The Politics of Austerity

Carter's steel-belted budget and his spare State of the Union Message may be, in spirit if not cost, the most conservative any Democrat has offered since the New Deal. His commitment to a politics of austerity sets him in opposition to the activist wing of his own party, sharpens the risk of an election-year recession in 1980 and fairly dares Teddy Kennedy on the left and Jerry Brown on the right to contest his renomination. But Carter feels serenely at one with the temper and the economic necessities of the times - and even some of his liberal opposition suspect he may be right.

'The Scream Factor'
Austerity, in Washington, remains a relative term: the $531.6 billion Carter budget for fiscal 1980 (page 59) remains $29 billion in the red and would increase spending on the poor by a claimed $4.5 billion—enough, in one aide's wishful view, to quiet the "scream factor" over what got cut. "It is not a punitive budget," the President said in an NBC-TV interview last week.

But it is, in the wintry opening words of his Budget Message to Congress, "lean and austere." Its sacrifices to the war on inflation bloodied the cutting-room floor with lost Federal beneficences—158,000 public-service jobs, 250,000 summer jobs, 25,000 subsidized housing units, $400 million in school lunch subsidies, $600 million in social-security trims and much more. The squeeze, moreover, was only beginning; the President pledged, over the best guesses of his economic brain trust, to bring the budget into de facto balance by fiscal 1981.

The air was smoky with rebuke from the left even before this week's formal unveiling—the more so when word got out that the Pentagon budget would be up nearly 10 per cent, to $125.8 billion, at the expense of domestic spending. Kennedy, the emerging leader of the liberal opposition in Congress, was arming to do battle for national health insurance and against three-Martini lunches. Vernon Jordan of the National Urban League warned sonorously against making blacks and poor people "cannon fodder in the war on inflation." Labor seethed. So did mayors, minorities and organized women. Arthur Schlesinger, Jr., once court historian to the Kennedy's, went so far as to read Carter out of the Democratic Party. "He's a Republican," gruffed Schlesinger. "He has the temperament of a small-business man who happened to become President."

What all this portends is a bitter trench war in Congress over the leavings in 1979—and the increasing likelihood of a Democratic challenge to the President in 1980. Carter has mortgaged his future to events—to the highly uncertain chance that his strategy will abate inflation a bit without seriously increasing unemployment.

Teddy and Jerry
But the newest government indexes showed the economy cooking in 1979 at a 6 per cent growth rate, intensifying inflation and—in some nonpartisan analyses—threatening a recession in the thick of the 1980 primary season. By then, in the White House view, Brown will already be in the field on a born-again budget-balancing platform—and Kennedy could be irresistibly tempted out of his quadrennial attack of ambivalence into the race (page 26).

Carter has calculated these risks and accepted them, on the premise that, as one senior political adviser says, "the people support us no matter what the professional liberals say." He and his aides have betrayed occasional twinges of rue that their successes won't be appreciated in time to do Carter any political good. "Where would you like us to send you the polls ten years from now—in Plains?" one staffer inquired impishly, to which Carter replied, "It may be a little too late by then to get any credit." But the polls now—even a new Los Angeles Times poll placing Carter behind Kennedy by 23 points nationally and 51 points in a New Hampshire primary dry run—reveal powerful riptides of sentiment against big government and big spending. Congress felt those tides with chastening force in the 1978 elections. Carter was already there.

The result, in the infant 96th Congress, may be less a great national debate over whether austerity is a good thing than a year of picky, intramural contention over how to spread austerity around. By nearly universal agreement, the spending spigots would open again in case of a recession; otherwise, the Hill seems disposed to out-Carter Carter at shrinking the deficit. The talk at his first legislative breakfast of the season last week rambled at length over foreign policy until House Majority Leader Jim Wright interrupted: "Domestic affairs are what we need to talk about. That's what your election and our election depend on." The talk ran a half-hour overtime, the talkers bidding one another up as inflation fighters. Walking away afterward, Carter remarked to staffers that he thought he had a consensus on the issue—and that, for the first time in two bruised years, he was looking forward to working with Congress.

