That Was Then, This Is Now (Part 1)

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

WASHINGTON, DC - DECEMBER 22: US Speaker of the House Newt Gingrich (L) and US President Bill Clinton (R) begin a bi-partisan meeting on the stalled budget talks at the White House, 22 December. President Clinton and republican leaders are meeting to reach a compromise that will reopen the US Goverment. 
National Journal
Major Garrett
Oct. 8, 2013, 5:39 p.m.

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.

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