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ON THE CUTTING EDGE
The House GOP Alternative to Clinton's Budget
by John R. Kasich
From the Summer 1993 issue of Policy Review
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     On March 18, 1993, 132 Republicans and three Democrats did
something unusual for members of Congress: they voted to shrink
the size of the government.
     The vote was for a budget resolution, offered on the floor
of the House of Representatives by Republicans on the House
Budget Committee, to reduce federal spending by $430 billion over
five years. This GOP budget achieved the same amount of deficit
reduction promised by President Clinton's budget. But unlike the
president's plan, the Republican budget achieved all of its
savings through spending restraint. It did not raise any taxes
and did not disturb the government's Social Security contract
with the American people.
     Many Republicans initially believed it was a mistake to put
forth such a budget of their own. However, as the new ranking
Republican on the House Budget Committee, I believed it was
absolutely necessary for the GOP to develop a bold, serious
budget alternative to the president's economic plan. My GOP
Budget Committee colleagues and I convinced most members of our
party in the House that a detailed budget was essential in
distinguishing the Republicans' intent to control the growth of
the federal government from the Democrats' desire to expand it.

"No Hot Air, Show Me Where"

     When President Clinton presented his budget strategy on
February 17, in what he called his "Vision of Change for
America," he asked critics of his plan to be as specific and
thorough as he was in developing their alternatives, and
precisely identify where they would allocate resources
differently. His demand: "No hot air, show me where." Leon
Panetta, the new director of the Office of Management and Budget
(OMB), repeated the challenge in testimony to the House Budget
Committee.
     Committee Republicans already had decided that any
alternative they produced would be substantive and specific -- it
was not enough to call for a spending freeze or spending "caps."
Such mechanisms only determine limits on aggregate spending
amounts; they do not face up to the kinds of program changes
needed to achieve the savings. They also ignore the different
impact that the same level of spending cuts will have on
individual programs and departments.
     Control of federal dollars can only come by confronting
particular programs line by line. Republicans needed to show
precisely how and where they would achieve the savings they
claimed.

A Clinton Trap?

     Republicans who were reluctant to go forward with an
alternative had understandable concerns. They saw the Clinton
challenge as a trap. A GOP budget alternative would draw
attention away from the Clinton budget and its numerous flaws,
while asking Republican members to support spending cuts that
could be unpopular with many constituents. It could draw the
opposition of various interest groups, focusing attention on what
they disliked in the Republican plan and away from everything
that was wrong with the Clinton plan.
     Despite these hazards, Budget Committee Republicans were
convinced that, without a credible alternative to the president's
budget, Republicans would come off as petty naysayers whose
criticisms would not be taken seriously. Even more important was
the future impact of such an approach. If Republican policies
were to succeed in the long run, they would have to be
formulated, explained, and advanced at every opportunity. If
Republicans wanted to govern again, they had to show they knew
what role the federal government should play in the life of the
nation and that process had to start now, with the budget
resolution.
     The zeal and commitment of the committee's Republicans
became apparent early. They quickly agreed on certain demanding
criteria for their budget:

     Credibility. Every spending reduction, every program
     termination, every government reform had to be based on
     sound and defensible analysis. There could be no gimmicks.

     Specifics. The Republican budget would need to be thorough
     and specific -- as much as the president's plan.

     Political viability. The budget had to be one that a large
     majority of Republicans could support. A program that
     received no more than, say, two dozen votes would not
     represent a realistic blueprint for governing behind which
     Americans could rally.

