How 'Gang of Six' Fashions a Budget

In basement hideaway, White House and GOP negotiators draft deal affecting every wallet.

They met almost daily for weeks in Sen. Pete Domenici's "hideaway" basement office a few steps from the Capitol carpentry and electrical shops. Although other players came and went, six men are responsible for negotiating the future of America's federal government: how large it will be, how much it will tax, and which services it will provide.

While a deal was close on Thursday, the process used in this year's negotiations has drawn both criticism and approbation. Still, by recent historical measures, the negotiation moved quickly. One reason, according to those close the talks, is the personalities involved and the changed political backdrop since November.

"It's kind of hard not to get along with Pete Domenici and John Kasich," says a Republican Senate source. Representative Kasich, the energetic GOP House Budget Committee chairman from Ohio, has developed a father-son (or, as Domenici prefers, a big-brother, little-brother) relationship with Senator Domenici.

Domenici, considered as earnest as Kasich is brash, is a Republican veteran of 2-1/2 decades of budget wars. The senator from New Mexico - chairman of the Senate Budget Committee - and his staff are widely regarded as Congress's top budget experts.

A deficit hawk, Domenici has always placed balancing the budget ahead of cutting taxes, to the dismay of GOP supply-siders, who say a tax cut is needed to boost the economy and raise workers' wages.

But Domenici clearly went into the negotiations intent on a deal. And for that he wins praise from White House negotiators. "[He] would say: 'Now everybody who comes into this room ought to understand this is a bipartisan budget agreement. So if you're interested in getting everything you want you shouldn't be in this room,'" says Gene Sperling, President Clinton's economics chief.

The director of the National Economic Council, Mr. Sperling has been with President Clinton since the 1992 campaign. He is considered one of the administration's top experts on government finance.

Similarly, many Hill Republicans say the president's negotiating team was much easier to deal with this time around.

They especially praise White House chief of staff Erskine Bowles, whom they compare favorably to his predecessor, former Rep. Leon Panetta of California. "Bowles is a much more pragmatic guy," the Senate source says. "He's a less partisan guy, looking to balance the budget instead of scoring political points."

While the broad outlines of the budget plan have been known since May 2, the negotiators have been trying to flesh out the details ever since - and it wasn't easy.

"They are continuing to want to spend more, and we continue to want to restrain spending. That is the crux of the battle," says Senate majority leader Trent Lott.

Many say the negotiators jumped the gun in publicizing the deal. "There was euphoria on both sides," says Senate minority leader Tom Daschle says. "We probably should have taken a couple of days, let the dust settle, and made the announcement."

But Mr. Sperling defends the announcement: "By May 2 there had been agreement on all the major issues, enough so that the president and the congressional leadership felt they could shake hands on a deal."

The budget deal calls for ending the deficit by 2002 and for net tax cuts of $85 billion. Besides the president's education tax credits, it calls for cuts in capital-gains and estate taxes and a per-child tax credit for families. It trims $115 billion from Medicare growth but provides $31 billion in new domestic spending such as health-care insurance for poor children. The deal reportedly predicts deficits rising for the next three years and falling in 2001 and 2002.

By yesterday morning, the negotiating team was down to seven to 12 unresolved items. The negotiators were scrambling to complete two documents: a memorandum detailing spending agreements and a letter to Mr. Clinton from Senator Lott and Speaker Newt Gingrich affirming their commitment to give Clinton his cherished $35 billion in tax cuts for education.

The team that put the deal together included the chairmen and ranking members of the congressional budget committees - Domenici, Sen. Frank Lautenberg (D) of New Jersey, Kasich, Rep. John Spratt (D) of South Carolina - and Franklin Raines and Sperling, representing President Clinton. Joining them most often was John Hilley, the president's director of congressional liaison. Backing them up were Lott, Gingrich, Senate Daschle of South Dakota, House minority leader Richard Gephardt of Missouri, Mr. Bowles, and, of course, the president.

"As the weeks went by ... it became clear that both sides were dealing in good faith, that there was an absence of posturing, an absence of backbiting, an absence of leaks," says Sperling. "It allowed ... a more honest communication and trust in the room that allowed [us] to get this agreement."

Now begins the next phase:getting the deal through Congress. Leaders hope to have a budget resolution on the floor of both houses early next week. Then the tax and appropriations committees go to work.

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