WASHINGTON — This week's congressional decisions marked an extraordinary event: Ronald Reagan's so-called tax reform, his second-term priority, was derailed; meanwhile the Gramm-Rudman deficit-reduction bill was passed--in a form the President considered vetoing because of its tax-increase and defense reduction implications.
Rarely does Congress impose its own economic policy judgments on a President enjoying close to 70% popularity. Yet the House and Senate actions represent a realistic appraisal of the political and economic unacceptability of the bold "Second American Revolution" ambitions Reaganites laid out a year ago, in the wake of the 1984 landslide.
Let me be blunt. The President's tax reform and Gramm-Rudman embarrassments are part-and-parcel of a fundamental miscalculation. As recently as last winter, ambitious Reagan aides gloried in the 1984 election--for them it signaled political and ideological realignment. They felt voters had endorsed a new GOP era--encompassing deregulation, dismantling federal domestic programs, upholding free trade and minimally restricting foreign product access to U.S. markets, phasing out assistance to agriculture and slashing tax brackets.
Yet the 1984 elections never signaled any such demand: The public has opposed many parts of the resultant Reagan blueprint and been apathetic to the rest. Former budget director David A. Stockman is said to be titling his forthcoming book, "The Triumph of Politics: Why the Reagan Revolution Failed." A better title would be "The Misunderstanding of Politics." That's what happened. What the President and his advisers wanted never had inadequate roots in political reality.
White House embarrassment over congressional stalling of its tax overhaul hopes and its discomfort with Gramm-Rudman's deficit-reduction machinery should be viewed as part of this larger failing. Tribulations began almost immediately last winter, when Congress slashed the President's request for 5%-6% real growth in the defense budget and used the savings to fund domestic programs that the White House sought to abolish. That should have been a signal. How Reaganites ever thought these priorities could succeed bewildered congressional Republicans from the start. Many declared the President's budget "dead on arrival" at Capitol Hill.
The timing of Reaganite demands for free-market agriculture also strained credulity. Early this year, the Administration sought to eliminate most federal farm aid, ignoring the pathos and political backlash of a farm belt in the worst slump since the Great Depression. Not surprisingly, with farmland prices plummeting 22% over the last 12 months in the Chicago Federal Reserve District--and with headlines about distraught farmers shooting bankers--Congress has declined to go along.
Yet the three areas where the early 1985 Reagan blueprint has been farthest off the mark are clear: the budget, taxes and trade. National surveys on these issues showed the President drawing just 37%-38% approval, far below his high (and perhaps not very relevant) 65%-70% personal approval rating.
The common denominator of these fumbles is evident: a mixture of excessive White House ideological commitment to a laissez-faire economy combined with a lack of electoral savvy and sound political strategy. Until an insurrectionist Congress developed the Gramm-Rudman mandatory deficit reduction mechanism, the Administration's attitude toward the deficit was often both naive and Machiavellian. On one hand, the White House brandished complaints about the deficit, to force Congress to cut domestic spending. Meanwhile, the President pressed for more military spending and tax-bracket reduction instead of a tax increase.
To use a favorite phrase, Gramm-Rudman now reorders these priorities. Although the President endorsed the legislation, some of his advisers--Defense Secretary Casper W. Weinberger, most prominently--urged him to veto it. Defense will bear roughly half the burden if the mandatory spending-cut mechanisms come into play.
The second Reagan insistence jeopardized by Gramm-Rudman is no tax increase . Indeed, the "doomsday machine" process by which Gramm-Rudman would decimate domestic spending virtually guarantees that Congress will try to substitute a tax increase for some of the cuts. Farm-sector legislators are already grumbling about rural disaster and National League of Cities spokesmen have evoked the specter of urban riots.