The Republicans' realization on Blue Monday that the Democrats had won a huge victory followed belated understanding of what had really happened the night before, when White House Chief of Staff John Sununu was described as storming out of talks on the massive tax increase.
In fact, Sununu was never at the Senate-House negotiating table. He and budget director Richard Darman were in an adjoining room. Senate Republican Leader Robert Dole entered to tell them his Democratic counterparts had just demanded another pound of tax flesh: After all the Republican concessions made in President Bush's behalf, the Democrats now wanted the top bracket income tax rate boosted at least another point -- to 32 percent.
Dole said that was the last straw and that Congress could pass stopgap government financing to last through the election and go to the public to debate the issue. He then told Sununu and Darman they might as well go home, and they left. But when Dole returned to the table, Senate Democratic Leader George Mitchell backed down and agreed to the 31 percent rate (up from 28 percent for highest-paying taxpayers).
No wonder. Mitchell was not about to cast away the greatest ideological victory for either party since Ronald Reagan forced his tax and budget plans through a Democratic-controlled House in 1981. The package to be passed by jubilant Democratic majorities and signed by the president exceeds the wildest dreams of Democrats.
Bush not only accepted breaking the 28 percent limit without a capital gains tax cut (or any growth incentive); he also accepted in principle a "millionaire's" tax -- thereby putting the "greed" label on Reaganomics. Even some budget summiteers agree that the current version suppresses economic growth, puts in new disincentives for charitable giving, opens the way to returning to a multi-bracket tax system -- and something else as well. "It's tax shelter time," a happy tax lobbyist told us.
Why would the president agree? Because Darman convinced him that a "deal" on controlling government spending was worth the price. Yet spending is reduced only in a Washington sense.
The Bush-approved budget agrees to $180 billion in additional spending during the next five years; the Draconian House GOP budget drafted by Rep. John Kasich of Ohio would reduce that to $84 billion. Even when measured against maintaining current services regardless of inflation, the Bush budget goes up $20 billion over that "base line" (while Kasich's drops $66 billion below it). Darman's celebrated process reforms to make sure the spending cuts are real get sarcastic laughter on Capitol Hill, where veterans know the folly of trying to bind future Congresses.
A more realistic rationale for letting Democratic ideology triumph is to impel the Federal Reserve Board to ignore inflationary indicators and try to force down interest rates. But even here, administration insiders concede there is no sign the Fed will inflate and no hope that it will be any more healthful for the economy than it was during the Carter administration.
Such criticisms are not limited to a few disgruntled mavericks in the Bush administration. They take in a wide circle of knowledgeable officials whose names might surprise if they were made known. They remain hidden because this administration has mastered the internal stifling of dissent. To disagree publicly would require resigning. No one is quite ready for that.
Secretary of Housing Jack Kemp has come closer than any other Cabinet-level official. Though stopping short, he did not make himself popular with his colleagues in recent speeches by quoting Czechoslovak Finance Minister Vaclav Klaus's comment that taxing capital gains dries up investment. The thought police inside the White House issued a warning.
With congressional critics, the president's men cannot gag but can point fingers. One finger points at House Republican Whip Newt Gingrich for the defeat of the original budget summit's proposal, which, however removed from Republican principles, was a lesser victory for Democrats than the new one. In truth, House insiders say Gingrich did not count for more than 10 votes one way or another. More poisonous was the lukewarm support of Ways and Means Chairman Dan Rostenkowski (D-Ill.).
On Blue Monday with the election two weeks away, Republicans wondered how to minimize the catastrophe. Suggestions: no bill-signing ceremony in the rose garden; a photo opportunity bringing Sununu and Gingrich back together; the president on the campaign trail attacking the agreement. But how could Bush assail a deal that owed its life to his insistence on a deal? "He'll have to dance a little," a party leader told us. But it will take more than a little dancing to obscure a monumental defeat.