Taps for Caps

One problem the Republican leadership faces in boasting about the
accomplishments of the 1999 congressional session is that one of them was the repudiation of the primary "success" they were trumpeting proudly in 1997. That was the year the Republican Congress passed—and lamentably got Bill Clinton to sign—the wildly misnamed Balanced Budget Act. It was wildly misnamed on two counts.

First, the budget was in fact already coming into balance, thanks to the tax increase signed by George Bush in 1990, the tax increase on wealthy people proposed by Bill Clinton and passed entirely by Democrats in 1993, and the great surge in revenues that has resulted from the solid growth in the American economy--a growth that refuted Republican predictions in 1993 that the tax increase would plunge us into recession.

Second, the most significant actual reduction in expenditures the 1997 act accomplished--a drastic, cruel, and ultimately unsustainable cut in Medicare--was used not to reduce the deficit, but to pay for the Republicans' cherished capital gains tax cut. To that extent, the Balanced Budget Act was, from the federal deficit standpoint, a wash.

There was, however, one element in the act that would have resulted in a substantial reduction in overall government outlays had anyone ever paid it any serious attention. Fortunately, no one did. I refer here to the widely hailed-- contemporaneously but not later--budget caps.

Indeed, from this perspective, the fact that the deficit was disappearing thanks to the tax increases and economic growth was a problem, not an advantage. The conservative ideologues realized that they would no longer be able to point to the Reagan-era deficits as an argument against funding environmental cleanup, public transportation, community development block grants, increased aid to education, and other such threats to the moral fiber of the republic. So they sought in 1997 to get one last ideological boost from the fear of deficits, and mandated reductions in real domestic spending for the next five years.

But these reductions as well as the drastic cuts in medical services to the elderly--both signature items in the Republican platform--died in 1999. And while it is entirely just that these deaths go unmourned, it is a mistake to let them go unnoticed.

Essentially, what happened in 1999 was the defeat of right-wing ideology by the reality of contemporary American society. By the end of the 1999 congressional session, not even the most rabid Republicans were seeking to maintain the existence of the 1997 caps or the serious Medicare cutbacks. On the discretionary spending side, the appropriations bills adopted in 1999 for fiscal year 2000 exceeded the number called for in the 1997 act by more than $40 billion. There is room for debate about the numbers. But not even the most creative numerical manipulations can hide the fact that the 1999 appropriations bills drove a very large stake through the tiny, hardened heart of the 1997 budget act. Indeed, by the end of the session, the Republicans had abandoned even the pretense of defending the caps.

They did try earlier in 1999 to maintain some allegiance to what they once considered one of their crowning achievements, mainly by taking abusive advantage of one of the loopholes they left themselves. The 1997 act did allow for the federal government to exceed the discretionary spending caps in case of emergencies. Clearly, the outbreak of a major war would make caps of any sort unrealistic, even if they had been remotely realistic in the first place. And an extraordinary level of natural disasters could also be a justification for greater-than-called-for spending. But the "emergencies" that the Republican Congress proceeded to declare in 1999 in their futile effort to avoid the act of auto-repudiation took intellectual dishonesty to new depths.

One of the "emergencies" Congress declared to justify spending beyond the cap level for the Commerce Department was the need to conduct the Census in 2000. It is of course the case that this emergency was first foreseen in 1787, when the requirement for a census on a decennial basis was included in the U.S. Constitution. When some of us challenged the Republican assertion that an event that had been constitutionally mandated for over 200 years qualified as something unforeseen, the most authoritative answer we received from the Republican in charge of Census 2000 preparations was that they had forgotten to include it when they passed the Balanced Budget Act of 1997. This may turn out to be one of the great Republican contributions to civil society. Think of the social friction that will be avoided if people are able to follow this congressionally enacted precedent, and in situations where embarrassment or tension might result from someone having to admit to another that he or she had forgotten to do something, the forgetter could instead simply declare that the resulting difficulty was "an emergency" and escape responsibility.

Another emergency cited to justify ignoring the caps was the coming of winter. The Republicans sought to justify spending more money in the appropriations bills for the departments of Health and Human Services and Education than was called for by the 1997 act by listing the expenditure for the Low Income Home Energy Assistance Program as emergency spending. Apparently, the Republican leadership has been secretly taking the threat of global warming far more seriously than they have let on, and had, until appropriations time, expected January, February, and March 2000 to be downright balmy.

