Behind The Budget Brouhaha, Whispers Of A Compromise

How's this for an improbable scenario? By fall, President Clinton and his political archrivals, Speaker Newt Gingrich (R-Ga.) and Senate Majority Leader Bob Dole (R-Kan.), will strike a far-reaching agreement to slash the deficit, reform health care, and provide modest tax relief for the middle class and those reporting capital gains.

Sure, it sounds crazy given the partisan name-calling and bitter debate that suggest Washington is stuck in Gridlock Gulch. But policymakers in both parties quietly hint that a grand budget compromise is in the works. "There is a real chance that Congress and the President can come together," says a top White House official. Adds House Republican Conference Chairman John A. Boehner of Ohio: "I'm pretty confident we are going to get something done. What hoops we have to jump through is still the question."

Clinton and GOP congressional leaders are being driven toward a deal for several compelling reasons. Breaking gridlock will be an invaluable display of leadership for both Clinton and Dole, the leading GOP Presidential contender. Gingrich can't fulfill his vow to slash government and taxes without enough support from the White House or Senate Democrats who can make any Republican plan veto-proof. Incumbents know they'll pay a heavy price in 1996 if they fail to bring the deficit under control. And better yet, both sides already agree that tax increases--deal-busters in the past--are off-limits this time.

WINNERS AND LOSERS. Even so, some partisans would like to block a compromise. Some White House political operatives want underdog Clinton to run against a "heartless" GOP in '96, an opportunity he would foreclose by cutting a deal. And some powerful Republicans also prefer stalemate. One beneficiary: Texas Senator Phil Gramm, who is challenging Dole for the GOP Presidential nomination. Gramm recognizes that an accord would help Clinton reverse his image as an ineffectual leader and add to Dole's stature as the insider who gets things done--the essence of the Kansan's campaign.

A compromise would boost GOP deficit hawks as well. Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) and his House counterpart, John R. Kasich (R-Ohio), know that significant deficit reduction can be done only through an overhaul of Medicare and Medicaid, which are expected to cost a staggering $435 billion in the year 2000. Taking on those politically sensitive programs will be much easier if done as part of a bipartisan health-care reform push. While Domenici remains skeptical about Clinton climbing aboard the fiscal bandwagon anytime soon, he concedes major deficit reduction "would be impossible without the President, if he wants to veto it."

As for Gingrich, he is struggling to hold the Contract With America together. His $189 billion tax cut is under heavy assault--even among Republicans who believe it's too generous to the wealthy. And he has been unable to build a consensus for the big spending cuts he'll need to balance the budget. His only hope: Bring more Democrats into the fold.

That won't happen overnight. The White House will continue sniping away at least until May, when Republicans unveil their own proposals to balance the budget by 2002. But as early as summer, the partisan vitriol could be replaced by serious overtures to Republicans, probably led by a group of hawkish Senate Democrats, insiders confide. Explains Representative Charles H. Stenholm of Texas, leader of swing-vote conservative Democrats: "We're looking forward to the end of the first hundred days so we can get down to the serious stuff on the budget." And once they start bargaining, Clinton, Dole, and Gingrich may even surprise themselves.

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