After the Lost Weekend

Budget deadlock, a veto, brief layoffs—and no solution in sight

It was yet another battle of wills between the White House and Capitol Hill on fiscal restraint, and the ambiguous outcome did credit to neither branch of Government. In what Democratic Senator William Proxmire of Wisconsin aptly described as the “lost weekend,” Ronald Reagan responded to his first defeat in Congress by casting his first veto. The President did so in defense of frugal government. Yet he acted at a moment when the Government was technically out of funds, and for one astonishing day, the federal bureaucracy actually began to shut down. Placed in a no-win situation, Congress grudgingly gave Reagan the minimum he had demanded: a temporary funding bill that extends present spending levels only to Dec. 15. So the battle simply resumes when both President and Congress return to Washington this week from the brief Thanksgiving recess, and there are no guarantees that it will not go down to the deadline again.

As Reagan dined happily with his family on turkey, corn-bread dressing and mince pie at his Santa Barbara ranch, the frayed tempers and bruised feelings of congressional leaders also began to mend. On reflection, the great budget battle was probably as unnecessary as it was unseemly. The confrontation had centered on a matter of roughly $2 billion, a totally symbolic figure since it represented a mere .28% of the $700 billion budget for fiscal 1982, which is running $80 billion in the red. Not only will the $2 billion have to be fought over once again between now and Dec. 15, but the Administration in less than two months has to stake out its position on a budget for fiscal 1983. Indeed, Reagan already has on his immediate schedule nine lengthy meetings with White House staffers and Cabinet officers to sort out the conflicting requests of the various departments. The President is faced with the need to pinpoint some $40 billion in new spending cuts for fiscal 1983, and then get a restive Congress to agree. So the din of budget clashes is destined to grow even louder and prove all but interminable.

The main lesson of the long, chaotic weekend was that the budgetmaking machinery of the Government had broken down. “The process stinks,” said House Republican Whip Trent Lott of Mississippi. House Republican Leader Robert Michel of Illinois derided the deadline jockeying as a “flimflam.” The experience, said Oregon Republican Mark Hatfield, chairman of the Senate Appropriations Committee, was a “political nightmare.”

Democrats tended to blame the President and his party, rather than the process. Senate Democratic Minority Leader Robert Byrd of West Virginia termed the veto “a manufactured Shootout.” House Speaker Tip O’Neill was unusually personal, scoffing at Reagan: “He knows less about the budget than any President in my lifetime.” But Massachusetts Republican Silvio Conte of the House Appropriations Committee put the blame more broadly on Congress, declaring, “We’re the laughingstock of the nation.” In fact, there was plenty of blame for all to share.

Many of those involved in the lost weekend agreed, in retrospect, that a showdown spawned by mistrust and misunderstanding should have been averted. The Government’s fiscal 1982 operations had been financed since Oct. 1 under a “continuing resolution” while Congress struggled to pass appropriations bills meeting the President’s call: first, for a $35 billion cut in spending he had won in July; second, for an extra $13 billion in reductions he had sought in September. The Democratic-controlled House had passed twelve out of 13 required appropriations bills, but the Republican-dominated Senate had approved only two. Reason: G.O.P. leaders in the Senate had been waiting for clear signals from the White House as to precisely what range and mix of spending proposals the President would accept. Reagan, on the other hand, had preferred to wait and see what both the House and Senate would produce.

This stalemate had to be broken before the continuing resolution ran out at midnight Friday, Nov. 20, leaving the Government without spending authority. Guided by Majority Leader Howard Baker, the Senate went along with the House in approving a new continuing resolution to fund the Government for the current fiscal year, which ends Sept. 30. The two chambers differed, however, on both the level of spending and on how the funds would be apportioned. The House wanted to spend $432.5 billion on discretionary domestic programs, which was later amended to embrace a 2% across-the-board cut, including funds for the Pentagon. The Senate approved $427 billion, which involved a 4% slash in selected programs, but none in defense. The President, meanwhile, had dropped his initial demand for cuts of $8.5 billion, in this part of the budget, to $4 billion.

When conferees from the two houses, 28 Senators and 21 Representatives, assembled in a Senate conference room on Friday night, their seemingly small overall differences grew into a plague of arguments over details. They haggled past midnight, reconvened on Saturday morning and discovered that they could not even agree on a common basis for computing the spending figures under discussion. Recalls Lott: “We were working with different base lines and three different sets of figures, and the computers weren’t talking to each other.”

Finally, Baker summoned the Administration’s statistics wizard, Budget Director David Stockman, to Capitol Hill. Stockman, presumably glad to be called upon after his scorching public relations problems over his Atlantic Monthly fiasco, went to work in Baker’s leadership office, calculator in hand. Conferees would periodically ask him what certain decisions would mean for the budget. Stockman would tap away, then provide answers. By dinner time Saturday, the conferees were ready to accept the 2% House cut.

Foreign aid remained a problem. Republican leaders knew that Reagan wanted more money for such aid, although he had not pushed for it in public. They urged that up to $2 billion be shifted from domestic spending to overseas economic and military aid, even though their own head counts showed that only 40 of the 192 House Republicans would be willing to go along. Democratic leaders, who were more sympathetic to foreign aid, were reluctant to lead such a fight if the President would not take the heat too.

By 1:30 on Sunday morning, the conferees had agreed on a package, exclusive of foreign aid, that would authorize spending of $427.9 billion, well below what the Senate had approved. Since Reagan had sent word earlier that the Senate bill was acceptable to him, Stockman raised no objection to the compromise. Key Republican Senators, including Reagan’s friend, Paul Laxalt of Nevada and Oregon’s Hatfield, quickly endorsed the result.

