The ‘Contract with America’: What It Really Means

Standing on the steps of the US Capitol on September 27, 1994, more than three hundred Republican candidates for the House of Representatives voiced their support for a “Contract with America.” The remarkable victory by Republicans in last November’s elections converted the Contract into a blueprint for legislative action. Although the broad contours of the Contract are generally known, little is understood about the bills now being enacted. What do they contain? How do they compare with the original plan?

The Contract indicts the national government as “too big, too intrusive, and too easy with the public’s money.” The three principles said to underlie the Contract’s many parts are accountability, responsibility, and opportunity. The signers of the Contract pledged to make elected officials more accountable to the public, to bring about a new, and in their view better, balance between government and personal responsibility, and to increase private opportunities by reducing taxes and curbing regulations.

Some of those goals were achieved in the opening weeks of the 104th Congress. The House eliminated several committees, cut committee staff by a third, and prohibited proxy voting in committee. The Senate also acted to reduce the size of committee budgets. By the end of the first hundred days, most of the Contract had passed the House, and two bills were signed into law. A Congressional Accountability Act requires Congress to comply with federal standards, and another statute restricts the ability of the federal government to impose expensive mandates on the states and the private sector.

Despite the extensive press coverage lavished on the Contract, deep misconceptions about it prevail. Republican rhetoric, misleading White House statements, technical complexities, the breakneck legislative pace, and superficial reporting all contribute to widespread public confusion. I deal here only with seven cases of such confusion: the Congressional Accountability Act, unfunded mandates, the National Security Act, item-veto authority, the balanced budget amendment, the private property bill, and term limits. Other proposals in Contract With America, the recently published text of the contract,¹ also deserve close examination: welfare reform, the anti-crime bills, the child-tax credit, regulatory reform, and product liability legislation.²

1.

Regarding congressional accountability, the Contract states: “All laws that apply to the rest of the country [should] also apply equally to the Congress.” A number of laws, including equal employment opportunity and labor legislation, did not cover Congress. When President Bill Clinton signed the Congressional Accountability Act on January 22, he said it is “about time that Congress lived by the same laws it places on the private sector.”

This is not the first time, however, that Congress has acted on this question. The bill Clinton signed is only the latest in a series of steps taken by Congress over the years to comply with federal standards. The Civil Rights Act of 1991 subjected Congress to a number of civil rights provisions and established an Office of Senate Fair Employment Practices to provide for their enforcement. Senate employees are protected from discrimination based on race, color, religion, sex, national origin, age, handicap, or disability. The House adopted similar reforms.

In several other ways Congress has acted to bring itself under the same standards applied to other citizens and public officials. In 1994, the Joint Committee on the Organization of Congress recommended an end to Congress’s exemption from workplace laws, and on August 10, 1994, the House passed legislation to apply a series of worker-protection and anti-discrimination laws to Congress. Members of both parties recognized the need to move decisively. The vote in the House was nearly unanimous, 427 to 4. Although most senators were prepared to pass this legislation, it was blocked along with other measures at the end of the 103d Congress. At that point the House approved a resolution to amend its rules to include much of the language in the bill that had passed in August. Thus, by the time of the Contract and the Republican victory in last year’s elections, both houses and both parties had already done the main work in drafting this legislation and arriving at a consensus.

Why had Congress exempted itself from these laws? Did it try to place itself “above the law,” as critics suggested? In some cases Congress did not apply laws to itself simply because it had no responsibilities in such matters as non-discrimination in elections, public accommodations and public facilities, and disbursement of federal funds. Second, the responsibility for enforcing equal employment opportunity laws is vested in executive agencies, and Congress had a legitimate reason to protect its prerogatives as a separate branch. It did not want the Justice Department or some other agency supervising its offices. Hence the series of incremental and cautious steps taken by Congress before the Contract. The bill signed into law by Clinton avoids separation of power problems by creating an Office of Compliance outside the executive branch to oversee congressional adherence to workplace laws.

2.

