The Frustration of Reform

excerpted from the book

The Paradox of American Democracy

by John B. Judis

Routledge Press, 2001, paper

p203
The New Liberal Elites

Two groups of policy elites played a critical role in defining Clinton's initial agenda. One was the Democratic Leadership Council (DLC), which was founded in 1985 to move the party away from what it called "liberal fundamentalism." The other was a loosely defined collection of intellectuals who had been reformers rather than revolutionaries during the late sixties and who had spent fifteen years trying to recast the liberal agenda. Clinton had close ties to both groups. He had been a founding member of the DLC and was its president in I990 and I99I. He and his wife, Hillary Rodham Clinton, were charter members of the post-new left intelligentsia, many of whom he had met when he was a Rhodes Scholar, a Yale Law School student, or a worker on McGovern's presidential campaign in I972.

The DLC was started by Al From, a young political operative who had been director of the House Democratic Caucus during Reagan's first term. From was a protégé of Senator Edmund Muskie, whom he backed for president in I972, and of Bob Strauss, with whom he worked in the Carter White House. After Walter Mondale's landslide defeat in I984, From became convinced that the Democratic Party had to move to the center by distancing itself from the AFL-CIO, the National Organization for Women, Jesse Jackson's Rainbow Coalition, and other liberal groups that had dominated the Democratic National Committee and set the tone for national campaigns. With help from Strauss (who raised much of the initial money), Senator Sam Nunn, and Virginia Governor Chuck Robb, From established the DLC with himself as executive director and Will Marshall, who had worked with From on Capitol Hill, as the policy director. In the first year, 110 politicians signed up, including Congressmen Dick Gephardt and Al Gore, Arizona Governor Bruce Babbitt, Delaware Senator Joe Biden, and Clinton, all of whom would later run for president.

The DLC began as a factional group within the Democratic Party. At the outset, many of its proposals, such as the creation of "Super Tuesday" presidential primaries in the South, were designed to enable someone like Robb to capture the Democratic presidential election, but after Bush defeated Dukakis in I988, From and Marshall established a research organization, the Progressive Policy Institute, to develop a platform for a Democratic candidate to run on. The DLC and PPI produced a hybrid of positions. Some-intended to "inoculate" Democrats against Republican attacks by moving the party to the center on capital punishment, affirmative action, and other hot-button issues-were purely tactical; some positions on trade and statements on labor unions mimicked Reagan conservatism; but other PPI stances broke new ground for liberalism.

From and Marshall promoted a national service program-originally developed by Northwestern University sociologist Charles Moskos-that would require young people who wanted student loans to serve in either the armed forces or a new citizens corps that would assist the poor and help in state conservation efforts. The DLC evoked John Kennedy's nationalism-"Ask not what your country can do for you, but what you can do for your country"-in presenting this proposals From and Marshall also unveiled a welfare reform plan based on the concept of "mutual obligation." After two years, welfare recipients would be given a choice between taking a private sector job or enrolling in the national service corps. It also championed a new strategy of "reinventing government" developed by policy intellectual David Osborne that was intended to defend government's historic role by improving its efficiency. Its central idea was summed up in the slogan that government should "steer, not row." With these efforts, the DLC was trying to counter the individualism of the Reagan era with a communitarian and nationalist politics that recalled, but also went beyond, the politics of the early I960s.

The other key group consisted of liberal intellectuals who had worked together in different commissions and campaigns and had written for the same publications, and who were attempting to develop a new politics that took account of the post-Bretton Woods world economy. They included academics (Robert Reich, Derek Shearer, and Laura Tyson), lawyers (Mickey Kantor, Harold Ickes, and Susan Thomases), businessmen and business consultants (Ira Magaziner and Eli Segal), and journalists (Strobe Talbott, Robert Kuttner, and Sidney Blumenthal). Many of them had attended the annual Conference on Alternative State and Local Politics in the I9705 or had served on the two Cuomo Commissions during the late I9805. They had read and written for working Papers, The Washington Monthly, The New Republic, and The American Prospect. And they had worked on the Hart, Mondale, Dukakis, and Jackson campaigns.

