GovernmentExecutive.com

couple of months ago, on one of those chilly, gray drizzly days when

Washington couldn't make up its mind whether to blossom into spring or stay in

its winter shell, an angry knot of federal employees marched up the steps of the

U.S. Capitol to deliver their verdict on the House Republicans' Contract with

America.

In an era when political discourse is dominated by live TV coverage, talk

radio and fax blitzes, the event was almost quaint -- an old-fashioned mass

rally. Well, not exactly "mass." The group of about 500 employees took over

only a tiny section of the mammoth Capitol steps.

Nevertheless, the event's leaders did their best to tap into the workers'

righteous indignation. "Federal employees will not stand idly by while they gut

our contract with America," shouted Louis Jasmine, president of the National

Federation of Federal Employees.

"Honor our contract!" the workers chanted. "We will be heard!"

A passerby, stopping to see what the fuss was about, cocked an ear to the

crowd and smiled. "We will be hurt is more like it," he chuckled.

Indeed, in the halls of the Capitol behind the demonstration, Republicans had

already launched a vicious rhetorical attack on the federal government and its

bureaucrats. No proposal was too ambitious for the heady Hundred Days of the

first Republican Congress in 40 years: eliminating, privatizing and

consolidating whole agencies and Cabinet departments, slashing federal

employment and, of course, trimming federal pay increases and scaling back

retirement benefits.

But when talk shifted to action, the Republican revolution ran into some

serious roadblocks.

The House overwhelmingly passed a balanced-budget constitutional amendment in

February, but the Senate narrowly voted it down. The House voted to freeze the

implementation of new federal regulations, but the Senate unanimously rejected

the idea. And House Speaker Newt Gingrich, R-Ga., was barely able to round up

enough votes for what he called the Contract's "crowning jewel," a $ 190 billion

tax-cut package.

A group of moderate Republicans argued that changes in the federal retirement

system included in the bill amounted to a $ 4,000 "tax hike" on the average

federal employee over five years. Others simply questioned the wisdom of trying

to cut taxes and reduce the federal budget deficit at the same time. Gingrich

had to spend a tense week twisting arms before the measure finally passed on

April 5.

"This is not a monolithic Roman legion marching inexorably toward victory,"

the Speaker conceded as the Hundred Days came to a close.

Nevertheless, Gingrich remained steadfastly committed to his goal of shaking

big government to its foundations. House Republican appropriations bills to be debated in the coming months would "zero out" a series of federal programs,

Gingrich declared in early april. As many as four Cabinet departments, he

predicted, would be eliminated or completely overhauled.

Perhaps. But every time the Republicans geared up for a frontal assault on

big government during the Hundred Days, the same forces that built the federal

colossus subtly shifted to its defense. Big government, it turns out, is a

slippery beast, one that it will take considerably more than 100 days to slay --

or even tame.

The Contract

The federal employees' march on the Capitol came almost exactly six months

after Republican congressional hopefuls had themselves gathered on the Capitol

steps to sign the Contract with America and listen to their leaders talk about

the "new era in American government" that it would usher in.

"We propose to cede back power from the hallowed halls of Congress to the

more hallowed kitchen tables of America . . .," said soon-to-be House Majority

Leader Richard Armey, R-Texas. "Our contract recognizes the limits of

government and the unlimited contribution of husbands, wives, mothers, fathers, children and grandparents in a safe and prosperous America."

The Contract, though, didn't live up to Armey's lofty billing.

"Make no mistake: The Contract with America is a big government -- and a big

government from Washington -- document," argue John J. Dilulio and Donald F.

Kettl in a Brookings Institution analysis published earlier this year.

For starters, the Contract suggests the Clinton Administration already has

gone too far in downsizing the Defense Department, which consumes nearly half of

the government's discretionary budget. And on the domestic side, DiJulio and

Kettl conclude, "while the Contract could mean significant changes of many

kinds, it would maintain a large federal policymaking, administrative, and

funding role in crime policy, environmental management and many other areas

where, as late as 1950, the federal government did little or almost nothing."

Many of the contract's proposals -- for legal reforms, term limits and

various tax credits -- are essentially neutral on the size-of-government issue.