Social Security Off Limits

     Several other substantive criteria were established. First,
and most important, the Republican plan would contain no tax
increases. One of the most fundamental convictions of Budget
Committee Republicans is that chronic budget deficits are the
result of excessive government spending, not inadequate tax
revenues. The Republican budget resolution needed to reassert
this point.
     The president already had reversed his campaign promise to
cut middle-class taxes. The budget plan he unveiled in February
contained more than $350 billion in tax increases, many of them
imposed on middle-income earners. These included taxes on energy,
gasoline, and on the Social Security benefits of middle-income
senior citizens. These taxes, along with the many others the
president proposed, offered Republicans a clear opportunity to
demonstrate the differences between the two political parties: We
would reduce the budget deficit without raising any taxes.
     Second, Social Security was off limits. Republicans believe
that Social Security represents a fundamental agreement between
the Federal Government and the American people -- an agreement
that must be preserved. Once Mr. Clinton raided Social Security
benefits by expanding the taxable portion of these benefits and
calling the added taxes a spending cut, he presented a clear
opportunity for a distinction between Democratic and Republican
strategies: Republicans would achieve their deficit reduction
without cutting benefits that American senior citizens have come
to consider a sacred trust.
     Third, prudence was essential in the defense arena. The
president, in his budget, proposed roughly $112 billion in
defense spending cuts over five years. This was double the amount
of defense cuts he had proposed during his campaign. Republicans
acknowledged that the world had changed with the end of the Cold
War. This did not mean, however, that the United States and its
allies were now free of security threats. Therefore, the
Republican budget would adhere to the figure on which Mr. Clinton
had campaigned -- cutting no more than $60 billion from defense
over five years. We didn't outline in detail where our $60
billion in defense cuts would come from. Indeed, we might have
lost some coalition members if we had to identify specific
weapons systems to be eliminated or specific bases to be closed.
We were as specific here as the president was.

Wide Latitude for Working Groups

     To develop a comprehensive plan, Republican committee
members were divided into several working groups: national
security, economic growth/budget process, health care reform,
human empowerment, physical capital, natural resources and
science, and government management. This approach allowed us to
distribute the work load and capitalize on the interests and
leadership talents of individual committee members. For example,
Alex McMillan of North Carolina has spent years examining the
alarming growth of spending in Medicare and Medicaid, the
government's two major health programs, and is the third-ranking
Republican on the Energy and Commerce Subcommittee on Health and
the Environment, which handles both programs. He handled our
working group on health care.
     Another example was Lamar Smith of Texas, who for several
years has been pushing legislation to cut government "overhead"
spending on items such as travel, printing, and supplies. He led
the working group on government management.
     Jim Kolbe of Arizona has long been a strong voice on the
importance of restraining federal entitlement programs, which are
driving spending and the deficit. He was put in charge of the
working group on what we called human empowerment.
     Olympia Snowe of Maine brought expertise on foreign aid
programs from her post on the Foreign Affairs Committee. She
joined with Christopher Shays of Connecticut, who has a deep
personal interest in defense issues through his work on the
Government Operations Subcommittee on Legislation and National
Security, in fashioning our national security proposals.
     Committee members had only two-and-a-half months to develop
a complete budget. Working group sessions were frequent, intense,
and productive. Members vigorously debated each one of dozens of
proposals for reforming the government and controlling its costs.
Staff members often worked into the night and through the
weekends compiling the working groups' decisions.
     Members also consulted at length with colleagues on other
committees whose support would be needed later. For instance, Bob
Walker of Pennsylvania, the Ranking Republican on the Science,
Space, and Technology Committee, worked closely with our
committee members to shape a series of spending reductions that
could win the support of Republicans on his committee. Among
these was a recommendation to cancel the NASA program for
developing an advanced solid rocket motor.
     Consultations between Budget Committee Republicans and their
fellow GOP members in the House contributed to building a
coalition for our budget in two basic ways. First, each of the 17
committee members was reaching out to other colleagues with whom
he or she had contact. Second, if non-committee members made
recommendations that we followed, they then would have a stake in
the product that emerged because they had contributed to it.
     The working groups were given considerable latitude in
developing criteria and spending goals tailored to their
programs. Working groups were not given specific spending
reduction targets they had to meet; they were encouraged simply
to seek out reasonable and significant savings that could win
broad public support. Furthermore, we were not just concerned
with numbers. We wanted to develop government reforms that
actually enhanced the effectiveness and efficiency of government,
while at the same time saving money.

