Donorgate And Newtgate Take Center Stage

For now, ethics will overshadow legislation

Just weeks ago, on the heels of President Clinton's convincing second-term win and the Republicans' success at retaining control of Capitol Hill, Washington leaders were chanting "compromise." But the hymns to harmony have suddenly gone flat. The reasons: House Speaker Newt Gingrich's admission that he misled the House Ethics Committee about his use of tax-exempt foundations to back his political causes and the deepening fund-raising scandal surrounding Clinton.

Now, as the 105th Congress convenes in Washington, the Georgia Republican's fight for survival as Speaker will be a huge distraction for lawmakers itching to tackle a legislative agenda. "It's going to make it much tougher to find common ground," says Representative Peter King (R-N.Y.). And a steady stream of revelations suggesting that the Clinton campaign sold White House access to wealthy Asian donors could hobble the President's agenda as well. "This is growing into a Class One scandal," worries Democratic adviser Ted Van Dyk. "If Newt Gingrich goes down, the Republicans will try to bring Clinton down, too."

"TOO CONFRONTATIONAL." Barring the appearance of any new revelations, House Republican leaders believe they can weather defections from backbenchers such as Representative Michael P. Forbes (R-N.Y.) and reelect Gingrich as Speaker on Jan. 7. And privately, Democrats say they won't mind if a damaged Gingrich survives. They welcome the chance to use his ethics woes to divert attention from the First Family's problems. Even if he holds on to his office, Gingrich's days as an all-powerful Republican field general seem to be over. His pugnacious style has made him a liability to many Republicans. Gingrich is "too confrontational, and it's threatening the effectiveness of the party," frets one GOP lawmaker.

While the ethics wars rage, some legislators are determined that the partisan potshots not produce the gridlock that plagued past Congresses. In fact, the perverse effect of more partisan bloodletting may be a shift of power to GOP moderates and "Blue Dog" Southern Democrats, who are eager to bridge ideological differences in such areas as deficit reduction, tax cuts, and deregulation (table). "The House leadership realizes they don't have the numbers they had last year," says U.S. Chamber of Commerce lobbyist Lonnie P. Taylor. "You talk to the Blue Dogs, and they think they can set the agenda."

That's fine with the White House, which wants to avoid constant policy conflicts. Says one top Administration official: "You don't have the Republicans steamrolling in, this time, with a Contract [With America] that forces us to draw lines in the sand to prove what we stand for." Business leaders are hopeful that a bipartisan coalition will allow Clinton to take the lead on such controversial matters as restraining growth in Medicare and Social Security to achieve a balanced budget. "Clinton's going to be a little less partisan," predicts Chicago Board of Trade Chairman Patrick H. Arbor. "He's now interested in the history books."

LONG FREEZE. A budget agreement could actually spring from the carnage, if for no other reason than the two sides believe the voters demand it. "Both parties campaigned on a deal and now have a huge stake in achieving it," says Van Dyk. While last year's budget discussions fell victim to campaign politics, White House and Congressional budget-cutters hope that they can revive the framework: a five-year freeze on most domestic spending, $125 billion in cuts from projected Medicare spending, and a modest middle-class tax cut.

But Congress has a small window for compromise. The Republicans' hearings on Democratic fund-raising efforts are slated for the fall, and cooperation at that point may wither. Lawmakers realize that if they can't hang together for a few months to move legislation, they may hang separately in the next election. But many concede that the job won't be made any easier by the ethics uproar that is now gripping Washington.

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