They had been part of the sixties new left, but sought reform rather than "revolution now." They were much closer to the sunny utopianism of early SDS, the Kennedy administration, and Martin Luther King's "I have a dream" speech than to the dark apocalyptic spirit of Weatherman and the Black Panther Party. They had opposed the Vietnam War because they thought it violated America's democratic mission in the world. Some of them initially thought of themselves as socialists, but they eventually became progressive elites in the tradition of Croly, Lippmann, Frankfurter, Tugwell, Arthur Schlesinger, Jr., and Nader. They believed that through the application of social science they could devise programs that would solve the country's deepest problems. They believed in government and what Reich called the "power of public ideas." They differed from the progressives and New Dealers primarily in their social and political priorities. They had come of age during the sixties, when the "labor question" ceased to preoccupy the nation's intellectual and political leaders. Instead, their framework was shaped primarily by the civil rights, antiwar, feminist, consumer, and environmental movements.

Like Nader, they wanted to create democratic structures that checked the power of corporations. Indeed, many of them, like Derek Shearer, got their start working for Nader. They shared the utopian impulse of the early new left, typified by "The Triple Revolution." They believed that through government planning, people could solve the major problems of society-from access to health care to the competitiveness of American businesses. Shearer advocated European-style planning, while Reich and Magaziner embraced an "industrial policy" and later a "national economic strategy" that was borrowed from Japan's MITI. They were internationalists who believed that the United States benefited from the elimination of trade barriers, but they fretted that under the mantle of free trade, multinational corporations were forcing down wages and environmental standards.

The leading figure was Robert Reich. Reich had been on the respectable fringe of the antiwar movement, working in I968 in Eugene McCarthy's presidential campaign. When he came back from Oxford as a Rhodes Scholar in I97I, he told a reporter that European-style democratic socialism was "inevitable" for the United States. But his thinking evolved into a much more typically American, and progressive, mixture of public regulation and private initiative. What became most important to Reich was using the power of government to subject the private market to overall public direction.

In Minding America's Business, written with Ira Magaziner in I98I, Reich proposed putting federal research and development funding, antitrust policy, and trade relief under a new agency that would coordinate federal policy to improve industries' competitiveness. This agency would use the promise of subsidies and trade and antitrust relief to exact changes in behavior from industry. Ten years later, Reich was still worried about competitiveness, but he now had a different take on how the United States could adjust to post-Bretton Woods international capitalism. In The work of Nations, Reich argued that because of the ability of corporations to transfer operations wherever they pleased, there would soon be no such thing as a "national corporation." Government policy, Reich maintained, should be oriented toward making American workers more competitive and therefore able to attract the most profitable enterprises of the future, whatever their national origin:

The real economic challenge facing the United States in the years ahead . . . is to increase the potential value of what its citizens can add to the global economy, by enhancing their skills and capacities and by improving their means of linking those skills and capacities to the world market.

Within this new economy, Reich also worried about the tendency of the new information technology to divide the workers into a "fortunate fifth" that enjoyed its benefits and a mass of lower-paid service workers who lacked health insurance and pensions and access to the kind of worker training that could lift them onto a higher tier. Reich favored public spending within each nation in any manner that enhanced the capacities of its citizens to lead full and productive lives- including pre- and postnatal care, childcare and preschool preparation, excellent primary and secondary education, access to college regardless of financial conditions, training and retraining, and good infrastructure.

He rejected the calls for trade protection and subsidies to specifically American companies, but, echoing Burke-Hartke, he warned against trade agreements that were really designed to speed the flight of capital rather than the sale of goods. "Instead of pushing other nations to open their markets to [investments by] American firms," Reich wrote in The New Republic in I99I, "the U.S. trade representative should insist that foreign nations allow in the work-products of Americans."