Both houses scheduled rare Sunday sessions at which the compromise bill was to be swiftly passed and sent to the President. At a morning meeting in Senator Baker’s office, Republican leaders briefed James Baker, Reagan’s chief of staff, on the final details. New Mexico Senator Harrison Schmitt wanted more cuts, but the others urged Jim Baker to ask the President to sign the compromise. “They all said that a veto would be a terrible mistake,” recalled one participant. They agreed that shutting down the Government over a matter of a couple of billion dollars would be seen as too extreme.

That morning Stockman had been running the compromise numbers through his computers at the Office of Management and Budget. He wanted to translate the bill’s “authorization” figures into projected “outlays” of funds; the difference could be substantial. While the conferees thought they had cut the $4 billion that Reagan had agreed to acceptStockman now saw only a reduction of no more than $2 billion. One reason for the smaller savings, by his calculations, was that the compromise underestimated what might have to be spent on such entitlement programs as Medicare, Medicaid, food stamps and unemployment benefits. Some Republicans accused the House Democrats of having deliberately misrepresented these figures.

Early Sunday afternoon, Stockman joined other Reagan aides in a White House session with the President. Stockman gave his analysis of the numbers. They all joined in urging Reagan to exercise his first veto. Said one aide later: “Once he saw the numbers, I didn’t have any doubt about what he would do. A veto was so consistent with the Reagan character that it had to be done.”

The House was about to pass the compromise when Michel, who favored the measure, took the floor at 2:15 Sunday afternoon with a bombshell announcement: the President had just called him to warn that he would veto the measure. Clearly embarrassed, Michel told Democratic Floor Leader Jim Wright, “The gentleman knows I was operating from good faith. I had no reading whatsoever . . .” Reagan called Baker to reveal his decision. The Senator was also caught by surprise.

Leaders in both chambers now faced a unique situation. House Democrats felt that they had compromised fairly with Senate Republicans and that Reagan was demanding total capitulation on budget matters. Moreover, by bowing to the impending veto and rejecting the compromise bill, they, rather than the President, could be blamed for shutting down the Government. They decided to approve the measure and let Reagan kill it.

Republican leaders in the Senate, on the other hand, normally would vote against a bill that the President did not like, while Democrats would feel free to push it. But Byrd took a position opposite that of House Democrats, arguing that it would be futile to pass the bill without the votes to override a veto. Republican Senators, also differing with their House counterparts, decided to approve the compromise, just so Reagan could wield his dramatic veto.

When those cynical strategies were carried out on the Senate floor, the response ranged from outrage to derision. “I do not want it on my voting record that I voted for this monstrosity,” said Colorado Republican William Armstrong of the compromise bill. The measure was approved, 46 to 39, with all but two of the yes votes cast by Republicans. The House also approved it, 205 to 194, with most Republicans voting no.

Reagan’s Monday-morning veto was almost anticlimactic. “By refusing to make even this small saving to protect the American people against overspending,” the President said, as he rejected the bill, “the Congress has paved the way for higher interest rates and inflation, and the continued loss of investment, jobs and economic growth.”

What the veto would do to the Government became a more immediate question. Reagan announced that all “nonessential” Government services would have to stop. The result was capricious. As a midday exodus of some 200,000 federal workers began, the Pentagon lost not a single man-hour of work. The National Zoo in Washington also remained open. But the President’s press office stopped functioning, and 262 of 344 people who work for the White House went home. Outsiders trying to express an opinion on the President’s action heard a recording that ended, “No one is here to answer your call.”

The layoffs rippled rapidly across the nation. Visitors to the Statue of Liberty were turned away. Agriculture Department offices from Atlanta to Hawaii closed down. But the ever vigilant Internal Revenue Service kept pursuing tax evaders, wherever they could be found.

Anxious to leave town for Thanksgiving, congressional leaders quickly agreed late Monday to Reagan’s suggestion that they pass a 25-day extension of the funding resolution, even though Democrats wanted levels continued at least until Feb. 3. The only Senator voting against the Dec. 15 deadline was California’s Democrat Alan Cranston, who argued that Congress needed more time to make these “momentous decisions.” Within ten minutes after he signed the extension, the President left the White House en route to his California vacation.

By Tuesday morning, all federal employees were back at work. The bureaucrats who pay them computed that it would cost more to dock furloughed employees’ pay than it would to meet their normal salaries. It was not clear what the fiasco had cost Congress in terms of its already low public esteem. The President’s relations with Capitol Hill leaders, whom he had courted so effectively in the past with a soft sell, were surely damaged.

Whatever the future, the President had scored a public relations triumph in taking a firm stand against even the symbolic $2 billion. To be sure, Reagan himself could be faulted for holding up the budget process by making his last-minute demands in September for huge new cuts, and for failing to give G.O.P. leaders in Congress clear signals about his veto intentions. Yet there was validity in his criticism of the legislature. “This country has gone on now for a year without a budget and is two months into the second year without a budget,” he complained. “That is no way to run a rail road, and it’s even less of a way to run a country.” If a more certain hand on the throttle by the chief engineer might have helped, there was no reason for all those congressional conductors to steer their own cars off the tracks. By now, all of the clashing groups should have learned the lesson of that lost weekend.

—By Ed Magnuson. Reported by Douglas Brew and Neil MacNeil/Washington