'Friends of the Poor'
Their relations will hardly be peaceful. Some of the Hill's Democratic whales think Carter did his budgeting backward, starting with a spur-of-the-moment promise to hold the deficit under $30 billion and a pre-austerity commitment to NATO to increase defense spending by 3 per cent over the inflation rate—docking social programs to pay the cost. Some leaders suspect that neither pledge can be kept—that rising interest rates alone will crack the $30 billion deficit limit and that at least token cuts will be demanded of the Pentagon. Soaking the welfare state likewise sat badly with party elders. "I've always been a friend of the poor, just like you, Mr. President, and I'm not in favor of dismantling these programs," Speaker Thomas P. (Tip) O'Neill said at last week's breakfast. "Neither an I," retorted Carter—nor, he insisted, were the cuts quite so draconian as advertised.

But some do run deep, even after a showy Christmas Eve stockingful of $2 billion in "restorations." The total of public-service jobs for the unemployed under CETA (for Comprehensive Employment and Training Act) was scheduled for shrinkage from 625,000 this year to 467,000 by the end of fiscal 1980—a month before Election Day. The summer-job pool would phase down from 1 million to 750,000. Aid to state and local governments would stay static at $85 billion, equivalent to a 7 per cent loss to inflation.Funds for public works would be sliced by $1.7 billion, rehabilitation loans for poor neighborhoods by $75 million. Free school lunches would be limited to poor children only, reducing subsidies to the middle and upper classes.

'An Incredible Flap'
In a season of dreams deferred, some of Carter's own were slimmed down or backburnered. His ambitious-but-failed welfare reform of last year was sweated down from $17 billion to $5.5 billion in new money and from 1.4 million to fewer than 400,000 new jobs to help the employable poor off the dole. His equally ambitious tax reforms came to grief in the 95th Congress and have evanesced from the 96th. His version of national health insurance is thought likely to be a gingerly "phase one," starting with coverage for catastrophic illnesses and little more until economic circumstances permits. His caution could well put him on a collision course with Kennedy, who favors a quicker start on a comprehensive program—and who, in the countdown to budget time last week, predicted "an incredible flap" over Carter's dollar-squeezing arithmetic.

Yet what was most strikingly missing in the Age of Less was a coherent liberal agenda for what must or even can be done. "Mr. Speaker," said Carter over breakfast, in kidding allusion to his own sparse offering of new programs, "I'm waiting for my mandate from you." Everybody laughed, including O'Neill, an ancient of New Deal vintage and impulse; neither he nor anyone else in the room had brought a mandate with him. The Hill's liberals will count it a successful session if they can scratch up a billion or so out of the defense budget, add in the money freed up if, as expected, Carter's counter-inflationary "real-wage insurance" plan is defeated, and then spread the dividends among the hardest-hit programs. "It's a holding action," says liberal Illinois Rep. Abner Mikva. "Congress will be even tighter than Carter because it always overreacts to the public mood."

It was precisely Carter's own sense of that mood that sustained him through the cutting process. He did show flashes of pleasure at one-upping his more importunate department heads —"getting information on something that those jerks come over here to appeal," an aide says, "and shooting them down." But the fun was quickly spoiled by the tug of war between his Georgia populism on one hand and his native penury on the other. "He's genuinely upset with some things he had to cut," one of his political directorate said. "He doesn't like to be depicted as Scrooge." Neither did he relish the painful choices among supplicants. "This," he sighed in the midst of one bloodletting, "is absolutely the most depressing time of the year for me."

The marketing of less begins with the Budget and the State of the Union message this week - both Spartan documents whose main obeisance to the poor is that inflation is demonstrably worse for them than anyone else and that austerity will help them more if it works. The Budget Message places their needs third in order of priority, behind defense and energy. The State of the Union, as paraphrased by one of its coauthors, urges patience on them and their champions—"Tough choices today to accommodate a better life tomorrow."

Neither message has much rhetorically or philosophically in common with the do-everything Democratic canon of the past half century. But Carter wanted it that way. His imagist-in-chief, Gerald Rafshoon urged him in an October memo to begin thinking about the State of the Union and proposed two options: the standard laundry list of promises, programs and applause lines - or a tight focus on inflation and a strategic arms limitation treaty with Moscow as his two paramount priorities. The memo came back with Carter's scribble next to the inflation-and-SALT paragraph: "There's no other choice." A second memo followed from the speech factory before Christmas, urging further that the message be kept short, general and thematic to prove that Carter—contrary to a wide suspicion—really does have a controling vision for America. He liked that, too.