By the early I990s a new liberal politics had emerged from these sources: Reich's ideas of a new "positive nationalism" focused on increasing the skills and decreasing the economic insecurity of American workers, the DLC's innovative social policies, Clyde Prestowitz's and John Young's emphasis on increasing American competitiveness, and the programs for national health insurance being pressed by Henry Simmons's Leadership Coalition for Health Care Reform. It was not altogether consistent, but it was a program that addressed both the weaknesses of the older liberalism, with its single-minded emphasis on welfare spending, and the failings of Reagan conservatism, with its blithe acceptance of economic inequality and insecurity.

Clinton's Promise of Reform

Clinton was as much a product of the new left as Reich or Magaziner were. Before he went to Oxford he championed civil rights in Arkansas and worked at Georgetown and in Senator William Fulbright's Washington office to end the war in Vietnam. In the I9705 and 19805, Clinton was a participant in, and not simply an observer of, the debate over industrial policy and national economic strategy. But he was also a Southern politician who had to win reelection in a political environment dominated by Reagan conservatism and a small-state governor who had to cultivate the good will of multinational corporations and Wall Street banks. Throughout his career the two mentalities of progressive reformer and realistic Southern politician vied for supremacy, but during his 1992 campaign and his first year in office the progressive reformer was firmly in command.

Clinton adopted most of the political agenda that the DLC, the post-new left intellectuals, and other dissenters from Reagan conservatism had developed. His campaign pledge to "end welfare as we know it" and his commitment to a communitarian "new covenant" bore the mark of the DLC. His campaign manifesto, Putting People First, was drafted by Magaziner, Reich, and Shearer. Clinton backed both the DLC's citizens corps and welfare reform plan, Simmons's call for national health insurance, and the post-new left intellectuals' approach to worker retraining, trade, and multinational corporations. He supported large increases in public investments on education and infrastructure and called for tax reform that would discourage corporations from awarding CEOs multimillion-dollar salaries. In the months after Clinton's election, it looked as if he was going to lead the country into a major reform era. But Clinton got almost none of the things that he asked for.

Clinton backed off his plan to limit the deductions corporations could take on CEO salaries. He couldn't get Congress to increase public investment. The budget it finally passed provided less for education, bridges, water systems, and other infrastructure than the last Bush budget had projected. Republicans reduced Clinton's plan for a citizens corps to a pilot program-a contradiction in terms for a program intended to unify the national community, not to reward a few ambitious teenagers. The administration fared no better in attempting to amend the North American Free Trade Agreement (NAFTA), and in getting Congress to vote on, let alone adopt, its health care plan. In each case, the reason for defeat was the same. Business lobbyists and conservative Republicans were able to draw off enough moderate Democrats to undermine Clinton's agenda. With some programs, like Reich's plan to finance worker retraining from corporate payroll taxes, business opposition was so adamant that the administration backed off even before Clinton was inaugurated. But the most telling defeats were on NAFTA and the health insurance program.

... Clinton s health care program epitomized the progressive impulse of the new administration. Hillary Rodham Clinton, who was put in charge of the plan, called it "the Social Security Act of this generation, the reform that would establish the identity of the Democratic Party and be the defining legislation for generations to come." The plan, modeled on a proposal from Paul Starr, a Princeton sociologist and co-editor of The American Prospect, and Walter Zelman, an aide to California insurance commissioner John Garamendi, set up government-regulated state and local health alliances that would negotiate costs and quality of service with a limited number of managed care plans and HMOs. Americans would automatically belong to an alliance and could choose one of these plans through the alliance. The alliance would also offer a regular fee-for-service alternative. The Starr-Zelman plan built upon the existing American system of health care, but it provided both universal access and the power to control costs and ensure quality.

