners earning below the poverty line in paying their heating bills but ended up subsidizing Southerners in running their air conditioners.

One reform, intended to undermine the veto power formerly held by committee chairmen, was to give subcommittees funding and staffing independent of their parent committees, especially in the House. In the Senate, 16 new Republicans were elected in 1980, and every one of them chairs at least one and more often two influential subcommittees. New York Republican Alfonse D'Amato, who is considered something of a legislative featherweight by congressional observers, chairs three subcommittees: Urban and Rural Development, Securities, and District of Columbia.

With the proliferation of these new power centers has come an explosion in overlapping jurisdictions. In 1977 Jimmy Carter described his proposed energy legislation as the "moral equivalent of war." But bills produced by his Administration went almost nowhere for three years. One reason: 83 House committees and subcommittees claimed the right to pass judgment on parts of any proposed energy package. "It's damned hard to get legislation passed," complains Maurice Rosenblatt, a veteran lobbyist for railroads and the liquor industry. "You used to be able to deal with Wilbur Mills [longtime head of the House Ways and Means Committee]. Now you've got to go to every damned fund raiser, drink one more highball, eat one more turkey gizzard."

No one in Congress is crying over the plight of lobbyists, nor should the public. The special interests, in fact, have been doing quite well, mainly because of the rapidly growing influence of political action committees (P.A.C.s), which can donate up to $5,000 to candidates for the House and Senate. Their number has grown from about 600 in 1974, when P.A.C.s spent $12 million, to 3,115 in 1980, when they contributed $55 million in campaign funds. P.A.C.s representing everything from giant corporations to labor unions to bird watchers are expected to spend more than $80 million on this year's congressional elections.

As the cost of campaigning grows, so does the dependence of candidates on P.A.C. money. While P.A.C.s contend that their contributions are aimed only at gaining "access" to winning candidates, the militancy of some of these groups often comes disturbingly close to bribery. "Congressmen need the money, and the P.A.C.s have it," says Fred Wertheimer, president of Common Cause, a public-interest lobbying group. "There should be lobbying, but the bigger bucks often win, regardless of the merits." The twelve members of the House Health and the Environment Subcommittee who voted last month for a measure that would weaken the Clean Air Act had received seven times more campaign money (an average of $25,000 each) from industry-backed P.A.C.s than the eight members who opposed the bill.

Such carefully targeted money, as well as the outpouring of mail on special-interest bills by well-financed lobbying groups, especially unnerves the newer members of Congress. Older hands, in fact, scoff at many of the new legislators as "bed welters with blow-dry hairdos." Contends one House Democratic leader: "The new breed are scared of their shadows. They want to do what's immediately popular rather than what will work."

One result of pressure-group politics is that bills with wide but diffuse popular support repeatedly die in the nervous Congress. At least 75% of Americans favor the registration of handguns, but members of Congress, terrified by the 1.8 million-member National Rifle Association, will not pass such legislation. The rising cost of health care is severely straining federal and state budgets, but lobbying by the American Medical Association shut down a bill proposed by Carter that would merely have put a cap on the exorbitant increases in rates charged by hospitals.

Congress has fallen into other bad habits. Knowing how hazardous and time consuming it is to push a controversial bill through the multilayered committee system, legislators increasingly tack their pet proposals onto major bills as riders. Right-wing advocates of so-called social issues have placed anti-school busing and pro-prayer riders onto a number of Justice Department funding bills. There is even an antiabortion rider attached to this year's appropriations bill for the Postal Service. These irrelevant amendments rarely survive both houses, but legislators waste valuable time in the process of shedding them.

One new fact of congressional life that has made the institution less effective, though it was designed to do the opposite, is the immense growth in the size and cost of the staffs maintained by committees, subcommittees and individual members. Congress now has 23,000 such aides, in contrast to 3,300 for Canada's Parliament, which has the second largest staff among Western democratic governments. It now costs $1 billion a year to operate Congress, against $150 million only 20 years ago. Some Washington experts fear that these hardworking, generally bright technocrats are devoted primarily to the re-election of their congressional bosses and too inclined to justify their jobs by producing needless legislation. Others contend that these staffs provide Congress with the research and vital expertise it needs to assess the torrent of information churned out by the Administration's massive bureaucracy.

The upshot is that Congress today is much more of a brake on an Administration's initiatives -- and perhaps on the nation's progress -- than it is an inspiring source of fresh ideas and solutions to problems. Whether that reactive tendency, to block what a President proposes, is perceived as good or bad depends, of course, on the observer's political point of view. In any case, Congress this year will not produce many dramatic new legislative achievements. Reagan, in fact, has asked it to undo much of what its predecessors have done.

Historians and political scientists with long memories contend that Congress has often been ponderous, frustratingly slow and unharnessable. Shortly after Franklin Roosevelt's sensational, Depression-generated 100 days, a Democratic-controlled Congress soon reverted to its traditional friction with the White House, leading F.D.R. to com plain about its mulishness.

Following John Kennedy's assassination, President Lyndon Johnson en joyed a burst of support from the Congress he knew so well, but that romance lasted only 18 months. Says Political Scientist Ornstein: "We have never had sustained congressional-presidential unity for even one full term."

Some thoughtful members of Congress take comfort in the unruliness of their branch. "The system was not meant to be any different," contends Massachusetts Democratic Senator Paul Tsongas. "It was meant to avoid hasty activity." At best, he argues, Congress can block and can force a President in a direction, "but positive leadership has to come from the President." Democratic Congressman Richard Gephardt of Missouri agrees that the shapers of the Constitution meant Congress to be a check on Executive excess. "It's the price you pay for diffusing power," he says.

It has always been unfair to rate a Congress as either "do-nothing" or "rub ber-stamp," depending upon how it responded to a President's legislative desires. The current Congress, in particular, might well merit praise by refusing to adopt presidential economic policies that it considers too risky. But that is not enough. Inaction and stalemate on the economy can be as dangerous as errant action. The nation cannot afford a prolonged political confrontation between the White House and Capitol Hill. If the President will not yield, Howard Baker and his congressional cohort really have no choice; they must try to provide the U.S. with some degree of economic leadership. Reported by Reported by Neil MacNeil and Evan Thomas/Washington

With reporting by Neil MacNeil, Evan Thomas

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