The New Republican Motto: Make Deals, Not War

A year ago, fresh from their stunning capture of Congress, Republicans were taking no prisoners as they ruthlessly pushed their Contract With America. Now, the shell-shocked GOP is regrouping for one last charge up the legislative Hill. Today's rallying cry: Compromise!

Big tax cuts are out. So is any hope of balancing the budget by 2002. Radical regulatory overhaul has been dropped, and Medicare reform is barely alive. Many Republicans will settle for a pale imitation of last year's revolutionary plan. Bob Dole needs legislative victories, now that he appears to be heading for a November showdown with President Clinton. And House Republicans are eager for a few wins to inoculate themselves against charges that they can't deliver. "They need to get some points on the board," says one business ally.

BURDEN. With deficit-hawk Dole providing the push, the GOP still has a chance to pass watered-down welfare, legal, and regulatory reforms plus small cost savings in Medicaid and Medicare. Republicans seem ready to cut a quick deal with Clinton on a fiscal 1996 spending bill that will keep the government running through Oct. 1.

The burden for pulling together the tattered Republican agenda now passes to Dole, who needs to burnish his can-do image for election day. With House Speaker Newt Gingrich (R-Ga.) turning over day-to-day leadership of his troops to lieutenants, it will be up to Dole to unite bickering Republicans. Hard-liners want to force Clinton to veto an aggressive package of tax and spending cuts they would attach to a bill extending Treasury borrowing authority beyond mid-March. But party pragmatists--with tacit support from Gingrich--say they can't risk taking the blame for another government crisis. "We want a bill Clinton can sign," says one House GOP leadership aide.

Cutting a budget deal may be the biggest hurdle. The White House--egged on by House Democrats--has been stalling, since voters seem more focused on economic angst than budget balancing. Still, Clinton would love to boast in November that he cut the deficit, reduced middle-class taxes, and reformed welfare, so common ground may be found.

HOT BUTTON. One approach, pushed by Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), would save $350 billion in entitlement spending by 2002 but postpone tax cuts until a balanced budget is adopted. An alternative would have Congress vote on separate bills, say, welfare reform, then Medicaid. If Clinton and the GOP can agree on anything, it is probably welfare reform, which has broad bipartisan support. Medicaid will be much tougher, although the GOP could win modest concessions if it agrees to keep the program a federal entitlement.

As for Medicare, Domenici and Senate Finance Committee Chairman William V. Roth Jr. (R-Del.) are looking for some $150 billion in savings through 2002 to postpone insolvency. But if Clinton keeps stonewalling, House Ways & Means Chairman Bill Archer (R-Tex.) would rather drop the politically hot issue for this year.

Archer still wants a tax cut of $100 billion built around a temporary $500-per-child tax credit and a cut in capital-gains rates, but tax relief is a nonstarter in the Senate. Republicans may have a better shot at modest changes in the regulatory process and a bare-bones product liability bill. But much more than cosmetic changes there could be veto bait.

For now, Republicans' grand plans for shaking up Washington are on hold. The revolutionaries of 1995 have come to realize that, this year at least, a bit of middle-of-the-road reform is the best they can get.

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