A Good Start on the Contract

March/​April 1995 • Policy Report

In September 1994, when the Republican candidates for theHouse of Representatives announced their Contract with America,Newt Gingrich may have been the only person who expected that contractto be more than a campaign document. And after the unexpectedRepublican win in the November election, the usual cynicspredicted (or hoped) that the contract would be quickly forgotten.

To their great credit, the Republicans in Congress havemaintained a commitment to the contract and have moved, as if by forcedmarch, to transform the contract into a governing agenda. As Iwrite, Congress has already approved four major contractmeasures, the common theme of which is restricting the powers ofCongress.

The first measure made Congress, as an employer, subject to 11labor and civil rights laws from which it was previously exempt.The direct effect of this measure will be to extend tocongressional employees most of the same employment rules andrights to which all other workers are subject. The more importantindirect effect of this measure will be to make Congress moreaware of the problems inherent in existing regulations of thelabor market and more cautious about approving more such regulations. Thismeasure was approved by both houses and was signed by thepresident.

The second measure provides some statutory protection againstnew uncompensated mandates on state and local governments. Thelaw creates a presumption in favor of compensation for the necessary additionalcosts of new mandates (if the estimated cost is more than $50million), but the requirement for compensation may be waived bymajority vote. And mandates specific to national security, emergencyrelief, constitutional and civil rights, and Social Security areexempt. This measure also requires federal agencies to publish abenefit/​cost analysis of all new regulations affecting either stateand local governments or the private sector (if the estimatedcost is more than $100 million). This measure is only half a loafbut, in this case, half a loaf is better than none. The measureis now in conference committee where minor differences betweenthe House and Senate versions will be worked out.

The third measure authorizes the president to veto individualline items in appropriation bills. This measure providesauthority similar to that now held by 43 governors and wouldrestrict the potential for Congress’s loading appropriation billswith individual projects that would not be approved as separate bills.The Senate is now considering several versions of a line‐​item veto.

The fourth measure is a proposed constitutional amendment thatwould change the voting rules on the federal budget. Support ofthree‐​fifths of the members of each house would be necessary toapprove an expected deficit or an increase in the debt limit, andsupport of a majority of the members of each house would beneeded to approve an increase in taxes. Unfortunately, there aretwo serious problems with the proposed amendment:

  • The voting rule on tax increases is neutral with respect to the level of total spending and taxes and is inconsistent with the contract’s commitment to a three‐​fifths rule.
  • The absence of constitutional protection against uncompensated mandates seriously undermines the prospect for ratification of this proposed amendment.

The Senate narrowly failed to pass this proposed amendment,but the primary near‐​term effect of House approval will be to forceCongress to develop a budget plan that would lead to a balanced budgetby 2002. That will constrain the several irresponsible contractproposals to increase defense spending and for tax reductionsthat do not increase economic growth. The mandate and mood of the 104thCongress will lead to a budget plan that does not include a taxincrease, but there is less reason for confidence that a futureCongress will not increase taxes to comply with the proposedamendment.

The most unfortunate measure passed by the House to date is anew crime bill that maintains most of the outrageous provisionsof the crime law enacted in 1994. The crime bill, whichfederalizes most violent crimes and increases federal spending,is wholly inconsistent with the general commitment to limitedconstitutional government in other parts of the contract. Unfortunately,the Senate will probably pass a similar bill.

All in all, the new Congress has had a very productive firsttwo months. It has made a good start on the contract, even ifsome of the details of the first measures are less than optimal.Current political conditions represent the best opportunity inmany decades to restore limited constitutional government, andCato will make every effort to take advantage of thisopportunity.

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