This summer, the famous Contract With America that swept Republicans into power in Congress in January 1995 turns ten years old. The contract was a bold and sweeping agenda to change the way government works in Washington. It included 10 major provisions, including welfare reform, rules to force Congress to live under the same laws as the rest of us, term limits, tax cuts, and, most importantly, budget reduction. In the memorable words of Newt Gingrich, the Republican revolutionary who inspired and led the Contract With America Revolution, Republicans were going to make government “smaller and smarter. We are going to prove that we can get rid of programs, not just start them.” That was a promise that was highly appealing to voters as the federal budget under Clinton approached $2 trillion in size. I will never forget when I first heard of the Contract With America. My boss at that time, Rep. Dick Armey (R.-Tex.), the second in command in the House among Republicans, told me that this was going to be a pledge-filled document that would sweep Republicans into the majority in the House for the first time in 40 years. Misreading History I had a hard time not laughing in my boss’s face. The idea of a Republican majority in the House seemed as improbable as my beloved Cubs winning the World Series: something that would not happen again in the 20th Century. But I got to work helping construct the taxing and spending pillars of the Contract. I joked later with Armey that if I had known the Republicans were going to really win the House, I would have taken the contract more seriously. He wryly replied that if his colleagues had really believed that the GOP would take the House, they would never have signed the Contract With America. It is chic these days to criticize the Contract With America and write it off as a failed revolution. That would be a misreading of history. Much was accomplished of great significance during those first 100 days in 1995. Republicans for the first time did require Congress to live by the rules they impose on the rest of us. Term limits were imposed on committee chairmen. The first steps toward meaningful litigation reform were passed. And perhaps most impressive of all: The budget was balanced, not in seven years, but in less than four years. There were other great triumphs of the new Republican majority back then. Perhaps the biggest of all was strong-arming President Clinton to sign the most historic social legislation of the last 50 years: welfare reform. Since that legislation passed, welfare caseloads have been cut in half and many of those welfare moms are now living productive lives in the workforce. Even in the fight to cut government down to size, there were some early impressive victories. In the first two years of the Gingrich revolution, the federal budget actually was reduced after inflation by 3.5%. The only other two-year period where that happened was in Reagan’s first two years as President. There was clearly a new ethic of fiscal restraint, rather than fiscal expansionism. I was proud to work with the young and energetic Budget Chairman John Kasich (R.-Ohio), who put together the original Contract With America budget in 1995. That was an astonishingly visionary document–something we haven’t seen the likes of ever since. Kasich’s budget slated more than 300 programs for termination. Some of these programs were little more than political slush funds for special interest constituencies–such as the Legal Services Corporation, bilingual education funds, and Bill Clinton’s army of $7.27 Americorps “volunteers.” We were also going to finally defund programs that Reagan had tried, but failed, to kill: the Economic Development Administration, Amtrak operating funds, federal transit grants, the Appalachian Regional Commission, and maritime subsidies. Most impressive of all, the Contract With America budget called for the elimination of three Cabinet agencies: the Departments of Education, Commerce, and Energy. Perhaps Republicans over-promised. But in the end, politics triumphed over good fiscal common sense. Ten years later, most of the useless programs are still flourishing. Here are some disappointing examples:
- The Americorps program has grown by 181% and President Bush wants to expand it further;
- The Department of Education budget has almost tripled in size since 1995.
- The Goals 2000 budget has grown from $231 million to $700 million.
- The bilingual education budget has grown by more than 50%.
- Amtrak subsidies were supposed to be phased out entirely by the year 2000, but this year the railroad asked for a $2 billion bailout, and Congress is likely to grant that request.
A bill to raise the budget for the Peace Corps by 50% over four years passed the House by a margin of 326-90 last year. This prompted a Washington Times headline: “Republicans Retreat from Battle to Shrink the Size of Government.” Most depressing of all is that a budget that reached balance by 1998 and surpluses of $200 billion by 2000 is now $500 billion back in the red. The budget of $1.5 trillion in 1995 will likely reach $2.5 trillion this year. The war against big government was fought–at times valiantly–but eventually lost. Wealth and Prosperity What lessons can be learned from the Contract With America? First, this was an initiative, despite its failures, that launched one of the most radical and successful political reform eras in American history. Welfare reform, the balanced budget, the capital gains tax cut, the new ethics laws imposed on politicians, and the clean-up of the corruption and corrupt practices in Congress were true victories for the conservative movement. In many ways, the Newt Gingrich-Dick Armey led revolution helped bring the Reagan Revolution to its beneficial conclusion. The economy roared back to life on almost the very day that the Republicans were elected into the majority. In November of 1994, the Dow Jones Industrial average stood at about 3,000. By the year 2000, the Dow stood at 10,000. This was a period of unparalleled wealth creation and prosperity. Whatever the Republicans did; the bulls in the financial markets clamored their approval. But one lesson of the Contract With America is that revolutions in America are short-lived. Reformers come in and change the course of government, but it isn’t long before the forces of inertia overwhelm the change agents. That is what happened to the Gingrich Republicans. It is what happened to Ronald Reagan, who accomplished all his major economic victories in the first two years of his administration. Some critics look back and say that Republicans tried to do too much, too quickly. That’s 100% wrong. The window of political opportunity shuts rapidly. Best to do as much as you can while you have the other team in disarray. I have often argued that the two most important elections in the past 50 years were the election of 1980 that gave us Reagan, and the election of 1994 that put reformist Republicans in charge of Congress. The Gingrich Republicans were a heroic bunch. They did a great service in turning our economy and our government around after two years of the totally dimwitted tax and spend policies of Clintonomics. The Contract With America contained policy changes of great consequence. The tragedy is that today many of those same Republicans who led the Contract With America siege on Washington have settled into power, have become overly-comfortable with their perches of authority, and have in some ways become mirror images of what they replaced. The Republicans are now spending more money than even the Democrats did when they ran Capitol Hill. Republicans seem to have forgotten who they are, and why voters put them there. Perhaps it is time for conservatives to start plotting the next revolution.