Press accounts suggested that the unfunded mandates law, signed by Clinton on March 22, would do away with the federal government’s practice of ordering states to meet national standards while not providing federal funds. Clinton reinforced that impression when he signed the legislation. He said that when he took office there were at least 172 separate pieces of legislation that imposed federal requirements on state and local government. “After today,” he said, “this should stop.”

But the unfunded mandates law does not stop unfunded mandates. As Clinton later noted, the bill simply requires the Congressional Budget Office to flag any bill that creates an unfunded mandate of $50 million or higher on the states and $100 million or higher on the private sector. On the basis of CBO estimates a member of Congress may make a point of order against these mandates, but the point of order can be overridden by simple majority vote. The proposals by some legislators that a point of order could be waived only by a large majority (such as three fifths) were defeated. As enacted, the bill sends a cautionary signal to Congress and probably requires it to engage in serious debate on issues of federalism before it overcomes a point of order. It may make Congress more sensitive and responsive to the issue of unfunded mandates, but the mandates remain permissible.

The bill that Clinton signed, moreover, exempts a number of matters that account for most unfunded mandates. Senate hearings in 1994 clearly revealed that governors and mayors were not eager to challenge unfunded mandates dealing with civil rights and the disabled. The bill exempts any legislation that “establishes or enforces any statutory rights that prohibit discrimination on the basis of race, color, religion, sex, national origin, age, handicap, or disability.” Many of the mandates that Congress imposed on states and local governments during the 1980s consisted of these anti-discrimination laws.

Also exempted is any legislation dealing with the “constitutional rights of individuals.” That would cover statutes passed to enforce the Fourteenth and Fifteenth amendments (for example, the Voting Rights Act). Further exemptions apply to any bill “necessary for the national security” (however that is defined) and any bill that the president designates as “emergency legislation and that the Congress so designates in statute.” Another exemption applies to situations where the federal government offers money to the states only if certain conditions are accepted. These programs are voluntary, not mandatory. If states object to the condition, they don’t have to participate (and they don’t get the funds). Also exempted is the politically explosive social security program.

Like the congressional accountability statute, the unfunded mandates bill reflects bipartisan action in the 103d Congress. Both houses, with the support of Democrats and Republicans, moved this legislation along and developed the basic principles. But the Republicans deserve credit for pushing both bills—congressional accountability and unfunded mandates—through Congress and enacting them into law.

3.

As part of the Contract, the Republicans produced a draft National Security Act that required advance congressional approval whenever the president enters into “special agreements” with the UN Security Council to provide US troops for UN military actions. Special agreements describe the type of forces the US will make available. The draft bill also specified that Department of Defense funds could be used for UN peace-keeping operations “only to the extent that Congress has by law specifically made those funds available for such purposes.”

When this bill passed the House on February 16, it stated that any special agreement “shall not be effective unless approved by the Congress by law.” Does this prohibit unilateral military commitments by the president? It does not. The requirement for congressional approval applies only to special agreements to provide forces for UN action, and no president has ever entered into those arrangements. The new National Security Act reflects language in the UN Participation Act of 1945, which provides that any special agreement “shall be subject to the approval of the Congress by appropriate Act or joint resolution.” But the UN Participation Act did not prevent President Truman from sending US forces into Korea in 1950, supposedly under the authority of the UN, without seeking the approval of Congress. Truman circumvented the 1945 statute because he never entered into a special agreement. Clinton was ready last year to invade Haiti—again on the basis of a Security Council resolution—without ever considering it necessary to make a special agreement or seek congressional approval.

Presidents can easily evade the language in the new National Security Act regarding special agreements. The Republicans, however, took significant action this year in responding to Clinton’s request for $2.5 billion in supplemental funds for the Defense Department. His request covered peace-keeping, peace enforcement, and humanitarian assistance “in and around” Somalia, Rwanda, Iraq, Bosnia, Haiti, Cuba, and Korea. Several of those operations, as with Rwanda, Bosnia, and Haiti, were taken unilaterally by the Clinton administration without seeking congressional approval. Some of them, as with Haiti, were taken in the face of active congressional opposition by members from both parties.