Since the mid-I980s, support for a national health insurance plan had been growing. When Clinton announced his plan in September I993, a Washington Post/ABC poll found that 67 percent supported it and only 20 percent were opposed: The New York Times declared the plan was "alive on arrival." After Hillary Rodham Clinton had appeared on Capitol Hill to present the plan, Republican Senator John Danforth declared categorically, "We will pass a law next year." Under the leadership of SEIU's John Sweeney, the unions in the AFL-CIO resolved their differences over the various plans and agreed to back Clinton's. Businesses that were part of Simmons's National Leadership Coalition, including the major auto companies, backed the Clinton plan. More important, the NAM, the Business Roundtable, and the Chamber of Commerce were meeting regularly with Magaziner and other administration officials to iron out disagreements over the plan. The Chamber, led by Robert Patricelli, the CEO of a Connecticut health benefits management company and the chairman of the Chamber's Health Committee, had declared "that all employers should provide and help pay for insurance on a phased-in basis." The Clinton plan looked as if it couldn't possibly lose. Yet by the end of February I994, barely five months after Clinton introduced his plan, it was dead and buried, and no health care reform plan would pass Congress that year or even be voted upon.

What happened was that the ideal of dramatic, systematic economic reform that the bill represented-reform that would permanently alter the structure of authority in health care delivery and redistribute income downward-ran up against the reality of political and interest group power. The advocates of reform discovered that while the Reagan revolution was, indeed, over, the old alliance between conservatives and the business lobbies of K Street could still be revived-not as a governing coalition, but as a powerful veto against an ambitious program of reform.

The defeat of Clinton's health care plan was sparked by conservative political operatives and politicians who had little knowledge of or interest in health care legislation, but who feared that through the passing of health care reform, Clinton would create a lasting Democratic majority. The plan was also killed by the efforts of businesses that were directly threatened by health care reform. These included small family-owned businesses that did not provide their employees with health care, small health insurance providers that under the Clinton plan would be squeezed out by the larger, more cost-efficient firms, and corporations that owned subsidiaries that did not provide health insurance for their employees.

The key political operative in engineering Clinton's defeat was Grover Norquist, a Harvard graduate who, along with other young conservatives, had come to Washington in Reagan's first term to promote conservatism and to make his mark among the rich and powerful. Norquist, after a stint with the College Republicans and the Chamber of Commerce, had formed a lobbying group called Americans for Tax Reform that demanded that candidates take a pledge not to raise taxes. When Clinton was elected, Norquist, worried that the president would be able to consolidate a new Democratic majority through passing national health insurance, began to organize against it. He set up what came to be called the "Wednesday Group"-a collection of fifty or so conservatives who met at his office every Wednesday morning over bagels and coffee to plot the destruction of the Clinton health care bill. They included lobbyists from the Christian Coalition, the National Rifle Association, home schooling organizations, term limits groups, taxpayer and property rights organizations, and also representatives from the American Spectator, Rush Limbaugh's talk show, and other conservative media. Norquist and the Wednesday Group did not have a single grand strategy, but they coordinated their activities against the health care bill through their weekly meetings.

The Wednesday Group was active in pressuring conservative politicians and organizations and legislators to oppose health care reform. They organized a national campaign against the Chamber of Commerce. Norquist enlisted conservative House Republicans to threaten the Chamber. At a Republican meeting in late I993, Ohio Congressman John Boehner told Chamber president Richard Lesher and chief lobbyist William Archey that it was "the Chamber's duty to categorically oppose everything that Clinton was in favor of." Norquist and his network of operatives also attempted to cripple the Clinton administration by spreading rumors of financial and personal wrongdoing.

The American Spectator, the Washington Times, and the Wall Street Journal editorial page (whose chief editorial writer, John Fund, was a close ally of Norquist) repeatedly attacked Clinton for his role in an old Arkansas land deal called Whitewater. The American Spectator published an article alleging that Clinton had used state troopers in Arkansas to solicit sex for himself. Limbaugh promoted the American Spectator articles (its circulation almost tripled that winter) and accused the Clinton administration of covering up aide Vincent Foster's murder. Limbaugh even drew a direct connection between Whitewater and health care:

I think Whitewater is about health care. Most people think that health care is a good idea, but they haven't read the plan. They're taking the President's word for it. Now . . . if people are going to base their support for the plan on whether they can take his word, I think it's fair to examine whether or not he keeps his word.