Facing Political Realities

     Our efforts culminated in a five-and-a-half hour meeting of
all the committee's Republicans on the evening of March 2. Every
proposal developed by the working groups was debated, line by
line. Many were endorsed without change. Some were altered and
refined. By the end of the evening, the members had reached an
agreement. The plan would reduce the deficit by $430 billion over
five years without raising taxes or touching Social Security. It
would ask most Americans to accept a little more responsibility
for their own lives, rather than ceding it to the government, but
it would impose no devastating sacrifice on anyone.
     Some early recommendations were altered in the process. For
example, the working group dealing with natural resources
recommended terminating funds for the superconducting
supercollider. But the termination would make it virtually
impossible for Texas Republicans to support our plan, so the
recommendation was excluded from our final proposal. Similarly,
an original working group proposal called for terminating the
Economic Development Administration (EDA) and placing a
moratorium on filling the Strategic Petroleum Reserve (SPR). Some
Republicans could not accept both, so we struck a compromise: the
EDA would be preserved, but the refilling of the SPR would be
reduced by half. All committee Republicans accepted this
agreement.
     Members of the empowerment group were troubled by the large
expense incurred supporting programs for veterans -- about $35
billion a year and growing -- but acknowledged the larger
political question of cutting them too deeply. Veterans are a
natural Republican constituency; they tend to be relatively
conservative on budget issues in general. Group members therefore
sought modest restraints in this area.
     The working group dealing with health programs recognized
the serious spending problem associated with Medicare.
Specifically, the program's outlays are projected to grow from
$130 billion in 1992 to $389 billion in 2002 if no policy changes
are made. To strike a balance among what was possible in terms of
budgetary goals, the need to maintain broad-based support for the
Republican budget package, and the desire to protect the
interests of senior citizens, the working group recommended $65
billion in Medicare savings over five years. Our plan had less
net cost to the elderly than that of the Democrats, which will
cost seniors about $80 billion over five years through increased
Social Security taxes and Medicare charges.
     We also wanted to ensure that our cuts could not be
challenged as unrealistic. We included nearly $49 billion in
overhead savings over five years, a figure that may very well be
understated. But by being conservative with our numbers (as well
as our philosophy), we avoided charges that our proposals were
not serious.

Unchanged Cuts

     Recommendations that went unchanged included a moratorium on
federal land purchases and the elimination of the subsidy for
improvement of Amtrak's Northeast Corridor.
     Other key recommendations of our plan, an 84-page document
titled Cutting Spending First, included:

          - WIC-PLUS. This reform combined the assistance for
          Women, Infants, and Children with other food and
          nutrition programs into a consolidated program funded
          through block grants to the states. Twelve percent of
          the program's fund would be guaranteed for WIC,
          constituting full funding, but states were given
          flexibility to allow funds to go to areas of greatest
          program need.

          - Medicaid. The Republican plan saved $10 billion over
          five years by making a fundamental change in the way
          Medicaid works. Medicaid recipients would be placed in
          managed-care systems, similar to what already is
          working successfully in Arizona.

          - Medicare. Members agreed it is good public policy to
          require wealthy individuals, those with incomes above
          $100,000 annually, to absorb a greater share for both
          their Medicare hospitalization coverage and their
          Medicare supplemental medical insurance. This policy
          would reduce the amount of subsidy these higher-income
          people would receive from other taxpayers. The reform
          saved $6 billion over five years.

          - Foreign Aid. The Republican plan proposed
          far-reaching changes that would have saved over $13.5
          billion in the next five years. It cut funding for the
          Agency for International Development (AID); a
          presidential commission has already found that AID has
          too many objectives and supports too many programs. It
          terminated aid to 33 middle-income countries and to
          those low-income countries where U.S. assistance has
          shown no results. It also advocated program reforms to
          assure that U.S. aid did not become counter-productive
          in countries we were trying to help.

          - Federal Employees' Retirement. The committee members
          also determined that the current minimum retirement age
          of 55 for civilian federal employees is unrealistically
          low. Gradually increasing it to 62 would bring it more
          in line with the retirement age in the private sector.
          In addition, the cost-of-living-adjustment for military
          retirees would be deferred until the retirees reached
          age 62. (They now receive the COLA from the day they
          retire, even if they have as many as 20 working years
          left.) These reforms saved nearly $11 billion over five
          years.