The Republicans provided Clinton with the supplemental funds, but only at a cost. The supplemental bill required “rescissions”—cancellations of funds previously appropriated to the Pentagon—to offset the new funds. Moreover, the conference report on this bill noted that the missions involving Somalia, Rwanda, Haiti, and refugee relief in the Caribbean “all mark significant departures from previous emergency deployments of American forces.” Of course other presidents have deployed military forces without congressional authority, as with the Grenada invasion, for example, but the level of such activity sponsored by Clinton in his first two years was remarkable. The conferees stated their “strong belief” that military deployments in support of peace-keeping or humanitarian objectives “both merit and require advance approval by the Congress.”

4.

The “item veto” bill sped through Congress this year, apparently with scarcely any public understanding of its actual effect. Many citizens likely thought that this reform would permit the president to strike items from a bill and return them to Congress for a possible override. The rest of the bill would become law. That is the way the item veto works in many states. It is not the procedure included in the bills passed by the House and the Senate.

Public confusion was promoted during the administration of Ronald Reagan, who repeatedly called for an item veto. In his State of the Union Address in January 1988, he said that with an item veto he could have deleted “millions for items such as cranberry research, blueberry research, the study of crawfish, and the commercialization of wild flowers.” This was a false claim. Reagan could not have eliminated those programs—even with an item veto—for the simple reason that they were not identified in the bill sent to him. They were mentioned only in the conference report and other parts of the legislative record. If bills are not itemized, items cannot be vetoed. That elementary point is often overlooked.

The Contract “item veto” does not provide for an item veto. If either the House or the Senate version, or some combination of the two, is enacted, President Clinton will have the same choice that he and other presidents have had in the past: either sign the whole bill or veto the whole bill. There would be no opportunity to pick and choose. Allowing the president to disapprove individual provisions of a bill would violate the procedures established in the Constitution. Every president, from George Washington on, has recognized that the veto applies to an entire bill, not parts of it. President George Bush toyed with the possibility of an “inherent item veto,” an idea promoted by The Wall Street Journal. According to that theory, presidents already have an item veto and do not need further statutory or constitutional authority. However, during the campaign in 1992, Bush conceded on the basis of legal advice from Attorney General William Barr and White House Counsel C. Boyden Gray that no such authority exists.

Republicans had to come up with an “item veto” that did not violate the bill-passing procedures set forth in the Constitution. The book Contract With America describes the alternative clearly. After a bill becomes law, presidents would recommend rescissions—canceling funds already appropriated. Those proposals would become law within twenty days unless Congress disapproved by bill or joint resolution. If the president vetoed the disapproval bill, Congress would need a two thirds majority in each house to override the veto. This version (“enhanced rescission”) shifts substantial power from Congress to the president. It passed the House in February.

The Senate debated two rescission proposals. Senator John McCain advocated the House version: enhanced rescission. Senator Pete Domenici supported a change that would not surrender so much legislative power. His proposal (“expedited rescission”) would force at least one house of Congress to consider and vote on a president’s recommendation. (The existing process allows Congress to ignore presidential requests.) The committees of jurisdiction—Senate Budget and Senate Governmental Affairs—could not decide which version to recommend. It looked like the McCain and Domenici bills would go to the floor and be fought over until one prevailed.

Just as that was about to happen the balanced budget amendment went down to defeat in the Senate, falling short by a single vote because of Senator Mark Hatfield’s opposition. A few Republicans threatened some kind of punishment for his defection from party ranks. Comparisons were drawn between Speaker Newt Gingrich’s ability to move the Contract speedily through the House and the difficulty that Bob Dole, as majority leader, had in controlling the senators. About to announce for the presidency, Dole did not want another bloody conflict among Republicans. Both item-veto bills were yanked in favor of a substitute that had been considered and rejected ten years ago: separate enrollment.