These attacks, which recalled the scurrilous Republican attacks against the New Deal in the late I9305, diverted the Clinton White House during the crucial winter months when it should have been persuading the public of the merits of its health care plan. They also rallied the right to oppose the Clinton plan and sowed doubts in the public mind about the administration's integrity and effectiveness.

The two most important business groups that opposed the Clinton health bill were the National Federation of Independent Business (NFIB) and the Health Insurance Association of America (HIAA). Founded in San Mateo in I943, the NFIB had long been the kid brother to the U.S. Chamber of Commerce. It was composed of pizza-store owners, service station operators, and other proprietors of small, unincorporated businesses. In the early I9905 it had about three times as many members as the Chamber of Commerce-600,000 versus 220,000-but a fraction of the dues. The Clinton health care reform provided the organization with a new opening to gain influence and represent its members, who were adamantly opposed to any employer-mandated health insurance. The NFIB threw its resources into lobbying Democratic and Republican House members who were uncomfortable with the Clinton plan but willing to back a compromise.

The NFIB joined a coalition organized by another organization, Citizens for a Sound Economy, and coordinated on Capitol Hill by Georgia senator and former insurance executive Paul Coverdell. This coalition included the National American Wholesale Grocers Association, the National Retailers Federation, and businesses like General Mills that had subsidiaries that didn't provide health insurance to their employees. The coalition also included the HIAA, the health insurance lobby that was unequivocally opposed to the Clinton plan. The HIAA spent X50 million trying to defeat the Clinton plan. It set up a dubious organization called the Coalition for Health Insurance Choices that hired organizers to pressure House members in their districts and spent about $I5 million on a series of national television commercials that featured two characters named "Harry" and "Louise." The commercials depicted a couple worrying that the Clinton plan would deprive them of a choice of doctor by putting the government in charge of health care. The commercials were highly misleading. Americans were already losing their choice of doctor because of the growth of managed care within the private health industry. But they struck a chord among the public, which was wary of a new government bureaucracy, and helped to precipitate a sharp decline in the Clinton plan's popularity. The Gallup Poll found that from September 24, I993, to February 26, I994, Americans in favor of Clinton's plan fell from 59 to 46 percent, while those opposed rose from 33 to 48 percent.

If the corporate executives that had backed universal health insurance had remained steadfast, then the efforts of Norquist, the NFIB, and the HIAA might have been in vain. The Clinton bill might not have passed, but a meaningful compromise would have been reached. But unlike earlier generations of business leaders, who had been willing to break ranks, the CEOs were more concerned about unity within their lobbying ranks than with championing a program that might be in the national interest. They allowed those businesses that were fiercely opposed to health care reform to define the position of the business community.

Clinton had counted on the Business Roundtable to play a leadership role in winning health care reform. The great majority of its members already paid for health insurance and stood to benefit from a reform that would contain their rising costs. But within the Roundtable, a minority who strongly opposed the Clinton plan were able to determine the organization's position. They worked through the organization's Health, Welfare, and Retirement Task Force, which was chaired by Robert C. Winters, the CEO of Prudential Insurance. At least eighteen of the companies on the task force either were in the health business or did not insure their workers, and they got the task force and then the entire organization to reject the Clinton plan. The NAM followed course.

With the Roundtable and the NAM in opposition, the Chamber of Commerce buckled to pressure from conservative Republicans and from the NFIB, which had begun to raid their members. Chamber president Richard Lesher ordered Patricelli to inform the House Ways and Means Committee that the Chamber "cannot support any of the mandate proposals that have been advanced in legislation by President Clinton and members of Congress." The Chamber's board of directors then voted to oppose not only employer mandates but also universal coverage. Without support from any significant business organization, and with the health industry now either neutral or lined up against it, the Clinton bill could not pass.