Others would actually beef up the federal role. The "Taking Back Our Streets

Act," for example, would provide more funding for prison construction. That doesn't mean, of course, that the Contract, if enacted in its entirety,

wouldn't scale back the federal government in significant ways. For example,

the welfare-reform measure that passed the House on March 24 would turn the $

22.9 billion Aid to Families with Dependent Children program into a block grant

for the states. And line-item veto legislation, separate versions of which

passed both the House and Senate by late March, would expand the President's

authority to cut individual items of congressional spending.

Likewise, House Republicans moved swiftly during the Hundred Days to enact

the Contract's provisions attacking one of the most significant symbols of big

government, the federal regulatory apparatus. In February and March, the House

passed legislation to compensate landowners if the value of their property falls

due to federal regulations, to require agencies to conduct cost-benefit analyses

of their rules, and to temporarily freeze the implementation of new regulations.

These efforts came on top of legislation to curb unfunded federal mandates on

states, which on March 22 became the first major piece of Contract with America

legislation to be signed into law by President Clinton. (An uncontroversial

bill to make Congress comply with the laws it makes was passed first.)

The House's anti-regulatory activity is "the most dramatic change I noticed

in the Hundred Days," says Thomas Mann, director of governmental studies at

Brookings. "It is the clearest sign yet that a different team is in charge." But the House action was far from the last word on regulation and other

subjects in the Contract. In late March the Senate, moving at its statelier

pace, rejected the regulatory freeze in favor of a weaker alternative and was

still trying to round up Democratic votes for a welfare-reform measure far less

sweeping than House Republicans envisioned.

More importantly, the Senate failed to deliver what was by far the most

significant cost-cutting tool in the Contract: the balanced budget amendment.

A constitutional requirement to balance the federal budget would almost

inevitably have triggered a radical restructuring and downsizing of the

executive branch. But on March 2, Senate Majority Leader Robert Dole's feverish

efforts to round up support for the amendment fell on vote short of the

two-thirds majority needed to move it through the Senate. In the end, the

amendment fell victim to the hoariest of political arguments: that Republicans

intended to balance the budget by gutting the Social Security trust fund.

Freshman Orientation

Despite such setbacks, Republicans -- especially the 73 members of the House

Republican freshman class -- continued to insist during the Hundred Days that they would build down the federal bureaucracy in a sort of reverse New Deal.

Upon arriving in Washington, the freshmen quickly formed the vanguard of the

GOP attack on spending winning 7 of the 11 available seats on the House

Appropriations Committee and 6 of 9 open seats on the Budget Committee. In

mid-February, a group of freshmen, calling themselves the New Federalists,

launched a campaign to "privatize, localize, consolidate, [or] eliminate" the

functions of the departments of Commerce, Education, Energy and Housing and

Urban Development.

But it's hard to remain a revolutionary when you're in the belly of the

beast. Ask one of the New Federalists, Rep. Joe Scarborough, R-Fla.

Last fall, the 32-year-old Scarborough, a Pensacola, Fla., lawyer who had

never held public office, rode the GOP tide into Congress with a grass-roots

campaign to "retake America" by cutting back the federal government.

The youngest member of Florida's 23-member House delegation hit the ground

running in January, landing a seat on the Government Reform and Oversight

Committee and heading up the freshman Republican task force on eliminating the

Department of Education. On January 19, he found himself on the House floor,

leading an hour-long debate under the lofty title, "Changing the Direction of Government."

"I have a seven-year-old boy in first grade," said Scarborough, "and I do not

want to hurt his chances in higher education. But does that mean we need a

federal bureaucracy telling school teachers in Pensacola, Florida, or in Maine

or in Washington State how to teach our children? No, it does not. That is

what this revolution was all about."

In mid-March, Scarborough got his chance to start the revolution when

Education Secretary Richard Riley was called before the Government Reform and

Oversight Subcommittee on Human Resources and Intergovernmental Affairs to

defend his department.

"There's a new wave sweeping Washington," Scarborough told Riley at the

hearing. He asserted that educational achievement in this country had fallen

since the creation of the Education Department in 1979. He wondered aloud

whether Office of Management and Budget director Alice Rivlin's book on

federalism, Reviving the American Dream (Brookings, 1992), didn't imply that

Education's programs could be better managed at the state and local level. He

and other members of the committee asked why Education shouldn't simply be

merged with some other Cabinet department, such as the Labor Department, as Rep.