And in each of the past two years, the Republicans listed billions of additional assistance dollars for farmers as emergency aid. This emergency appears to have been the product of the passage of the Freedom to Farm Act of 1996 by the very same Republicans who proudly proclaimed that they had unshackled American agriculture from the restraints of government. Unfortunately for their ideological consistency, the overwhelming majority of their agricultural constituents expressed a strong preference for those federal shackles, which included subsidy payments, and the Republicans promptly forgot their commitment to a free market in farming. (Apparently, there are footnotes in the free market economics texts of Friedrich von Hayek, Ludwig von Mises, and Milton Friedman, which say "none of this applies to agriculture." These footnotes are not visible to the naked eye and can only be deciphered by one who is a professed free market advocate who represents agricultural areas.)

The effort to save the caps by proclaiming emergencies soon fell under the weight of its own obvious foolishness, however, and by the end of the congressional session, desperate to pass appropriations bills and get out of town, the Republicans acknowledged that the caps were kaput.

What they have tried to avoid acknowledging is that this was far more than a numerical failure. The caps did not crumble because of any political maneuvering on the part of the Democrats. In fact, early in the session, neither the president nor the Democratic congressional leadership wanted explicitly to demand that the caps be ignored, lest the Republicans be able to blame the Democrats for their demise. What happened was that the great majority of the American people made clear their strong preference for more government activity than the caps allowed.

What we have seen in the short, unhappy life of the 1997 budget deal is an affirmation of a central fact of American life: While it is possible to get wide public support for denunciation of government spending in general, when the issue becomes funding the various components of government activity, the public has little sympathy for the conservative position. The 1997 discretionary spending cap represented an effort to create a whole that was smaller than the sum of the parts, to borrow a phrase that William Safire used about 15 years ago. Once it became clear to people that the caps could be maintained only if federal government refused additional federal aid to education, cut back on housing for the elderly, failed to fund environmental cleanup, cut back on health care, dispensed with the Department of Veterans Affairs, etc., etc., the public demanded that the caps be ignored.

So clear was the public's view in this matter that the Republicans never even presented appropriations bills on the House floor that would have maintained the cap levels, because they understood that it would have been political suicide for many of their members to vote for these unrealistically low levels. The caps died because the great majority of Americans understand far better than the right-wing leadership of the Republican Party that maintaining the quality of life in a complex society such as ours requires a level of government spending far beyond the Republican vision.

The repudiation of the second aspect of the 1997 budget act--the reductions mandated in Medicare spending--was also significant. By the beginning of 1999, it was overwhelmingly clear that Congress and the president had colluded to reduce Medicare spending levels below what was minimally necessary to provide decent health care. Hospital reimbursements were cut below what was needed, in many cases, to maintain reasonable service. It should be noted here that when hospital reimbursements are cut, it is not doctors' incomes that suffer primarily. Hospitals are one of the major employers of low-income workers in our society, people who perform unpleasant tasks on a seven-days-a-week, 24-hours-a-day basis for very low wages. The more we squeeze the hospitals, the less people will be paid to empty bed pans, prepare and serve food, clean rooms, etc.

In addition, home health care funding was cut to a level far lower than what compassion calls for. In the case of Massachusetts, the law wiped out by federal pre-emption a state law that had required coverage of prescription drugs. In addition, teaching hospitals, the source of many of our medical advances, were badly hurt by the budget act.

By mid-1999, the error inherent in the 1997 act was so clear with regard to Medicare that a serious question arose as to who in fact had been in Congress when the bill was passed. Member after member would take the floor of the House, or sign onto a letter, lamenting the unrealistically low levels of Medicare spending that had been voted by Congress in 1997. Newly arrived observers of the American scene could have been forgiven for wondering what sort of extremely high congressional turnover had occurred between 1997 and 1999 to result in so many members of the latter group being appalled at the actions of their predecessors. At one point, I called on the floor of the House for us to employ the crack investigative talents of Congressman Dan Burton and his merry band on the House Government Reform Committee, hoping they could discover whether or not there had been a mass impersonation in 1997 by a group of people who were able cleverly to disguise themselves as representatives and senators in an effort to sabotage Medicare. More likely, the 1999 debates on Medicare with members expressing their incredulity at the imposed cuts represent the greatest example in history of people expressing shock at the entirely foreseeable consequences of their own actions.

Whatever the explanation, the result was decisive. One of the very last acts of Congress in 1999 was to pass a bill undoing the worst effects of the 1997 cuts. Congress restored billions of dollars to counteract what Congress had taken away just two years earlier. Once again there is only one explanation: The political class in Washington, in its effort to appear "fiscally responsible," greatly underestimated the insistence of the majority of the American people on adequate funding for public purposes.

The 1997 caps sought to deny the ability of the electorate to increase spending on social purposes as the economy expands. The Republican argument of 1997, at the time seconded by Bill Clinton, treated government spending as a bad thing in itself, to be severely limited even if additional revenues became available. It is that right-wing notion that was resoundingly rejected by the American political system in 1999. That rejection should be duly noted. ¤