TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/022089/02208900.048

Text File | 1990-09-17 | 12KB | 206 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