TIME: Almanac 1993/TIME Almanac 1993.iso/time/022089/02208900.048

Text File | 1992-09-23 | 11.5 KB | 223 lines

                                                                                NATION, Page 32

Reaganomics with A Human Face


Bush's "action agenda" has something for everyone -- but the
bookkeepers

By Walter Shapiro


    A joint session of Congress is the most august forum
available to a President. The setting alone -- the entire
Government of the United States solemnly assembled in one vast
chamber -- imparts a majesty and a grandeur to the occasion.
The maiden address to Congress by a new President adds a
further element of anticipation and drama. For George Bush, in
particular, last Thursday's performance was the long awaited
moment of self-definition, the chance to put to rest forever
the stale gibes about his difficulties with "the vision thing."

    Those certainly were the expectations. Bush and his advisers
had portrayed the three pleasant but slightly enervating weeks
since the Inauguration as merely the interlude before the drum
rolls heralding the formal presentation of his legislative
program. White House aides talked confidently of the President's
"action agenda." Bush had been predicting publicly that Congress
would not like his courageous proposals, even as he artfully
wooed legislators to ensure a warm reception. By the time the
new President made his triumphal entrance into the House
chamber, beaming and backslapping like a joyful alum at a Yale
reunion, the stage was set for the programmatic speech that
would boldly launch the Bush Administration.

    By those inflated standards, Bush fell far short -- and for
want of a coherent message, an important opportunity was lost.
Unlike the Inaugural Address, the speech contained no
inspirational phrases, no soaring metaphors, just commonplace
sentiments about how "we must take a strong America and make it
even better." This failure of rhetoric can be excused, for as
the President said, now "it's time to govern." But governance
requires agonizing choices, and Bush, like his mentor Ronald
Reagan, stoutly declined to confront them publicly. The
President's program, as he defined it, is all gain and no pain,
with scant need to explain the inherent contradictions.

    In sharp contrast to Reagan's stiff-necked philosophic
rigidity, Bush was eager to touch every point on the ideological
spectrum. He honored, with lip service at least, most of his
kinder and gentler campaign promises, ranging from a pledge to
halt offshore drilling in California to advocacy of extended
health care for pregnant women and children. Bush courted
environmentalists (by pledging an end to acid rain and toxic
dumping) and borrowed lines from Jesse Jackson ("Keep hope
alive"), while still echoing themes from the Reagan years
("growth and opportunity" and "family and faith") and bowing at
the shrine of a balanced-budget amendment.

    But instead of clear priorities, the President offered a
clutter of programs, almost all marginal adjustments in the
status quo. By awkwardly trying to match the concerns of a
liberal Democrat with the means of a parsimonious Republican,
Bush ended up with an incoherent philosophy that might be
dubbed Reaganomics with a human face.

    The President's a-little-something-for-everyone approach to
Government, lurching from new national parklands to a statehood
referendum for Puerto Rico, at times sounded as if it had been
borrowed from Lyndon Johnson. But often the mismatch between
promises and price tags bordered on the comic. Bush took pains
to recall that he had promised to be "the Education President,"
and invited his audience to join the crusade by enlisting as
"the Education Congress." Yet the up-front cost of the
President's innovative proposals comes to a paltry $58 million,
less than $1.50 for every child in the nation's public schools.
Cynics, however, could envision the gleam of delight in the
eyes of Congress when the President proposed precisely 570 new
science scholarships -- one for each member of the Senate and
House (including nonvoting delegates) and 30 more that the
White House will control.

    The three most important words in Bush's address remained
the familiar cry of "no new taxes." That read-my-lips pledge
from the campaign presented the President with what may prove an
insoluble problem: how to meet the Gramm-Rudman target of a $100
billion deficit on his $1.16 trillion budget for fiscal year
1990. The commitment to comity with Congress ruled out the
Reagan-era approach of proposing draconian, and politically
unrealistic, cuts in domestic spending that would be
immediately declared "dead on arrival." The familiar device of
using overly optimistic economic assumptions to gild the budget
was, of course, part of the Administration arsenal. The
President's Office of Management and Budget predicts that
economic growth alone will reduce the deficit to $127 billion
in 1990, yet Congress pegs the number at a more realistic $146
billion. But even pie-in-the-sky scenarios cannot trim the
deficit nearly enough to satisfy the requirements of
Gramm-Rudman.

    With a certain amount of brio, Bush actually claims that his
budget will produce a $92 billion deficit, $8 billion lower than
the target. Were these numbers not so conspicuously off base,
some economists would fear that slashing the current $170
billion deficit by $78 billion might send the economy into a
tailspin.

    How then did the Bush team pull off such a miraculous
deficit disappearing act? Budget Director Richard Darman came up
with a solution so Machiavellian that it had eluded even that
past master of cooked books, David Stockman. The Darman
doctrine: If the numbers are inconvenient, let someone else add
them up. It was a refined version of the same strategy that
Bush himself promoted during his campaign with his
numbers-fudging talk of a "flexible freeze."

