Clinton's legacy stalks the great budget debate

If there's any doubt that the legacy of Bill Clinton still hangs heavy over Washington, take a closer look at the way both parties are digging in to fight out this fall's budget battles.

Traditionally, since the Great Depression, Washington's answer to bad economic times has been more spending - on roads, schools, social programs - anything that gets dollars out there pumping up confidence.

Until Mr. Clinton.

In what has since been perceived as a political master stroke, he convinced Democrats that the way to win their way back to power was to shed the image of big spenders. Instead, he elevated Social Security as his party's top priority - and used concerns about the program's long-term health to ward off Republican tax cuts.

Now, after an election in which both major parties amplified the pledge to put Social Security first, both Republicans and Democrats are wrestling with whether to hold firmly to that pledge or shift to a more-traditional focus on economic stimulus.

So far, in a sign of how deeply the Clinton-era policy is engrained, leaders in both parties have remained committed to not tapping into the Social Security surplus.

But both parties face risks in taking this stance.

President Bush and Republicans are in the toughest bind. They proposed a tax cut that Democrats said wouldn't add up. Now, with recent sharp cuts in the budget-surplus forecasts, it looks as though the critics were right.

In response, House Republicans on Tuesday proposed across-the-board spending cuts in fiscal year 2002, to preserve a surplus in Social Security.

"Republicans had to come up with some scheme that would make them look holier than everyone else on Social Security, or else they would be blamed for it," says Stanley Collender, a Washington budget expert.

Even GOP stimulus proposals are wrapped in the caveat that they will not break into the surplus.

At the end of this week, GOP moderates in the Republican MainStreet Coalition hope to unveil their own program to rev up the economy. It will include "cheap and quick" ways to get more money into the economy, such as speeding up construction projects that are in the highway users' fund, that "won't violate the social security trust fund," says a Republican aide.

In the short run, the issue is a political bonanza for Democrats. Senate Democrats have been gearing up for a showdown over Social Security for months by keeping up a constant series of briefings on the diminishing federal-budget surplus.

Democrats want the White House to be the first to propose scaling back tax cuts or slashing popular programs to make the numbers add up.

Above all, they want to avoid being dragged into complicity with a budget that threatens dipping into the Social Security Trust Fund. Even liberals are sounding like fiscal conservatives."Senate Democrats are working to continue fiscal responsibility. We've passed no appropriation bill that exceeds the president's request. The budget supplemental bill we passed was not one thin dime beyond the president's request," says Sen. Charles Schumer (D) of New York.

Last week, House minority leader Richard Gephardt told fellow Democrats that the party's prospect in 2002 depended on defending the Social Security surplus and not getting drawn into votes for spending bills that violate it.

But Democrats are also taking a big political risk.

They don't want to be tagged as the Herbert Hoovers of the 21st century, who stood firm on points of fiscal principle while the economy tanked. They also face a backlash from their own constituents, if times get worse.

"Democrats are taking advantage of one of the oldest tricks in the political book - demagoguing Social Security," says Robert Reich, former Labor secretary in the Clinton administration.

"This may be wise tactically. It may be good politics. But it puts Democrats in a straitjacket," he adds, "and makes it impossible to talk about affordable and universal healthcare, pre-school care, mass transit, or any of the things that Democrats have championed in the past."

If the economy continues to slip, these positions will be sorely tested. So far, the White House is maintaining that no new stimulus for the economy will be needed.

But business groups pressing both parties to pass at least a capital-gains tax cut. Last week, House Speaker Dennis Hastert renewed calls for a stimulus package, including that tax cut.

"Unless they jump start this economy, [Republicans] will lose a lot of seats in 2002," says Stephen Moore, president of the Club for Growth.