The execution proved harder. Draft one reached Carter before his summit trip to Guadeloupe, borne by various contributors including Vice President Walter Mondale. "I thought you were going to give me a bold, thematic speech," grumped the President, bouncing it. A second draft a week ago came back hentracked with words, lines and whole paragraphs rewritten in Carter's hand. A third draft emerged, then a fourth. Agency heads made the usual push for pet projects and were rebuffed; interest groups maintained an odd silence—"because," one Carter man joked, "most of them aren't speaking to us." The resulting text struck some of its authors as almost too lean, moving them to push for at least a mention of health insurance Carter style. "Let's do it—get it out there before Kennedy," said one. "Why not put something positive in the State of the Union?"

The problem of selling a negative—or reality, as the White House prefers—can otherwise be substantial in Carter's relentlessly uncharismatic hands. The arguments are well rehearsed and, as liberals privately agree, largely well taken—that inflation does disproportionately hurt the poor; that a generation of governmental sprawl has become part of the problem; that the welfare state will either be pruned by its friends or leveled by its enemies."There are," says Jody Powell, "some folks out there who would take every social program and shoot it behind the ear without thinking about it for a moment." But Jimmy Carter promoting frugality is something less than Henry V rallying his armies at Agincourt. "Who's going to cheer," asks one, "when you say there's no money to spend?"

Girding for Battle
The other side, which has the headier causes, is arming—and coalescing—for war, beginning in the budget committees of Congress. Douglas Fraser of the United Auto Workers, a critical source of support for Carter in the 1976 primaries, convened his newborn Progressive Alliance of 80 liberal groups in Washington last week to gird for battle. Unions, mayors, minorities and feminists began descending on the Capital. Tom Hayden, the old New Leftist, planned a 75-city tour to rouse the cuttees against the cutters. A coalition of twenty senior-citizens' groups began organizing their own defense of social security, with backing from the AFL-CIO. U.S. Rep. Parren Mitchell of the Congressional black caucus announced himself ready to swap votes with anyone to protect programs for the poor - "with the devil if necessary."

The red-flag target for the left offensive will be the Pentagon and its obtrusive inflation-plus-three budget increase. That largesse was doubly important to Carter, in keeping his promise to NATO and signaling waverers on SALT that he is not soft on the Russians. But the opposition is already preparing an assault on defense as the most wasteful Federal operation of them all; even the International Association of Machinists, long wedded to megabuck Pentagon budgets, produced a scholarly study arguing that $1 billion of government spending will create 59,000 jobs in the civilian sector to 45,000 in defense. Defending defense will thus, in Tip O'Neill's educated guess, be "the big fight" in the battle of the budget—and the betting is that it will sustain some fractional losses.

But a certain gloom pervaded the Democratic left at the eve of battle—a feeling that Carter had preempted the high ground of politics and perhaps principle as well. The suspicion remains strong among them that Carter is a unsurper - a Coolidge in Democratic clothing, in George Meany's pungent view—and his politics of austerity an aberration from the party's progressive past. But their doubts coexist with a sense of their own isolation from the American mainstream. "They're perceived as the good guys," one Urban League official said. "We sure as hell aren't." Restraint was the sudden buzzword of the season, for Ted Kennedy no less than Jimmy Carter, and mea culpas were heard in the Democratic cloakrooms. "I think," said Rep. Thomas Ashley of Ohio, "that the liberal left has got to take the view that there is some legitimacy to the discontent—and that we contributed to a result that is coming back to haunt us."

'Sail Against the Wind'
Still, the party's activists—and a majority of its voters—long for the Restoration next year in the person of Teddy Kennedy. The prevailing view inside the White House and out is that Kennedy really does not choose to run in 1980 unless his hand is forced by events—by say, a sick spell in the economy, a plunge in Carter's polls, and a fast start for Jerry Brown. But the dream endures. As their memorable collision at the Democratic mini-convention in Memphis last month reminded the faithful, Kennedy is to Carter as a vodka Martini is to a celery tonic; he quickens the pulse, warms the blood, and leaves no medicinal aftertaste. That he is ideologically off pitch with the times seems not to matter; he roused the troops at Memphis by exhorting them to "sail against the wind"—not with it. "I'll be damned," says a vaguely envious Carter operative, "if I can think of anybody else who can bring people to their feet like he can."