    As a result, the Bush budget documents are as cryptic as an
Etruscan inscription. The heart of the strategy is a $136
billion pool of popular programs like Amtrak, environmental
protection and nutritional assistance that Congress can deal
with as it wishes. Off limits for Bush is the defense budget,
frozen at $291 billion after allowing for inflation, and the
near sacrosanct $247 billion for Social Security.
Unfortunately, those huge budgetary no-trespassing signs mean
that only meat-cleaver slashes in the jumble of discretionary
programs could possibly make the Bush proposal meet the
Gramm-Rudman targets. But the President's team is not going to
squander political capital on such a fool's errand; that messy
job is left to Congress.

    Capitol Hill Democrats quickly estimated that the Bush
budget calls for $20 billion in spending reductions but
identifies just $10 billion in specific cuts -- such as the
slash envisioned for federal workers' cost of living increases.
The remaining $10 billion in reductions disappear into what
Senate Budget Committee chairman James Sasser called the "black
box" of the budget. Asked about this timorous lack of specific
recommendations, a senior White House aide said with a chuckle,
"We're too smart for that. There's no law that says you have to
define cuts and throw out red flags too."

    Congressional Democrats remain slightly puzzled about how to
react to Bush's strategy of proffering a velvet glove clutching
a closed wallet. After years of bitter deadlock with Reagan,
they tended to mute their criticism of a President so palpably
eager to negotiate. Some, like Maryland Senator Barbara
Mikulski, were amused by the incongruities of the President's
new compassionate language. "Bush sounded a lot like Michael
Dukakis," she joked. "I hate to use that L word, but it sounded
liberal, liberal, liberal to me."

    Only one specific proposal in the Bush speech inspired a
fusillade of partisan attacks: the President's efforts to redeem
his campaign pledge to slash the tax rate on capital gains from
33% to 15%. Like Dukakis in last year's campaign, congressional
Democrats lambaste the idea as an affront to fairness. "I'm not
going to tell the wage earners in Chicago that they should pay
a higher tax rate than stockbrokers," thunders House Ways and
Means Committee Chairman Dan Rostenkowski. There is evidence to
support this equity argument: currently, 70% of all capital
gains are claimed by taxpayers with household incomes over
$100,000 a year.

    To Bush, cutting capital gains is another miracle-grow
elixir for the economy: "This will increase revenue, help
savings and create new jobs." In a reprise of the dubious
less-is-more assumptions that once undergirded Reaganomics,
Darman argues that such a tax reduction would yield $4.8
billion in additional revenue in 1990. The logic: grateful
investors would churn their portfolios in a frenzy to take
advantage of the more generous tax rate. Although there is no
consensus, most respected economic models challenge these
assumptions. A study by the Congressional Budget Office, for
example, puts the annual loss in the first year to the Treasury
around $4 billion -- or more than six times the amount that Bush
proposes to spend on all programs for the homeless.

    Buried within the Bush budget is an odd change in policy:
the President seems committed to reversing tax reform, the major
legislative triumph of Reagan's second term. A reduction in
capital-gains levies would erode the reform principle that
earned and unearned income should be taxed equally. Bush also
retains an unmistakable affection for the kind of
special-interest tax breaks that the 1986 legislation was
designed to curtail. The President has quietly asked Congress
for $2.7 billion annual tax reductions for business, including
$400 million for oilmen, who include some of Bush's most
faithful supporters. In comparison, the Administration's
aggressively ballyhooed child-care tax credits for low-income
families would cost around $2.5 billion.

    Behind the smiles and sweeping promises of last week's
speech lurks a calculated, if short-term, political strategy.
The President and his team believe they can maintain the
illusion of a "new breeze" with minor recalibrations of
priorities and finances as long as Bush continues to talk a
good game with both the voters and Congress.

    This chameleon style may be a shrewd defense mechanism,
designed to mask the harsh reality that Bush is more constrained
than any other President in modern memory. The borrow-and-spend
policies that Ronald Reagan presided over have bequeathed to his
chosen successor a downsized presidency devoid of the resources
to address long neglected domestic problems. The Bush campaign
strategists -- with the candidate's active complicity --
burdened the new President with an obdurate stance on taxes. And
for all of Bush's conciliatory zeal, Congress remains an enemy
camp; no elected Republican President in this century has come
into office faced with such lopsided Democratic majorities.

    Hemmed in as he is, the risk for Bush is that his
Administration could drift for months without major victories --
or, worse, be burdened with a mortifying setback. Already, the
uplifting sermons have begun to sound repetitious and a trifle
hollow. A budget concordat with Congress would, of course,
provide the tonic that Bush craves, but the Oct. 15 Gramm-Rudman
deadline all but ensures that serious negotiations will be
delayed until late summer. In the interim, Bush should have more
than enough time to grapple with that transcendent -- but still
unanswered -- question: What precisely does he want to
accomplish as President?

-- Michael Duffy and Richard Hornik/Washington