Commentary

Contract Revisited

By Stephen Moore
June 23, 2004

This summer the famous Contract with America that swept Republicans into power in Congress in 1995 turns 10 years old. The Contract was a bold and sweeping agenda to change the way government works in Washington.

It included 10 major provisions including welfare reform, rules to force Congress to live under the same laws as the rest of us, term limits, tax cuts, and most importantly: budget reduction. In the memorable words of Newt Gingrich, the Republican revolutionary who inspired and led the Contract with America Revolution, Republicans were going to make government “smaller and smarter. We are going to prove that we can get rid of programs, not just start them.” That was a highly appealing promise to voters as the federal budget under President Bill Clinton approached $2 trillion.

It is chic these days to criticize the Contract with America and write it off as a failed revolution. That would be a misreading of history. Much was accomplished of great significance during those first 100 days in 1995. Republicans for the first time did require Congress to live by the rules they impose on the rest of us. Committee chairmanships were term-limited. The first steps toward meaningful litigation reform passed. And perhaps most impressive of all: The budget was balanced, not in seven but in less than four years.

There were other great triumphs of the new Republican majority back then. Perhaps the biggest of all was strong-arming Mr. Clinton to sign the most historic social legislation of the last 50 years: welfare reform. Since that legislation passed, welfare caseloads have been cut in half and many of those welfare moms now are productively in the work force.

Even in the fight to cut government down to size, there were some early impressive victories. In the first two years of the Gingrich revolution, the federal budget actually was reduced after inflation by 3½ percent. The only other two-year period where that happened was in Ronald Reagan’s first two years as president. There was clearly a new ethic of fiscal restraint, rather than fiscal expansionism.

I was proud to work with the young and energetic House Budget Committee Chairman John Kasich, who put together the original “Contract with America” budget in 1995. That was an astonishingly visionary document — something we haven’t seen the likes of ever since. Mr. Kasich’s budget slated more than 300 programs for termination. Most impressive of all, the Contract with America budget called for eliminating three whole Cabinet departments: Education, Commerce and Energy.

Perhaps Republicans over-promised, but in the end, politics triumphed over good fiscal common sense. Ten years later, most of the useless programs still flourish. Here are some disappointing examples:

  • The Americorps program has grown 181 percent and President Bush wants to expand it further.
  • The Education Department budget has almost tripled since 1995.
  • The Goals 2000 budget has grown from $231 million to $700 million.
  • The wool and mohair subsidy was terminated (hooray) but then resurrected by Congress in 1997 and now spends more money than ever.
  • Amtrak subsidies were supposed to be phased out entirely by the year 2000. But this year the railroad asked for a $2 billion bailout and Congress is likely to grant it.

The budget of $1.5 trillion in 1995 will likely reach $2.5 trillion this year. The war against big government was fought — at times valiantly — but eventually lost.

What are the lessons of the Contract with America? First, this was an initiative, despite its failures, that launched one of the most radical and successful political reforms in American history. In many ways, the revolution led by Newt Gingrich and Dick Armey helped bring the Reagan Revolution to its beneficial conclusion.

The economy roared back to life on almost the very day Republicans were elected into the majority. In November 1994, the Dow Jones Industrial average was about 3,000. By the year 2000, the Dow stood at 10,000. This was a period of unparalleled wealth creation and prosperity. Whatever the Republicans did, the financial markets bulls clamored approval.

One other lesson of the Contract with America is that revolutions in America are short-lived. Reformers come in and change the course of government, but it isn’t long before the forces of inertia overwhelm the agents of change. That is what happened to the Gingrich Republicans. It is what happened to Ronald Reagan, who accomplished all his major economic victories in the first two years of his administration. Some critics look back and say Republicans tried to do too much, too quickly. That’s 100 percent wrong The window of political opportunity shuts rapidly. Best to do as much as you can while you have the other team in disarray.

The Gingrich Republicans were a heroic bunch. They did a great service in turning around our economy and our government after two years of the totally dimwitted tax-and-spend policies of Clintonomics. The Contract with America contained policy changes of great consequence.

It’s tragic that today many of those same Republicans who led the Contract with America siege on Washington have settled into power, have become overly comfortable with their perches of authority, and have in some ways become mirror images of what they replaced. The Republicans now spend more than even the Democrats did when they ran Capitol Hill. Republicans seem to have forgotten who they are, and why voters put them there.

Perhaps it is time for conservatives to start plotting the next revolution.

Stephen Moore, a senior fellow at the Cato Institute and president of the Club for Growth, was a staff member for former Rep. Dick Armey (R-Tex.).