It is appallingly clear now that some compromise version of the Gramm-Rudman-Hollings bill requiring the federal budget to be balanced by either 1990 or 1991 will get through Congress. But it no longer is clear that the White House, which once was entranced by the prospect that Gramm-Rudman would allow it to make huge cuts in nondefense programs, will be willing to buy it.
Increasingly, there are signs that President Reagan's advisers, fearing that the president may be forced to choose between the "evils" of biting hard into the defense budget or actually raising taxes, hope to be bailed out of that dilemma by a House-Senate deadlock over Gramm-Rudman.
As Sen. Donald W. Riegle Jr. (D-Mich.) points out, it's not likely that the administration could have both the deficit-cutting formula of Gramm-Rudman and a revenue-neutral tax reform bill: The latter would have to be written with a view toward a net increase in tax revenue.
It is even possible that, despite his early endorsement of Gramm-Rudman, the president might veto a compromise bill, using as an excuse that the stipulated cuts in the Pentagon's budget would compromise the nation's security. As the week ended, Sen. Phil Gramm (R-Tex.), whose legislative genius triggered the Capitol Hill bandwagon for his proposal, still hoped to get something enacted that would assure a balanced budget and that Reagan would sign.
If he does, much of the explanation for the success of a bill that one of the cosponsors, Sen. Warren Rudman (R-N.H.), frankly called "a substitute for guts" lies in a sea change in the Democratic Party's policies and strategy. Not only did 27 Democrats -- a majority in the Senate -- vote for the Gramm-Rudman bill mandating annual $36 billion cuts in the deficit until a balance is achieved in 1991, but the controlling majority in the House put through an alternative that also gets to a balanced budget and prides itself on getting there a year quicker.
The House Democrats patted themselves on the back for a display of unity, in which they only lost two votes, uniting the conservative and liberal wings with a somewhat different mix of budget-cutting targets, easier on social programs and tougher on defense cuts.
Gramm charges that the House set out deliberately to create an unworkable and unconstitutional formula, "making the shoe so tight that it won't fit." But the bottom line is that the Democratic-controlled House adopted the principle of a balanced budget within a fixed number of years. That's a 180-degree turn for Democrats, who for years have portrayed themselves as the party of compassion, willing to see the government go into the red at a time of recession so as to push the economy forward again.
It is true that the House alternative plan is less obnoxious than the Senate proposal, in that it would allow a smaller reduction in the deficit if real economic growth dips below 3 percent. That is more rational than the revised Senate version, which belatedly recognized the bad economics of the original by agreeing to modify the budget-cutting procedure if economic growth slipped below 1 percent.
But 1 percent real growth as a guideline! That makes no sense at all because, at such a level of stagnation in the economy, the deficit would widen by an extra $25 billion to $30 billion in lost tax revenue and recession-related expenditures, such as unemployment compensation, making the Gramm-Rudman targets impossible to achieve. At that point, as critics of the bill suggest, the whole exercise would collapse.
Gramm made clear in an interview that he doesn't believe in deficit spending, anyway, as an antirecession measure.
But the significant point about the House Democrats' alternative is that it accepts 3 percent growth as evidence of a "stable" economy, allowing a 20 percent cut in the deficit in the ensuing year. That, too, is bad economics -- not as bad as Gramm's, but pretty disappointing.
In reality, the U.S. economy would be close to the dividing line of a growth recession at 3 percent real growth. Typically, the economy offers little prospect of a lower unemployment rate at that level, and at almost any time in the postwar period, the liberal element in the Democratic Party would be calling for stimulus, not further contraction.
But times have changed, as Sen. Edward M. Kennedy (D-Mass.) -- one of the supporters of the even-tougher Senate version of Gramm-Rudman -- appears to have recognized. Democrats such as Kennedy also want to be recognized as moderates who are just as much interested in reducing the deficit as are their Republican colleagues. Yet, as Kennedy should know, the only possible rationale for insisting on an actual balance in the budget is an ideological revulsion against government.
Democrats also have become sensitive about their image of being soft on defense, and have carefully -- and approvingly -- noted the tactics of conservative Gerald L. Baliles in his successful campaign for governor of Virginia. Sen. Gary Hart (D-Col.) -- who voted against, and strongly condemns, the Gramm-Rudman bill -- made the point in a conversation the other day that, if Gramm-Rudman passes, there might be a political benefit for his party, assuming that the administration would seek to protect its strategic nuclear arms program by cutting conventional weapons.
"Frankly, I think that opens up some real possibilities for the Democratic Party to become a prodefense party again by defending the conventional forces against what will be the Weinberger-Reagan nuclear buildup," Hart said.
He feels that the Democratic Party has been "in disarray" for the past five years, having offered no policy alternatives with which to combat a popular president. There were no effective Democratic counterproposals to Reaganomics, the huge 1981 tax cut or the Gramm-Latta expenditure cuts. Now that Gramm has seized the lead with the balanced-budget proposal, the Democratic response, again, essentially has been "me too."
Despite last-minute fixes in the Senate bill, essentially nothing has changed in the past three weeks of debate on Gramm-Rudman, except a better public awareness of what the proposal would require.
Gramm-Rudman "has allowed congressmen to claim a vote against the deficit without voting for anything specific," observed economist Alan Greenspan -- who nevertheless joins the crowd of those supporting the legislation. Greenspan's excuse is that "we don't have the luxury of coming at the budget in a rational manner."
It is a sad commentary when rational people defend irrational behavior. But when an irrational mechanical process is put in place -- whether it is a monetarist rule that would hold the money supply to some fixed level, recession or no (and I'm sure Greenspan wouldn't buy that), or Gramm's automatic $36 billion annual deficit reduction in good or bad times -- the consequences are totally unpredictable.
In my view, any congressman or senator who votes for any version of Gramm-Rudman is confessing to the folks back home not only that he or she is frustrated by deficits, but that he or she is incompetent, and ought to be replaced. Ironically, we have come down to hoping that the most responsible vote may be cast by Reagan -- against Gramm-Rudman.