Steve Gunderson, R-Wis., has proposed. But Riley, who had already endured calls by ex-Education Secretaries William

Bennett and Lamar Alexander to abolish the department, had come prepared for the

rhetorical onslaught. "I am not wedded to the past, and I didn't come to

Washington to save the job of a bureaucrat," he said.

Student performance in math and science is on the rise, Riley argued. The

Clinton Administration, he noted, had already proposed cutting Education's

budget by some $ 16.7 billion over the next five years by reforming the student

loan program and phasing out 41 other programs. And the department's new Goals

2000 effort, Riley argued, was precisely what Republicans should be looking for:

a "responsible block grant" program in which 90 percent of grant dollars flow

directly to local school districts. The districts set their own standards and

design their own programs for improving educational performance -- with no new

federal regulations.

As to the issue of consolidation, Riley pointed out that the Office of

Education in the old Department of Health, Education and Welfare had 7,100

employees, while today's Department of Education has only 5,100. The

department, he said, spends only two cents of every federal education dollar on

administrative costs. "Big is not necessarily beautiful," said Riley. Suddenly, the debate over eliminating Education or merging it with another

department dissolved into a discussion of what would happen if Congress simply

froze the department's budget for a couple of years. "What you all have done in

the last two years appears to be very positive," Scarborough admitted. "I would

encourage you to keep moving in that direction." Not exactly

storm-the-barricades rhetoric.

"There's a learning curve," says Elaine Kamarck, a staffer to Vice President

Gore who directs the Administration's National Performance Review. "Some of the

most avid of the new Republicans brought to Washington the same misconceptions

about the government that the public has."

"It's hard to take proposals to shut down Cabinet departments seriously,"

says Brookings' Mann. "Early on, the Clinton Administration considered it, but

they were persuaded that it was symbolic, and critics would see through it very

quickly. To eliminate a department but not its programs is merely to change the

sign out in front of the building."

Balancing Act

Republican leaders, though, say that eliminating programs and agencies is

precisely what they'll do to balance the federal budget -- whether or not a

constitutional amendment requires them to do so.

"So long as I'm Speaker," said Gingrich in the wake of the defeat of the

balanced budget amendment in the Senate, "we're going to spend every day working

on decisions that get us to a balanced budget by 2002, period."

But the Republicans haven't made it easy on themselves. According to the

Congressional Budget Office, balancing the budget by early in the next century

would require a total of more than $ 1 million in federal spending cuts.

Gingrich and other Republican leaders have already exempted Social Security

(projected to be a $ 354 billion program in fiscal 1996) from cuts. House

Republicans also have proposed freezing defense spending at $ 270 billion a year

for five years, reversing Clinton Administration cuts at the Pentagon.

That leaves domestic discretionary spending (which the Clinton Administration

projects will account for only 17 percent, or $ 226 billion, of total federal

spending in fiscal 1996) and Medicare, Medicaid and other mandatory spending

programs to bear the brunt of deficit-reduction efforts.

What's more, House Republicans vowed to pass a package of tax cuts included

in the Contract with America that would cost $ 190 billion over five years and

promised to find spending reductions to offset them. On March 16, the House

Budget Committee approved a plan to lower domestic spending caps by $ 100

billion over five years. Combined with a $ 90.2 billion package of entitlement

cuts, the reductions would fully fund the Contract's tax cuts, said committee

chairman John Kasich, R-Ohio.

The committee included a list of "illustrative" budget cuts that

appropriations committees could make to meet the lowered caps. They provide a

bold but sketchy outline for downsizing government. The category "Discarding

Needless Bureaucracy" accounts for more than $ 23 billion of the proposed cuts.

It includes such specific items as saving $ 100 million by replacing dollar

bills with dollar coins and cutting $ 88 million by eliminating the Interstate

Commerce Commission. But it also includes fully $ 5 billion in savings under

the ill-defined heading, "Reduce federal agency overhead."

The Budget Committee's package of cuts proposes slaying a series of sacred

cows, such as $ 7.5 billion worth of economic development programs labeled

"corporate welfare." And Kasich insisted that the budget resolution his

committee would consider in May would produce even deeper cuts. "You ain't seen

nothin' yet," he vowed in mid-March.

But what Kasich and others had already seen was a grueling battle over the

first baby step in balancing the budget: rescinding some of the federal spending

already appropriated for fiscal 1995. The House passed a $ 17 billion recission

package, the largest ever put together, on March 16. But Democrats quickly

painted the package, which included cuts in public broadcasting, summer jobs

programs, low income housing and fuel subsidies, and the supplemental food

program for women, infants and children as draconian and mean spirited.

