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Businessweek Archives

The Gop Congress: All Rancor And No Rudder

Washington Outlook

The GOP Congress: All Rancor and No Rudder

After the impeachment-wracked 105th Congress, Republican leaders vowed that 1999 would be different. Representative J.Dennis Hastert became Speaker, promising to restore faith in the House. He and Senate Majority Leader Trent Lott pledged to stop attacking President Clinton and get on with the people's business. That included passing budget and spending bills on time, a big tax cut, shoring up schools and Social Security, and rebuilding the armed forces.

It was a modest approach, tinged with pragmatism. But it isn't working.

As 1999 enters its final quarter, congressional Republicans face the worst of all worlds: another chaotic, end-of-year budget battle that has pushed virtually all their initiatives to the back burner and rekindled the wrath of voters. A Sept. 1-12 survey by the Pew Research Center found that public approval of GOP Hill leaders has sunk to 35%, from 44% a year ago.ILLUSIONARY CAPS. Fiscally, it has been one blunder after another. Republicans bet the ranch on a $792 billion tax cut that was ignored by taxpayers and rejected by Clinton. Because of tight spending caps, GOP lawmakers couldn't pass most of the 13 bills needed to finance the government by the Oct. 1 deadline. That's why Congress had to grant a three-week temporary extension to keep the government running. Even the GOP's showcase Social Security "lockbox" bill to safeguard the retirement system's surplus is proving to be a sham. Lawmakers are picking the lock on the trust fund to pay for popular programs. "We've boxed ourselves in," sighs Representative Marge Roukema (R-N.J.).

The outlook: The session could once again end with a catchall spending bill larded with goodies for favored lawmakers. But not before a brawl with Clinton over spending priorities and the use of such gimmicks as borrowing from the 2001 budget to mask billions in spending over the caps.

Fearing that they have little to run on in 2000, back-bench Republicans are rebelling against their leadership on several fronts. Fifty-four House Republicans approved a bipartisan campaign-finance reform measure, ignoring Majority Whip Tom DeLay's strenuous efforts to derail it. A patients' rights measure that would let patients sue their HMOs has the support of at least two dozen GOP lawmakers despite heated opposition from Hastert. GOP leaders may also be forced to swallow a hike in the minimum wage and new controls on handguns.DROPPED REINS. The disarray is largely unavoidable. Republicans hold a razor-thin five-vote edge in the House. And their majority in the Senate is five votes short of the 60 needed to limit debate. Hastert is well-liked, but he's widely viewed as a caretaker. And Lott, for all his conservative credentials, can't bring his right flank to heel. "There's no power center" on the Hill, says John J. Pitney, associate professor of government at Claremont McKenna College.

Weak leadership and a lack of strategy have let the Democrats seize the agenda. Many issues at center stage this year, like gun control, play to Democratic strengths. No wonder Dems are rebuffing GOP offers of compromise, hoping to run against a do-nothing Congress in 2000.

The last hope for Republican lawmakers is to ride GOP Presidential front-runner George W. Bush's coattails to majority status again next year. But Marshall Wittmann, director of congressional relations at the Heritage Foundation, warns that "there hasn't been much of a coattail effect in Presidential elections since 1980." If GOP leaders don't find a way to govern in earnest soon, they could find themselves coasting--right back into the minority.By Amy Borrus; Edited by Douglas HarbrechtReturn to top

Bank Deal in the Works?

For years, bank-reform legislation has stalled on Capitol Hill over a key issue: Who will regulate financial-services supermarkets, the Federal Reserve or the Treasury Dept.? But BUSINESS WEEK has learned that the two powerful agencies are quietly negotiating behind the scenes to remove the biggest stumbling block to a deal. The talks are so quiet that trade groups and legislators had given up hope that Fed Chairman Alan Greenspan and Treasury Secretary Lawrence H. Summers could ever compromise.

Summers favors a House-passed bill that would require banks with assets greater than $10 billion to report to the Fed. The Senate version would give the Fed far more clout, by requiring that it supervise banks with as little as $1 billion in assets. A face-saving deal probably lies somewhere in between.

Banking-modernization legislation, which has been in the works for 25 years, has never gotten this far. But even if the Fed and Treasury cut a deal, other roadblocks remain. Differences persist over how to guarantee privacy protection for consumers. And efforts to water down the Community Reinvestment Act, which requires banks to lend money in low-income areas, also need to be addressed. But most lobbyists agree that those obstacles can be finessed if Greenspan and Summers find common ground. In the past, backers have said a deal seemed imminent, only to be disappointed. With Greenspan and Summers bargaining, this time could be different.By Laura Cohn; Edited by Douglas HarbrechtReturn to top

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