Separate enrollment, if enacted, would convert the present thirteen appropriations bills into about ten thousand bills. The committee report by Senate Governmental Affairs patiently and painstakingly explained that the itemization of bills at the state level ($2,000 for this, $2,500 for that) makes no sense at the federal level. Congress passes lump-sum appropriations to give agencies greater latitude to move money around in the middle of a fiscal year to respond to changing circumstances.

With separate enrollment, a clerk would take an appropriations bill after it had passed both houses and break it into separate paragraphs, sections, and numbers, with each part made into a bill and presented to the president. This procedure would yield thousands and thousands of bills, restricting agencies to comparatively small amounts and preventing them from shifting funds over the course of a fiscal year.

When a bill passes both houses in different forms, conferees are appointed quickly to work out a compromise. Republicans have been slow to go to conference on the two item-veto bills. They might be reluctant to give Clinton any version of item-veto authority for fear that he would use it in a political, partisan way (which is what he, or any other president, would do). If the item-veto bills remain stalled, Clinton may well ask: “What is going on? I asked for an item veto. You, the Republicans, said it was important to eliminate wasteful projects and reduce the federal deficit. Why haven’t you gone to conference to provide that authority for me?” Clinton contributes to public confusion and misconceptions by constantly asking for the “strongest possible item veto,” when he knows that the versions being considered have nothing to do with a true item veto.

5.

The Contract calls for a balanced budget amendment to hold Congress accountable and responsible. “Just as every American sits at the kitchen table and balances his or her budget, just as every small business must balance its budget, Congress must begin balancing our nation’s budget—now.” The amendment easily passed the House but fell one vote short in the Senate.

The analogy to household and business budgets points to a misconception. In each case there may well be a “balanced budget” and yet households and businesses also run deficits: home mortgages and other loans for households, investment loans for businesses. It is often said that states balance their budgets, and yet state constitutions typically authorize states to borrow money for highway construction, sewage projects, education, pension benefits, and capital activities such as housing and hospitals. States, in fact, have two budgets: an operating budget that is in balance, and a capital budget that is not. The size of the state budget that is actually balanced ranges from 40 to 60 percent of the total budget.

A decision by the Wisconsin Supreme Court in 1991 explains why state balanced-budget requirements can coexist so comfortably with a steady climb in state and local debt. The history of Wisconsin, said the court, “manifests both an abhorrence of public debt and a willingness to increase the debt limit, particularly for school purposes.” Citizens want it both ways.

The national government confronts the same political incoherence. One way or another, requirements for a balanced budget will make room for more indebtedness. A balanced budget at the federal level cannot end federal borrowing so long as citizens simultaneously call for a balanced budget, continued appropriations for services and benefits at roughly the same level, and tax cuts. Consider two major budgetary developments since last year’s election. Both President Clinton and House Republicans have called for tax cuts, and President Clinton has asked for an additional $25 billion for defense. These proposals are wildly incongruent with public demands for a balanced budget.

Members of Congress will reconcile these conflicting signals by turning to various accounting techniques that have the effect of disguising the real debt. Placing a large part of the deficit in a “capital budget” is one tempting remedy. The same political forces producing federal deficits today will produce federal deficits tomorrow, with or without an amendment, until constituents are told bluntly by political leaders that they must pay for government services they receive. Neither party has engaged in a candid dialogue with voters.

For several decades presidents have emphasized the need for a balanced budget and advocated a constitutional amendment to require it. Yet at any time presidents could have submitted a balanced budget, and they never did. The power to balance the budget was always in their hands. They chose, instead, to lecture and declaim while the crisis deepened. The total national debt in 1981 (accumulated since 1789) was one trillion dollars. By the time Reagan left office the national debt had tripled. Bush contributed another trillion to the debt during his four years, and a like amount will be added by Clinton, bringing the debt to $5 trillion. The only branch willing to do anything about the problem was Congress, Republicans and Democrats acting together. But the public continues to think of presidents as more concerned about the deficit than Congress. The record is otherwise.

