Not all budget battles are created equal.
It's tempting to compare the current budget impasse with the standoff led by then-House Speaker Newt Gingrich in 1995. Despite 15 years of separation, the plot lines and political atmospherics are similar. Still, we're unlikely to see a repeat of the kind of fight that resulted in the shutdown of the federal government for nearly in month total in late 1995 and early 1996.
Consider that story line: A Republican Congress passes a bill to cut spending, leading to a standoff with the Democrats and a shutdown of the federal government. Next, a Democratic president — whose party had been trounced in the most recent elections and lost control of the Congress — uses the shutdown to revive his fortunes.
Despite an apparent short-term accord that seems likely to postpone a confrontation for another two weeks, Republicans and President Barack Obama are still far apart on spending for the remaining months of this fiscal year.
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So what's different about that 1995-1996 fight and the one that might occur in the next few weeks between Obama and House Republicans?
Amidst a presidential contest
The battle between Bill Clinton and congressional Republicans — which caused not one, but two government shutdowns — came right in the middle of the 1996 Republican presidential contest. In fact, it happened just weeks before Iowa GOP voters held their first caucuses.
The frontrunner for the nomination, Senate Majority Leader Bob Dole, was simultaneously negotiating with Clinton and campaigning for the nomination.
Dole had to try to secure his right flank from primary challengers Pat Buchanan (who finished a strong second in Iowa), magazine mogul Steve Forbes, Sen. Phil Gramm and former Tennessee governor Lamar Alexander.
That left Dole in an uncomfortable partnership with Gingrich — uneasy with the speaker's strategy of confrontation with Clinton.
Why Dole couldn't break with Gingrich
In a roundtable discussion among campaign strategists for both Dole and Clinton on Dec. 7, 1996, at the Harvard Institute of Politics (one month after Dole lost the presidential election), memories of the government shutdown were fresh in the minds of both sides.
Dole advisor Sheila Burke said, “If we had broken from Gingrich in November or early December (1995), we (the Dole campaign) would have clearly lost anything (we had) on the right.”
She added, “The week before Christmas (1995), there were a couple of instances where there were CRs (continuing resolutions, or stopgap spending bills) at issue. When the House guys said ‘no,’ Dole was frustrated,” but “if he had let one ounce of light between him and the House leadership, we would have spent every waking day defending Dole from the accusations that he had dumped on the House, which we could not afford to do at that point.”
At that same roundtable, Clinton strategist George Stephanopoulos said to his counterparts on the Dole team: “It’s true you all did have a strategy. The strategy was, ‘we’re all going to hang together. No daylight (between Dole and Gingrich) through December (1995) and Bill Clinton is going to cave. And when he caves, we win.’ Dole did not have a fall-back strategy.”
This year, the struggle comes 10 months before the first presidential primaries and caucuses. No potential Republican presidential contender has a role in the House GOP budget strategy since none of them — with the possible exceptions of Sen. Jim DeMint and Reps. Ron Paul and Michele Bachmann — are members of Congress.
Medicare at center of '95 battle
Unlike this year’s battle, the fight 15 years ago was focused on Medicare — specifically, the Republican proposal to reduce future program spending by $270 billion over seven years.
In contrast, the spending cuts House Republicans have passed this year — $100 billion from the levels proposed by Obama — would all come from non-entitlement programs.
The current Republican focus on non-entitlement programs draws scorn from critics such as columnist Paul Krugman who called the spending cuts “a sham.” He added “anyone who is really serious about the budget should be focusing mainly on health care.”
But House Speaker John Boehner and his GOP colleagues are not proposing a plan to control Medicare costs — at least not right now. In fact, they ran last year on the theme that Obama’s health care overhaul cuts too much from Medicare, about $500 billion over ten years, arguing that this would hurt seniors.
When Medicare emerged as the defining issue in 1995, it allowed Clinton to run campaign ads the next year portraying Dole as indifferent to senior citizens’ fears and pains.
“I will not let you destroy Medicare,” Clinton declared, even though what Republicans wanted to do was reduce its rate of growth and create private-sector alternatives to the traditional Medicare payment system.
In the post-election discussion at Harvard, Dole's campaign manager Scott Reed gave the Clinton campaign credit for “the way the Medicare issue was played out. It was very effectively wrapped around our neck.”
Burke added, “One of the things the Clinton campaign bet on, and I think correctly so, was that there was a predisposition to believe Republicans were mean.” Burke gave Clinton campaign strategists credit, telling them, “You invested in building on that perception … it confirmed all of the people’s worst fears — (that) we hated the safety net programs, we didn’t really care about the blind and the lame.”
A leader going too far, too fast
While today House GOP freshmen are pushing Boehner for the full $100 billion in cuts that they campaigned on, and will be wary of anything less, the 1995 fiasco was a case of the leader, Gingrich, going too far, too fast, for Dole and other Republicans.
In an interview in February of 1996, after Gingrich had retreated, Rep. Ray LaHood, elected as a freshmen Republican in 1994 and today serving as Obama’s transportation secretary, said by forcing the shutdown, “We irritated a lot of Americans, we irritated a lot of federal employees and we look like we were just sort of intransigent on what our strategy was.”
House Budget Chairman Rep. John Kasich, now Ohio’s governor, said in 1996, after Gingrich folded, that shutting down the government “wasn't a sustainable action on our part; there was no way that we were going to hang tough on that because we were going to lose our members who were going to vote with the Democrats … And it obscured our message, because rather than us talking about balancing the budget and saving the next generation (from debt) … we're out there arguing about why the government's shut down.”
Deficit and debt then and now
Perhaps the biggest difference between then and now involves the government's deficit, debt and spending position.
In 1995, the deficit was little more than 2 percent of gross domestic product; last year, it was 10 percent of GDP, the highest level in nearly 65 years. This year's deficit will be nearly as big.
In 1995, gross federal debt amounted 67 percent of GDP; it is now close to, or at, 100 percent of GDP, the highest level since 1947, when the government was paying off the cost of World War II.
In 1995, federal spending was just over 20 percent of GDP; today it is 25 percent of GDP.
The 1995 struggle played out long before anyone could have imagined the federal government bailout of Wall Street firms, or it taking part-ownership of AIG, General Motors and other firms to keep them alive.
Kasich said in 1996 that the Republicans' Medicare cost curbs were needed because “higher entitlement spending is what's driving us to bankruptcy,” but such rhetoric might have seemed alarmist or overblown at that time. Not likely in 2011.
In 1995, “sovereign debt crisis” was a phrase people were accustomed to applying only to Mexico, as in 1992, or Brazil, as in 1987.
But today the leaders of Obama’s own fiscal commission warn of the potential of a sudden U.S. sovereign debt crisis.
Winners and losers
Clinton was the clear winner and Gingrich the loser of the 1995-96 budget battle.
But as Gingrich noted in a Washington Post opinion piece Friday, “Those who claim that the shutdown was politically disastrous for Republicans ignore the fact that our House seat losses in 1996 were in the single digits. Moreover, it was the first time in 68 years that Republicans were re-elected to a House majority — and the first time that had ever happened with a Democrat winning the presidency.”
And in 1997, Gingrich's Republicans did get two of the big things they'd sought in 1995: a substantial tax cut and a mechanism to try to curb Medicare costs.
It's the failure of Congress to enforce those 1997 Medicare cost controls that has helped produce today's alarming deficit picture.
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