"These cuts are a dagger pointed at the hearts of our children," said House

Minority Leader Richard Gephardt, D-Mo., in mid-March. They bring "new meaning

to 'women and children first,'" added Senate Minority Leader Thomas Daschle,

D-S.D.

The tactic worked. A Washington Post/ABC News survey showed that the

percentage of Americans agreeing with the statement "Republicans will go too far

in helping the rich and cutting needed government services that benefit average

Americans as well as the poor" went from 45 percent in early January to 59

percent by March 19. At the same time, the percentage who thought "Democrats

will go too far in keeping costly government services that are wasteful and

out-of-date" dropped from 43 percent to 34 percent. Senate Republicans began

drafting a smaller recission proposal that left out many of the House cuts.

Undaunted, House Republicans maintained that if need be, they would go it

alone in the fight to slash federal spending and eliminate agencies.

The House "can effectively 'zero out' an item by simply omitting it from the

appropriations bill, and the President can't veto a 'zero,'" wrote Rep. Bob

Livingston, R-La., chairman of the House Appropriations Committee, in a March

Wall Street Journal op-ed piece. "My committee intends to use that authority to

exercise the kind of fiscal responsibility the Democrats won't."

House Republican leaders have discussed using the "zero option" on individual

programs, small agencies and even entire Cabinet departments. Gingrich has

already pledged to zero out funding for the Corporation for Public Broadcasting.

"The power of the Speaker is the power of recognition," Gingrich told a

gathering of Republican congressional staffers in February, according to a

report in The Washington Post. "And I will not recognize any proposal that will

appropriate money for the CPB."

Boxed In

The problem, of course, is that as a budget-cutting and downsizing tool, the

zero option is a nuclear bomb. House authorizing committees, not to mention Senators, are likely to be incensed at the idea of being left out of the

decision to de-fund entire agencies and departments.

Indeed, cracks in the facade of GOP unity over slashing the federal budget

were already evident this spring, when Republicans in both the House and Senate

voiced concern about trying to dole out tax breaks and balance the budget at the

same time. In late March, Senate Budget Committee chairman Pete Domenici,

R-N.M., announced that his committee would take up a budget resolution in May

that would balance the budget by 2002, but without any tax cuts.

Administration officials can hardly contain their glee at the Republicans'

predicament. "They've gotten themselves into this box of having a tax cut and a

deficit target that they can't possibly meet," crows Kamarck. "As the year goes

on and the members, including the Republicans, understand how truly painful

cutting all this money is, I suspect that our approach will end up in many

committees carrying the day."

That approach involves a modest tax cut, costing $ 63 billion over five

years, and deficit reduction of a mere $ 81 billion over the same period. To

finance its proposals, the Administration has launched a second phase of its

reinventing government initiative, in which all agencies and departments are

being asked to look at ways to restructure, downsize, privatize and otherwise cut back their programs.

Last fall, Administration officials announced $ 20 billion in REGO II

cutbacks at the Energy Department, HUD, the General Services Administration and

the Office of Personnel Management. In March, they said another $ 13 billion in

cuts would come from NASA, the Interior Department, the Small Business

Administration and the Federal Emergency Management Agency. Spread over five years, the cuts will amount to an

average annual cut of $ 6.6 billion in the domestic discretionary budget.

The Clinton Administration is convinced that this modest pace of change, as

opposed to a wholesale restructuring and downsizing of the executive branch, is

what Americans really want, regardless of how they voted last November.

"We're engaged in a great debate today over what the role of the government

ought to be," said President Clinton in late March. "Just about everybody has

rejected the view that there is a big one-size-fits-all government that can

solve all the big problems of America. Now the rage in Washington is to argue

that the government is the source of all of our problems, and if there just

simply weren't one we'd have no problems. Sooner or later the American people

will come to agree -- and I think they are quickly coming to agree -- that the

old one-size-fits-all view was wrong, but the new rage of 'no government' is wrong as well."

As the Hundred Days came to a close, Republican leaders insisted they were

just beginning to sharpen their budget axes. But if Clinton's hunch pays off --

and the battles wages so far over cutting everything from federal pensions to

public broadcasting indicates that it might -- the revolution may already be

over.