BY THE TIME PRESIDENT CLINTON returned from his trip to Europe on December 3, the struggle at the White House over forging a budget deal with Republicans was over. Those arguing for no deal — George Stephanopoulos, various aides in Hillary Clinton’s orbit, even political adviser Dick Morris for a spell — had all but given up. Clinton himself had always figured a budget agreement is the best thing for him politically. And he’s right. But now the White House is worried Republicans may not be willing to compromise enough so Clinton can reach a deal without, as a senior adviser put it, ” caving on core values,” whatever they are.
Shortly after Clinton released his own version of a seven-year balanced bttdget on December 7, a White House offcial said he was mystified by Republicans’ reluctance to come to terms: “I don’t understand it.” Sure, the president sounds in his public statements like he won’t give an inch either. But Republicans should know better than to be swayed by that. It’s just rhetoric, the offcial indicated.
In fact, the president has adopted a new political posture. In his first two-lus years in the White House, he talked conservative and governed liberal. Now, as he negotiates a deal on balancing the budget and seeks re-election, he talks liberal and governs conservative. Well, not quite conservative, but his policy on spending and taxes is a lot less liberal than his public pronouncements.
When he vetoed the GOP balanced budget bill on December 6, Clinton sounded like an unrepentant reactionary liberal. He was blocking provisions, the president said, that would “turn Medicare into a second class system,” raise taxes on the poor, and “squander our natural resources.” The bill would also deny medical care “to hundreds of thousands of pregnant women and disabled children.” And so on.
But Clinton’s substantive position is much less kneejerk. Look how far he’s already been pulled by House Speaker Newt Gingrich and the Republican Congress.
On December 7, 1994, one year before he sent his balanced budget to Capitol Hill, he not only wasn’t in favor of balancing the budget in seven years, he wasn’t in favor of balancing it ever. Nor was he for any kind of tax cut. Nor did he have any plans for reforming Medicare and slowing its growth to save it from bankruptcy. And turning welfare over to the states wasn’t on his agenda either.
Clinton is ready to give more ground, so long as Republicans yield some, too. He and his advisers believe he is strong enough politically to make concessions without inflaming left-wing Democrats. For instance, he may propose a further reduction in the Consumer Price Index (CPI), which is used to calculate cost-of-living increases in Social Security and other programs. Democratic Senator Daniel Patrick Moynihan of New York has bombarded the White House with recommendations to adjust the CPI. He sent press secretary Mike McCurry, once Moynihan’s spokesman, a Labor Department booklet entitled ” Understanding the CPI: Answers to Some Questions.”
A senior Clinton adviser says the “structure” of an accord with Republicans is now visible. The White House would agree to more savings in Medicare and Medicaid and to a bigger tax cut. Republicans would adjust their budget on these issues, plus give Clinton money for his signature programs — AmeriCorps, Goals 2000, job training, environmental enforcement. In the end, Republicans would get 75 percent, if you judge their gains by how far they will have dragged Clinton from where he was a year ago. But in dealing with Clinton’s December 7 budget, they’ll have to split the difference.
It was a close call at the White House whether Clinton would propose a seven-year balanced budget at all. The key figure was Morris, the one-time Republican consultant who’d advised the president to position himself midway between Gingrich and House Democratic Whip David Bouior, the party’s ideological czar in Congress. Surprisingly, Morris flirted in November with the idea of rejecting a deal and prolonging the fight with Republicans right through the 1996 election, pounding them relentlessly on Medicare. Stephanopoulos and Harold Ickes, the deputy White House chief of staff, agreed.
But the risks were too great. For one thing, Federal Reserve chairman Alan Greenspan insists that interest rates will rise if no budget deal is forged. With a deal, though, he’s promised a cut in short-term rates as early as December 19. With the economy slowing, Greenspan’s role became more decisive, since Clinton is desperate to avert a recession in 1996. Moreover, there’s fear of a stock market correcLion, absent a deal. And governing by ” continuing resolution” came to be seen as awful as well, since Republicans would require a resolution cutting deeply into appropriations. “It would be devastating to programs we care about,” said a Clinton aide.
Morris relented, though he thought Clinton should have waited a while before complying with the GOP demand to produce a seven-year budget. That tipped the balance overwhelmingly in favor of the dealmakers — chief of staff Leon Panetta, counselor Bill Curry, McCurry, political director Doug Sosnick, and the president.
Count that also as a victory for Republicans. It means their breathtaking accomplishments in changing the size and scope of the federal government are now likely to be enacted (in samewhat diluted form). But there’s a downside. With a budget deal, Clinton will be able to claim in 1996 that he cut spending and taxes, balanced the budget, saved Medicare, and reformed welfare, while simultaneously pacifying liberals with boasts of having staved off more “extreme” GOP proposals. A clever ploy, and it may work.
by Fred Barnes
