America's Governors Emerge As 'Third House of Congress'

AT an extraordinary juncture in the history of American government, the nation's governors have stepped into the Washington fray in an unprecedented fashion.

Suddenly, the deadlocks over welfare and Medicaid have broken. The moribund budget process appears to have new life. And it's the state chief executives, acting almost like a third house of Congress, who have operated in the bipartisan spirit of compromise that used to mark proceedings on Capitol Hill.

In a way, it was a role the governors had to play, several of them said in interviews. A core debate in Washington has centered on how much federal power should devolve to the states - and governors hold a crucial stake in that battle. They also face practical, dollars-and-cents considerations that for Washington policymakers may have been lost in the inside-the-beltway ideology wars.

''I'm in the middle of a legislative session, trying to put a budget together that relates to next year,'' says Gov. Gaston Caperton (D) of West Virginia, chairman of the Democratic Governors Association. ''I'm trying to put welfare reform through. I mean, it's just that there's an instability that's difficult to work with.''

To some governors, it seemed the details of the federal budget compromise were less important than that a compromise be reached, and that Washington not just give up and ''let the voters decide.'' Leaving the budget battle to the next Congress and the next president would defer key decisions for another year, a level of uncertainty that many state rulers found intolerable.

Thus were born this week two compromise packages - one on Medicaid, one on welfare - by unanimous vote of the governors attending a National Governors Association (NGA) conference here. In a process shadowing similar work on Capitol Hill and in the White House, the governors, their staffs, and NGA staff spent the past six months working out details of reform packages in these two areas, both of which are operated at the state level with a large infusion of federal cash.

On welfare, the governors agreed to take federal money in a lump sum and end the federal guarantee of aid to the poor - in effect, adopting the GOP position that represents a fundamental shift from the 60-year-old entitlement. The proposal would require people receiving welfare to look for work; benefits would be cut off after five years.

To soften the blow for pro-entitlement forces, the governors added $4 billion over seven years for states to help pay for child care and another $1 billion for a contingency fund for states with heavier-than-expected caseloads.

On Medicaid, the federal health-insurance program for the poor, the governors tried to split the difference between the White House and Congress. President Clinton wanted to keep the federal guarantee. Republicans wanted to turn the money over to the states in a lump sum, or block grant. The governors' compromise would set a ''base amount'' that each state gets for the next seven years. The plan would also write into law certain guarantees of coverage, to satisfy Clinton. A contingency fund for cost overruns would also be established.

Each plan's financial implications for the overall budget have not been tallied yet, and Congress is expected to make some changes, governors said. Staffs for the governors, Congress, and the White House met yesterday to review details. Congressional leaders have promised hearings.

But the important point is that pieces of the budget process are moving again. Governors demurred on how to describe their role. When asked if they were acting like a third branch of Congress, Gov. Pete Wilson (R) of California, himself a former United States senator, replied: ''Well, we're certainly trying to be! That was the point of this morning's exercise.''

Then, thinking out loud, he continued: ''We were trying to be more in the nature of, I'd say - I won't say consultants, because that is not the role, but we were clearly advocating a point of view and urging the Congress to adopt it. I think it is true this Congress, the 104th Congress, more than any within memory, certainly within recent memory, has worked with governors and respected their desires and largely implemented them.''

Gov. Tom Carper (D) of Delaware noted that governors, by the nature of their jobs, are inclined to operate more ''from the center.''

''We tend to be maybe more pragmatic.... We run governments on a daily basis, we know we have to balance our budgets,'' he said.

''The National Governors Association has a good tradition of being a nonpartisan, bipartisan operation. We started to get away from that last year, with the new Republican Congress and a lot of new Republican governors. Fortunately, this year, we've come back to our roots, to our tradition of bipartisan cooperation,'' Governor Carper said.