This year Congress is once again taking the lead. Clinton’s budget called for deficits of $200 billion annually for the next five years; basically, he turned the problem over to the Republicans. The House and the Senate Budget Committees reported budget resolutions designed to balance the budget by fiscal year 2002. Heavy cuts are involved, especially in the Medicare and Medicaid programs. The House plan also includes a $354 billion tax-cut package, while the Senate Budget Committee opposes a tax cut but leaves open the possibility of one if certain conditions are met. A decision to go after Medicare, Medicaid, and other mandatory (entitlement) programs is essential if Congress wants to make any headway with the deficit. Discretionary programs, including defense, account for only about one third of federal spending.

The Clinton administration accuses Republicans of rewarding the rich with a tax cut and punishing the poor by cutting public housing, medical assistance, and other domestic programs. The fairness of these budgetary changes is a valid issue, but President Clinton failed to address the seriousness of the deficit in his budget and is now in the position of having to react rather than lead.

6.

The Contract sought to protect private property owners by compensating them for all but very small reductions in the value of their property that were caused by governmental regulation. The draft bill provided that a private property owner “is entitled” to receive compensation and the head of an agency “shall pay” a private property owner any compensation required. The Republican legislation had in mind losses that occur, for example, when a farmer is ordered to stop farming because an endangered species is discovered on his land or his acreage is declared a wetland.

However, when it became apparent that full compensation for such losses would add heavily to the budget deficit, the Republicans moderated the bill by removing the concept of an entitlement. The private property bill, as passed by the House, states that the federal government “shall” compensate anyone whose private property has been diminished in value by at least twenty percent. If the Republicans wanted to assure compensation they would have given citizens access to the existing “Judgment Fund,” an inexhaustible source of funds because it is permanent and indefinite in amount. The original bill threatened to expose the federal government to billions of dollars in claims, colliding with another element of the Contract: the balanced budget amendment.

The Republicans sharply limited the private property bill in scope and procedure. No compensation shall be made if an agency’s primary purpose is to prevent an identifiable hazard to public health or safety, or if the owner’s proposed use of his land would have been a nuisance. The result of these limitations is that, for federal activities covered by the bill—chiefly, protecting endangered species and regulating wetlands—the procedures may not yield any funds to a claimant. If a citizen presents a claim to the agency responsible for diminishing the value of the property, the agency can pay the amount and seek reimbursement from another agency that shares responsibility. Agency heads may transfer funds between appropriations accounts or reprogram funds within an account to make payment. But if the agency says it has no money to pay the claim, the only obligation at that point is for the head of the agency to ask Congress for an appropriation. Congress has no obligation (except perhaps a moral one) to appropriate anything. It is possible for a citizen to jump through a series of procedural hoops—claims presented to the agency, arbitration, and judgments from district court—and walk away without a penny.

7.

The Contract guaranteed “the first ever vote on a constitutional amendment” to establish term limits for members of Congress. Republicans wanted to put an end to a “lifetime job” for members and convert Congress into a “citizen legislature.” According to the Contract With America book, support for term limits is based partly on a grass-roots belief that “Washington is simply out of touch with middle America,” and that “an entrenched body of politicians” was responsible for deficit spending and political scandals. The punitive spirit behind the proposal is reflected in the title of a book published last year by John Armor: Why Term Limits? Because They Have It Coming!³

The Contract anticipated a vote on two competing types of term limits: one to limit the terms of representatives to six years and senators to twelve, the other to impose limits of twelve years for both chambers. Although the idea of term limits seems simple enough, legislative debate exposed a number of fractious issues that eventually drove a wedge in Republican ranks and led to the amendment’s defeat in the House.

If the goal is a legislature of citizens who are not professional politicians, why not a limit on lifetime service? Without that limit, members could serve six or twelve years in the House, step aside for two years, and return for another six or twelve years. Or members could serve six or twelve years in the House, twelve years in the Senate, and presumably return to the House for an additional stint. Members of Congress, facing the end of their congressional career, could run for mayor, governor, and other public offices. Term limits would not guarantee public service by non-professional citizen legislators.