Sharp Partisan Contrast

     By the time our plan was ready for public release, the
substantive differences between the Republican and Democratic
strategies were clear.
     The president's plan, which became the framework for the
Democrats' congressional budget resolution, contained the highest
tax increase in American history including expanded taxes on
Social Security benefits -- with almost no effort to restrain
spending. Although the administration had promised to pursue a
deficit-reduction ratio of $2 in spending cuts to every $1 in
higher taxes, the first year of the Clinton budget called for $36
in tax increases for every $1.50 of spending restraint. Even over
the full five years, higher taxes would outpace lower spending by
two-to-one -- precisely the reverse of the president's initial
promises.
     The president's campaign promise of cutting middle-class
taxes also was reversed. Even his claim that the plan would
impose 70 percent of its higher taxes on people making more than
$100,000 annually turned out to be false. Actually, a large
portion of his tax increases reached down to income levels as low
as $30,000 a year. His most egregious tax, the so-called BTU tax,
which fortunately has been dropped, would have taxed everyone's
energy use. To put it simply, the president proposed to raise
taxes on two kinds of people: people who are wealthy and people
who breathe.
     His choice of spending restraint was remarkably one-sided as
well. Of his net spending reductions, which totalled about $150
billion, nearly $112 billion were designated to come from
national defense. These cuts would be in addition to the
25-percent defense reduction already required by the 1990 budget
agreement. Nearly $60 billion of the president's deficit
reduction would come from his estimates of savings in future
interest on the national debt.
     At the same time, the president proposed $180 billion in new
domestic spending initiatives, and in an Orwellian twist called
them "investments." In fact, the president's plan actually
increases domestic spending by $25 billion over five years.
     In other words, the "contributions" to Mr. Clinton's deficit
reduction would come from America's armed services and American
taxpayers; the favorite domestic programs of Democrat
constituencies would continue to grow while everyone else was
making sacrifices for the president's "Vision of Change."
     Contrasting the Republican plan was fairly simple. The
Republican plan would achieve savings throughout the federal
budget, not just in defense. It would achieve the same level of
deficit reduction as the president claimed, and would do so
without raising taxes and without touching Social Security. The
Republican budget expressed the fundamental belief that reducing
the deficit depended on restraining the growth of government
outlays, not raising taxes.

Support from the Press

     We now had a plan that sharply contrasted with that of the
president and his fellow Democrats. Yet there were still
questions among Republicans outside the Budget Committee about
what to do next.
     Discussions with the Republican leadership were
inconclusive. Most of the leadership team liked the plan;
Republican Whip Newt Gingrich had supported the project from the
beginning, and Republican Leader Bob Michel pledged to join
Budget Committee Republicans on what he called a death march, if
necessary, to support our plan on the House floor. But many
Republicans were hesitant to present it publicly. Some also were
concerned about the timing: would it be best to release our
alternative in the committee or to hold back until the budget
came up for debate on the House floor? Again, the concerns were
understandable; we Republicans were in an unfamiliar role of
opposing the White House, so there was uncertainty about how best
to proceed.
     Nevertheless, the Republican Budget Committee members were
determined to go forward. We held a news conference the evening
before the markup session. The next day, we offered the full
package as an alternative to the Democrat budget.
     The time, effort, and risks involved in describing our more
than 160 budget recommendations proved worthwhile. News media
throughout the country applauded our effort, even if some
disagreed with some of its specifics. The New York Times wrote in
an editorial:

     But when the House Budget Committee Republican members laid
     out 80 pages of detail for the committee yesterday, they
     were brushed aside with barely a nod. Their effort deserved
     better ... [their] plan isn't flawless, but it calls Mr.
     Clinton's bluff and deserves a serious airing.... The
     Republicans have made a good faith effort to enter the
     budget process this year. Their proposals deserve good faith
     debate.

     Four days later, syndicated columnist Patrick Buchanan
added: "Diamond hard, packed with specifics -- real cuts and no
new taxes -- it represents a serious Republican alternative, a
clear choice."
     The comprehensive nature of our plan and the positive
reaction from the press emboldened Republicans to support us.
This was a large reason why our plan received 135 votes when it
reached the floor (including three Democrats). The total was not
enough to win passage, but it was the largest number of votes a
Republican budget had received in at least five years --
including four when Republicans held the White House.
     In recent months, Ross Perot, who deserves considerable
credit for having galvanized public opinion behind the need for
deficit reduction, has applauded our effort, calling our proposal
a "world-class plan." But even more important than that has been
the response from the general public. My office in Washington
received more than a thousand individual requests for copies of
our plan in just two months.
     Our committee will pursue a similar course next year, in
debating the budget for fiscal year 1995. In the meantime, we
will seek to incorporate our recommendations into authorizing and
appropriating legislation that comes to the House floor during
the course of the year. We intend to use every opportunity to
highlight our differences with the Democratic Party, and to
assert our convictions about the proper ways to allocate limited
federal resources, reduce chronic deficits, and restore balance
in budgeting and government.

JOHN R. KASICH, a sixth-term Republican, represents the 12th
district of Ohio and is ranking minority member of the House
Budget Committee.

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