Whatever Happened to the Contract with America?

September/​October 1995 • Policy Report

Six months ago my Chairman’s Message was entitled “A GoodStart on the Contract.” As it has turned out, that hasproved correct only for the House. As Speaker Gingrich promisedlast fall, all provisions in the contract were brought to a floorvote in the House, albeit with some modifications, in the first100 days of the new Congress. Moreover, all but one of thecontract provisions were approved by the House; the one exceptionwas the proposed constitutional amendment on congressional termlimits.

As of the dog days of August, however, most of the contractwas stalled in the Senate. Three contract provisions passed the Senatewithout much controversy: one that makes Congress subject to the same lawsthat apply to other employers, one that provides some protectionagainst new uncompensated mandates on state and localgovernments, and one that sets a governmentwide paperworkreduction goal. The proposed balanced‐​budget amendment, however,failed to pass the Senate by one vote. And the rest of thecontract is in limbo.

What happened? First, the Senate is expected to be moredeliberative than the House, and controversial measures must be approvedby three‐​fifths or more of the members. More important, the contractwas a commitment by House Republicans, not by their colleagues inthe Senate; some of the Senate committee chairmen, specifically,have little enthusiasm for reducing federal spending, taxes, and regulation.The budget and other priorities have also delayed resolution ofthe remaining contract measures. And the 104th Congress has a lotof time left to address measures that need not be resolved in thefiscal year 1996 budget.

The most important step to restore the momentum of thecontract is to approve a strongly restrained budget. On thatissue, I am moderately optimistic. The nearly unanimousRepublican support for a balanced‐​budget amendment was sufficientfor approving a budget resolution that would balance the budgetby 2002. The resolution also authorized some tax reduction on conditionthat spending reductions are forecast to be sufficient to balancethe budget.

The two programs that most jeopardize the budget resolutionare defense and Medicare. In a world where the United States hasno major potential adversary, the Republicans propose to add tothe Clinton defense budget; they make a good case for acceleratingthe development of a continental missile defense, but there is nocase for increasing spending for such high‐ tech pork as the B-2,the Seawolf submarine, and the C-17. On Medicare, the Republicanshave deceived themselves that the growth of spending can besubstantially reduced without reducing benefits or the eligiblepopulation. Welfare reform will also be addressed as part of thebudget, but the major remaining controversies involve the federalconditions for eligibility rather than the amount of spending.The Republicans’ commitment to fiscal responsibility will beseverely tested in the next two months as they develop the budget reconciliationbill and respond to the threatened Clinton vetoes.

Congressional resolution of the other major contract measuresbearing on crime, regulatory reform, legal reform, and even tax cutscan be deferred without much cost. On those issues, Congress isbest advised to do it right rather than quickly, in part becausesome of the House proposals are seriously flawed. The crime billsfurther increase the federal role in issues that should be leftto the states. The regulatory reform bill places an unrealisticburden on the courts. The product liability bill unnecessarily federalizes anissue that is better resolved by state legislatures and thecommon law. The several proposals for tax cuts should probably beaddressed as part of a broader tax reform and only after it isclear that the budget is on a path to balance.

In summary, some of the provisions of the Contract withAmerica will not be approved this year or, maybe, ever. In some cases,that will be unfortunate; in other cases, not. The HouseRepublicans deserve credit for developing and approving an ambitiousif somewhat inconsistent agenda of first steps toward restoringlimited constitutional government. They and their Senatecolleagues should now be judged by their next steps.

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