When the term-limit amendment was reported from the House Judiciary Committee (without recommendation), it did not establish a lifetime limit. Instead, anyone elected for a full term to the Senate “two consecutive times” would be ineligible for election or appointment for a third consecutive term. The same principle applied to the House. No person elected for a full term six consecutive times would be eligible for a seventh consecutive term. A break in service would allow the same person to run again.

Instead of debating the House Judiciary version, the House members shifted the attention to efforts to impose lifetime limits. By a vote of 114 to 316, the House defeated an amendment to restrict lifetime service of representatives to six years and senators to twelve. Another lifetime amendment (twelve years for both chambers) was rejected, 164 to 265. The basic Republican amendment—imposing a lifetime limit of twelve years for both houses—lost on a vote of 227 to 204 (a two thirds majority being required for a constitutional amendment).

Another issue concerned whether term limits should be merely prospective or also retroactive. If service in Congress has a corrupting effect, why shouldn’t term limits apply to prior service? If the principle of term limits is to be consistent, current members who have already served twelve years should not be allowed to run again. Advocates of term limits argued that it is unfair to change the rules in the middle of the game for existing lawmakers, but the general theory of term limits would seem to prohibit extended service for anyone. An amendment to make term limits retroactive was rejected, 135 to 297.

Public support for term limits appeared to ignore its effect on the constitutional balance between the executive and legislative branches. Turning members of Congress into citizen legislators would give them little stake in protecting legislative interests, and it would weaken their power to protect those interests even if they wanted to. Power would flow from Congress to the White House and to members of the career bureaucracy. Congressman Henry Hyde, Republican from Illinois and chairman of the House Judiciary Committee, broke with his party on this issue, saying, “I just cannot be an accessory to the dumbing down of democracy.”

With Congress weakened in relation to the executive branch, lawmakers would become more, not less, dependent on the expertise eagerly offered by interest groups. Far from eliminating corruption, term limits may well exacerbate the problem. Unable to look forward to a career in Congress, some legislators might view lobbyists not merely as sources of information but as potential employers. Tony Beilenson, Democrat from California, said that because of the six-year term limit in that state, “legislators come into office looking for ways to use their short stint to make their next career move.” Many left after three or four years to take jobs in the industries they had been overseeing as legislators.

The Supreme Court’s decision on May 22 striking down an amendment to the Arkansas constitution limiting members of the US Congress to three terms in the House of Representatives and two terms in the Senate is not the last word on the issue. The Court held, five to four, that the Arkansas amendment violates the US Constitution because it adds to the qualifications established for members of the national legislature. Clearly Congress, if it wants to set term limits, can pass a constitutional amendment and then urge three fourths of the states to ratify the amendment. The close vote of the Court might be used to justify action by constitutional amendment, although the basic principle announced in the ruling casts a shadow not only over efforts by states to set term limits but national efforts as well. The Court found term limits antithetical to the fundamental principle of a representative democracy “that the people should choose whom they please to govern them.”

The steady government-bashing in recent years has taken its toll, making government weaker, not stronger, rendering it more contemptible, not less. Jimmy Carter spent four years attacking Congress and the bureaucracy. Ronald Reagan pursued the same theme for the next eight years. Now we have Congress systematically castigating itself. Little wonder that the public is disgusted with government.

Although the Contract is intended to make legislators more responsible, some of its elements have the cumulative effect of downgrading Congress. The arguments for a balanced budget amendment, the item veto, and term limits all emphasize the same general and corrosive theme. Proponents of these measures claim that we need a balanced budget amendment, enforced by the president and the courts, in order to check congressional extravagance; an item veto must be given to the president to eliminate legislative “pork” and waste; term limits are required to constantly expel members corrupted by long service.

The underlying message is that citizens cannot trust Congress and Congress cannot trust itself. It must therefore surrender its constitutional duties and powers to the president and the courts. How long will it be before the citizens are disenchanted with those branches as well and claims become louder that they are not responsible or accountable either? As the reputations of all three branches are progressively discredited, citizens may well wonder where next to turn. What will be left?