In the past, elites within the business community had intervened to prevent the most venal interests from dominating Congress. In I946, the Committee on Economic Development, acting not as another business group but as an elite organization committed to the national interest, rescued the Employment Act. There were, however, no comparable organizations and no comparable leadership that could have rescued health care reform from oblivion. The CED itself had been overshadowed by the Business Roundtable and the American Enterprise Institute. The National Leadership Coalition had prestige but no clout and couldn't agree on the specifics of the Clinton plan. The sympathetic foundations, such as the Henry J. Kaiser Family Foundation, feared that if they got deeply involved, they would be attacked by conservatives for violating the tax laws.

The defeat of the Clinton plan emboldened his opponents on K Street and in Congress. When Clinton proposed his welfare reform plan in June I994, tying a work requirement to $9.3 billion in new funding for jobs and job training, the plan never even made it out of committee. Congress would eventually pass a welfare reform bill that would include the work requirement but no additional money for jobs and job training. Its spirit was that of nineteenth-century individualism rather than early I960s communitarianism.

The defeat of these measures dashed the illusions that Bill Clinton, Hillary Rodham Clinton, Ira Magaziner, Robert Reich, and the other post-sixties policy intellectuals harbored about what kind of reforms would be possible in the new post-Reagan political era of the I9905. In the future, Clinton would revert to the cagey Southern politician. He would avoid undertaking reforms that would threaten the entrenched power of major business interests and that might expand the reach of government.

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The Contract with K Street

Gingrich himself had a fertile imagination that allowed him to frame the most mundane and craven strategies in the rhetoric of political revolution. Unlike Clinton, who belonged to the generation that admired John Kennedy, Gingrich was a child of the late sixties who as a history graduate student at Tulane in I969 had opposed the Vietnam War and led a protest against the college administration because it had censured the campus humor magazine for publishing nude photos. Even as a conservative, his thought was marked by an apocalyptic spirit that identified change with revolution and the status quo with decline and even disaster. As he stood at the Capitol with Armey in September I994 promoting the Contract With America, he said, "Today on these steps we offer this Contract as a first step toward renewing American civilization. If America fails, our children will live on a dark and bloody planet."

Gingrich was deeply influenced by futurist Alvin Toffler, whose work he had discovered in the early I9705. Toffler argued that American society was undergoing a transition from an industrial Second Wave to a postindustrial Third Wave. Gingrich saw himself doing for the Third Wave what William McKinley, Mark Hanna, and Theodore Roosevelt had done in accelerating the transition from the First Wave of traditional agriculture to the Second Wave. Gingrich sought to marshal K Street lobbies and his fellow Republicans behind a strategy of gutting the Second Wave programs of the New Deal, the Great Society, and the regulatory reforms of the Nixon era.

Few of Gingrich's allies and followers in Congress shared his precise views. Some of them, like Armey, who had become a disciple of Milton Friedman during the sixties, favored their own version of conservative revolution. But others, like Texans Thomas DeLay and William Archer, simply represented extremely wealthy districts. When they sided with business or favored the rich, they were doing constituent service.

The key to the conservative Republican strategy was building powerful lobbying coalitions that would help enact K Street's and the Republicans' agenda. Gingrich invited business lobbies to help him eliminate any government regulations that got in their way. Gingrich told the members of the NAM in a speech in May I995 that he intended to go to major multinationals and say, "Tell us under what circumstances you'd put the next thousand high value-added jobs in the U.S. What do we need to do to regulation, taxation, litigation, education, welfare, the structure of bureaucracy? You tell us how we make this the best place in the planet to invest." He confided to NAM members that he had already met with "eight major providers" to develop "a new product line in Medicare." And he had invited the pharmaceutical industry to develop a bill to rein in the Food and Drug Administration. "We told them, 'You bring us the bill, we'll do it."

