JUST HOW MUCH DOES PETE DOMENICI, chairman of the Senate Budget Committee, carea bout a balanced budget? Following the committee’s approval on a party-line vote to settle Washington’s accounts by the year 2002, he solemnly called the vote “the culmination of the my life work.” That may be only a slight exaggeration for this longtime deficit hawk, but the outcome of the October 23 vote was a reminder of Domenci’s considerable skill, and success, in shepherding the legislation through a Senate laden with budgetary landmines. Domenici has emerged as one of the generals in the Republican effort to radically downsize the federal government and balance the budget in the process.
Nine months agao, few would have predicted Domenici’s central role in devising his party’s economic program. He has traditionally been eyed with suspicion, if not disdain, by conservatives after his work to scale back the Reagan tax cuts in 1981. This apostasy reared its head again in 1982 and 1990; he pushed for huge tax increases both years and solidified his image as an all pain-no gain Republican. Domenici wasted no time in resurrecting this image following the November elections: As Republicans prepared to name a new director for the congressional Budge Office, the dour Domenici objected ot the appoitnment of June O’Neill, a free-market economist supported by conservatives. He worried that her views would compromise the supposedly independent agency.
This heresy was small beer, hwoever, compared with what Domenici was spouting in response to the House’s tax-cutting Contract with America: “There is no commitment to any size tax-reduction plan in the Senate, and there is no consensus from what I can tell,” he announced in early February. “We’re clearly interested in what the House says and does, but everybody knows that senators are very concerned about the deficit.” Nor was Domenici fully supportive of the House goal to balance the budget over seven years.
But his reluctance waned when he recognized there had been a genuine change in climate among Senate Republicans since his previous tenure as chairman of the Budget Committee in the 1980s. While many of his GOP colleagues had always supported tax cuts, the willingness to make spending cuts was now widespread. This was brought home to Domenici in the proposals offered by working groups he had formed upon assuming the chairmanship of the Budget Committee in January. The working groups, which looked at domestic discretionary spending, entitlements, and privatization, came up with surprisingly bold proposals, which ranged from selling off the federal student-loan agency to including medical savings accounts in Medicare reform. The impact of these proposals was clear: If there was real enthusiasm for spending cuts among Republicans, then Domenici could swallow hard and support tax cuts.
Domenici’s search for a way to twin spending cuts with tax relief was greatly facilitated by an obscure April report from the CBO, which certified that a balanced budget would yield a $ 170 billion dividend to the federal government (primarily as a result of reduced interest payments on the debt and increased economic growth). The report, and earlier budge Committee testimony by then-CBO director Robert Reischauer, received no press coverage at the time but would prove to be one of the most critical elements of the GOP tax-cut plan. Domenici pledged to devote the $ 170 billion to tax cuts, which enabled him to round up Republican budget support from fellow deficit hawks.
Domenici’s newfound willingness to play ball with his GOP colleagues was underscroed by his acceptance in mid-June of an increase in the tax cut to $ 245 billion, the compromise number agreed to by House and Senature conferees. And when all 54 Republican senators voted for the House-Senate budget resolution on June 29, it was a testament to Domenici’s skill in bringing the GOP’s diverse coalitions together under one package. Domenici’s “masterful” procedural work — his use of the dividend in particular — was what made it possible for the resoltuion to pass, says Stan Collender, a budget expert at Price Waterhouse in Washington.
Domenici’s close relationship with Senate Majority Leader Bob Dole has played no small part in guaranteeing that tax cuts were include d in the bill. The pair have been ideological and temperamental soul mates during their almost 23 years together in the Senate, harboring chummy relations with many of their Democratic colleagues.
And despite their one-time rivalry (Dole defeated him in 1984 to become majority leader), Domenici was an early supporter of Dole’s presidential ambitions for 1996 and has understood that those ambitions would be thwarted if tax cuts stalled in the Dole-led Senate. Dole did have to do some arm twisting to get Domenici to agree to increasing the tax cut package to $ 245 billion, but Domenici’s legendary obstinacy never kicked in.
Will Domenici’s looming budget victory cement his links with conservatives? Probably not. He’s still a moderate at heart, as seen earlier this year in his refusal to approve tough provisions in the welfare reform legislation, and in his relentless work to preserve the Legal Services Corporation. Conservatives have little faith that Domenici has undergone an ideological transformation. Yet most of rhetoric these days from the right is grudgingly pro-Pete: ” Domenici does need to be given credit for getting the budget this far,” says Scott Hodge, a budget expert at the Heritage Foundation. The irony in this is that the man derided by the editorial page of the Wall Street Journal in April 1981 as “John Maynard Domenici” for his opposition to Reaganomics has helped craft and win approval of a budget proposal that would have been unimaginable during the Reagan years.
by Matthew Rees