The prime alternative is Brown; he stung Carter from the left in the late 1976 primaries, and the White House simply assumes that he will be back this time, "running," in one aide's dry assessment, "from anywere—left, right, outer space." That his preferred ground for the moment is right of the President on money matters has quieted some of the lingering anxieties he once caused the President's people.

'Beyond Opportunism'
Their conviction, widely shared even among Democrats disaffected by Carter, is that Brown overstepped badly with his call for a constitutional convention to mandate a balanced budget. One Carter adviser said Brown had moved "beyond the levels of accepted opportunism"—a theme echoed by the President himself at last week's press conference. Carter wrote the notion off as "radical" and "extremely dangerous"—the beginning of an effort to crowd Brown off the far right edge of the map of mainstream politics.

The idea is in fact a catchy one, enduringly popular in the polls and lately in Congress; no fewer than twelve balance-the-budget amendments bearing 119 signatures fluttered into the House hopper in the first week of the new Congress.* But even in this winter of Democratic discontent, Brown's great leap rightward strained his chances of drawing the party pros to his candidacy. That window had opened a crack when, at his own request, Brown met before Christmas with Al Barkan of the AFL-CIO's Committee on Political Education and, according to a participant, expressed his intense interest in running if the circumstances looked right. Barkan, this source said, was encouraging—till Brown did his balance-the-budget homily at his second-term inaugural a fortnight ago and phoned for a reaction. "It was very, very bad," snapped Barkan. "We thought it was a right-wing Republican speech."

*Not everything about the Hill's annual homecoming was so austere in spirit; there were the usual parties and, this time, a stargazer's holiday at the swearings-in of U.S. Senators John Warner, with his wife, Elizabeth Taylor, at his upstage elbow, and Bill Bradley, the sometime basketball hero.

Brown's high-wire walk and Kennedy's reticence were some comfort to the President's political handlers. But they have already begun war-gaming for 1980 as if one or both will challenge Carter, and perhaps some second-tier possibles as well—Senators George McGovern and Daniel Patrick Moynihan, Gov. Hugh Carey of New York.

Jordan's Playbook
The tactical playbook now clattering out of Hamilton Jordan's typewriter is, in outline, nearly a rerun of Carter's march to the nomination in 1976: enter all the primaries, hope for a quick kill in Iowa, New Hampshire and Florida—and prepare to slog through the entire 30-state course if necessary. His strategists hope, moreover, to cast him again as the outsider—the scourge of extravagance and waste, the terror of the bureaucrats, the champion of a government as good as the American people.

Yet it remains a measure of the stresses between Carter and the Democratic left that his people anticipate more trouble with his renomination than his re-election. Their winter-book bet for the Republican nomination is Ronald Reagan, and they consider him beatable, so long as Carter monopolizes the center—"just 80 per cent of the people," says Jordan—and isolates Reagan onthe outer right.

'The Country is With Us'
Their more proximate concern is the defection of the party and interest-group activists who weigh disproportionately in the nominating process—who raise money, go to caucuses, register voters and deliver votes. "The country is far more with us than the party," says one Carter planner. But the party will sit in judgment on him first, and his estrangement from the old liberal-labor-minority coalition forged by F.D.R. could haunt him then.

The gamble underpinning Carter's politics of austerity is that the old coalition has overstayed its welcome anyway—that the center of gravity in American politics has shifted from the slums and the factories to the suburbs and the shopping malls. In the view from the White House, it is the party left and its client groups who have lost touch with the people—not Jimmy Carter. His course is heavy with risk for his survival in office; he can only marginally improve the economy if he succeeds, and can be buried in its wreckage if he fails. But even his critics concede that Carter is in harmony with the straitened new state of the Union. "Right now, this is the Age of Can't Do," says Colorado Democratic chairperson Sheila Kowal—and Carter's vision of what cannot be done may be precisely what America has been waiting to hear."