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That Was Then, This Is Now (Part 1) That Was Then, This Is Now (Part 1)

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That Was Then, This Is Now (Part 1)

There are essential differences between the shutdown of 1995 and today.

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House Speaker Newt Gingrich and President Bill Clinton sit down for budget talks in December 1995.(J. DAVID AKE/AFP/Getty Images)

These shutdowns are not the same.

Not in origin. Not in legislative content. Not in economic context. Not in political calculus. Not in ideological motivation. Not in media coverage. Not in strategy. And they are certainly different in temperament, personality, and leadership style.

 

These differences reveal a bizarre incongruity. The issues being fought over now are trivial compared with those that led to the budget confrontation in 1995, and yet the consequences of stalemate are far larger.

This is one of two columns I will devote to the differences between 1995 and now. I covered the 1995 shutdown, and then a decade later published a book on its long-term consequences. My perspectives are, like anyone else’s, imperfect. But the differences between now and 1995 can explain why politics now seems so clotted with discord and why the air is rife with nonnegotiable demands and absolutism.

But first ... let's look at some overlooked similarities. The debate then—as now—was angry and personal. In fact, House members almost came to blows outside the Ways and Means Committee hearing room. Then as now, there was a threat of a government default. And there was, as now, presidential contempt for Republicans in Congress attaching extraneous measures to even a short-term increase in the debt ceiling. In 1995, President Clinton told the nation Republicans were toying with default and were "deeply irresponsible" and that what was occurring had no precedent. Sound familiar? There was also, believe it or a not, a bid by a Democratic president to find common ground with GOP budget hawks by proposing a reduction in future cost-of-living adjustments to Social Security benefits. The nomenclature now is "chained CPI." Back then, it was just called an adjustment to the consumer price index. Then, as now, it was proffered as an example of a Democratic president's budgetary reasonableness. There was even a Republican snit over an unsatisfactory telephone call with President Clinton over budget negotiations.

 

But the structural differences between then and now matter most.

Many have already noted the role gerrymandered House districts have played in hardening partisan divisions. That is a factor, but I believe there are other, more consequential elements to today’s impasse.

Composition and legislation: In 1995, Republicans controlled the House and the Senate, giving them institutional clout to pass actual legislation that could not be ignored. House and Senate GOP majorities produced a reconciliation bill that included a vast array of specific, programmatic changes to federal spending and taxation. That bill carried what all reconciliation bills carry—political and legislative tensile strength that no president can ignore. After an election that gave Republicans full control of Congress for the first time in 40 years, Republicans, ushered into power with enormous voter expectations for change, produced legislation largely consistent with their underlying 1994 campaign promises and tested by the fires of the legislative process in both chambers. By definition, that reconciliation bill is miles ahead of anything so far produced by the current House GOP majority in terms of specificity, programmatic ambition, and dollar-by-dollar scoring. It also trumps any of the current GOP products in terms of unifying Republicans on policy, politics, and legislative tactics. There were no backbench filibusters or sorta-filibusters to carry a GOP policy position in 1995. There was actual legislation with aggressive, politically risky components and a fervent rank-and-file backing that made its potency unavoidable.

Political timing/calculations: President Clinton was midway through his first term after having won with only 43 percent of the popular vote. A Southern president who won by defining himself as a new-era centrist was now facing a GOP majority in Congress powered by the first GOP domination of the South since Reconstruction.

 

Clinton’s calculations then were infinitely different than President Obama’s now. Clinton had to worry about reelection and had to make good on promises to respond to the clamor of 1994 for smaller government. And he did.

The shutdown is largely and properly remembered as a political defeat for congressional Republicans because they were blamed for their stubbornness. What is forgotten is Republicans were losing ground in public polls before the shutdown crisis materialized, and yet they still extracted significant concessions from Clinton. In February of 1995, Clinton’s budget projected deficits of $190 billion (yes, and that was considered nearly astronomical back then) for the next 10 years. Clinton at the time would not commit to a balanced budget. In June, he agreed to one in principle. By the end of the two government shutdowns, he agreed to a balanced budget in seven years with the Congressional Budget Office the only credible accountant—a seismic concession of power to Congress that neutralized the Office of Management and Budget’s historically coequal stature in federal accounting.

Presidents don't travel this distance by accident, and Clinton did not arrive at seven years to balance the budget because he plucked that number out of a hat. It was the GOP's bottom-line requirement, and Clinton eventually accepted it in the context of the government shutdown to preserve his political viability and win the politics while giving him space and time to adjudicate the policy later.

There is no similarly potent set of political calculations for Obama to confront. He won reelection, and did so after failed negotiations in 2011 over the so-called “grand bargain.” Though Obama won’t say it publicly, he regrets negotiations carried out in the context of a potential default in the late summer of 2011, and his political goal is now to permanently remove the threat or prospect of default from future budget talks. His political goals and incentives could not be more different than Clinton’s. Free from reelection worries, Obama feels empowered to shield the remainder of his presidency and future presidencies from the use of default as a tool of forcing other policy concessions or discussions.

Economic vitality: This difference is crucial to understanding the possibilities of then and the risks and fears of now. The U.S. economy was in full recovery from the recession of 1990-91, with an unemployment rate of 5.6 percent, in November of 1995. Gross domestic product was rising each and every quarter of 1995, and even in the immediate aftermath of the second shutdown (which lasted 21 days) it grew at 2.7 percent in the first quarter of 1996. In the second quarter of that year, it jumped to an annualized rate of 7 percent. Yes. SEVEN PERCENT.

Not only was the economy operating at near full employment, it was on the cusp of an explosion of high-tech development and the tax revenue that came with it. Federal tax receipts in 1995 totaled $1.35 trillion in constant dollars, making up 18.4 percent of GDP. The tech boom poured tax dollars into federal coffers until 2000, when individual tax receipts totaled $2.02 trillion and 20.6 percent of GDP—a phenomenal state of economic affairs that created balanced budgets and a pervasive and illusory sense of plenty. Economic growth was plainly visible to Clinton in late 1995, and he calculated, correctly, that it would provide the grease necessary to cut a balanced-budget deal with Republicans, which he did in 1997. There is no way to understand the limits of today's current political impasse without remembering how much economic growth created the political and budgetary flexibility for Clinton and Republicans to reach an relatively easy post-shutdown compromise. Economic plenty gave both sides political and policy space to declare victory.

Today’s economic realities are comparatively grim and create almost no space to lubricate compromise. America’s economic realities since 2008 have reflected not only the horror of the Great Recession but the grinding reality of slow job growth, virtually nonexistent wage growth, and sub-par GDP growth. When you add a reflexive desire in Congress to cut discretionary instead of entitlement spending, you are left with a legislative culture pinched by limits—real, scary, and politically hazardous limits. There is a sense of pervasive economic unease that makes the traditional obstacles of every modern budget deal much harder to surmount.

These are but a few of the significant differences between 1995 and now. There are others, and we will explore them in Part 2.

The author is National Journal correspondent-at-large and chief White House correspondent for CBS News. He is also a distinguished fellow at the George Washington University School of Media and Public Affairs.

CORRECTION: Due to an editing error, a previous version of this story misidentified chained CPI.

This article appears in the October 9, 2013 edition of NJ Daily as That Was Then, This Is Now.

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