Norquist and DeLay, who became majority whip and later the power behind Gingrich's successor Dennis Hastert, contributed an important other element to the strategy. They believed that the Democrats had preserved their majority through incumbents' access to campaign money and the effective use of Congressional staff. Norquist and DeLay wanted to create a Republican monopoly on K Street.

... Gingrich and the Republican leadership found an eager reception among Washington business groups. Out of the Thursday Group, Republicans set up coalitions to promote their legislation. DeLay organized over 350 lobbyists into Project Relief, which was designed to help draft and promote the Republicans' antiregulatory legislation. The Republicans and the lobbyists also set up the Coalition for Our Children's Future to back their budget, the Coalition for America's Future to support their tax bill, and the Coalition on Legal Reform for what was called "tort reform," which consisted of limiting the damage awards that citizens could win in civil suits against businesses. Business groups also responded with cash. In the first six months of I993, with the Democrats in charge, the business PACs associated with Project Relief had given Republicans 52.6 million. In the first six months of I995, the business PACs gave the Republicans $5.36 million.

In the winter of I995, the House and Senate Republicans introduced a moratorium on new regulations; new draconian requirements for the enforcement of regulations on labor health and safety, pesticides, poisons in food, clean air, and clean water; drastic reduction in funding for the EPA, the NLRB, OSHA, and other regulatory agencies; and limits on the damages that citizens could win in lawsuits against businesses. Together, these measures-embodied in separate legislation or attached as riders to appropriations bills-would have overturned many of the reforms that Congress passed from I967 to I974. In addition, House committees also proposed the elimination of the Commerce, Energy, and Education Departments, the Council of Economic Advisors, and the National Endowment for the Arts and for the Humanities. William Archer's Ways and Means Committee proposed massive tax cuts for capital gains and the elimination of the Earned Income Tax Credit-a liberal measure included in Clinton's first budget that helped workers climb off the edge of poverty. The labor and education committees called for gutting what remained of the War on Poverty, including Head Start. The Republicans would later recoil when Democrats accused them of favoring the rich, but their agenda clearly reflected the self-interest of their high-bracket constituents and the narrow interests of the K Street lobbies.

Many of these measures were drafted by lobbyists. Project Relief member Gordon Gooch, a lobbyist for petrochemical companies, wrote the first draft of the House bill establishing a moratorium on new regulations. Peter Molinari, a lobbyist for Union Carbide, and Paul Smith, a lobbyist for UPS, revised Gooch's draft. Charles W. Ingram, associate manager of environmental policy at the Chamber of Commerce, helped draft a bill weakening the Clean Water Act. Oil Industry lobbyists helped produce a draft relaxing standards for the cleanup of hazardous waste. The Senate was no better. Dole's major antiregulatory bill was drafted by lobbyist C. Boyden Gray, a former Bush White House official who was representing Hoechst Celanese, a German chemical company engaged in a pitch battle with the EPA, and was also the chairman of Citizens for a Sound Economy and a prime mover in Project Relief.

That summer, in devising a balanced budget for the year 2002, Gingrich also took the fateful step of trying to undermine the Medicare program. As part of the Republican attempt to balance the budget, Gingrich proposed to cut projected Medicare costs by $270 billion. Guided by health insurance lobbyists, he raised premiums and devised cuts that would have weakened and eventually crippled the program. Gingrich established a new "Medicare-Plus" plan for senior citizens to use their premiums to enroll with the insurance companies' managed care programs and HMOs. Under Medicare-Plus, senior citizens could also join what were called "medical savings accounts," a gimmick devised by one of the Republicans' principal contributors, Patrick Rooney of Golden Rule Insurance, to siphon off healthy and well-to-do seniors into private plans.

Both Medicare-Plus options threatened the Medicare system. Health insurance systems work by using the premiums from the healthy to pay for the costs of treating the sick, but if the pool of the insured becomes limited to the sick, then the costs of insurance become prohibitive. Both HMOs and medical savings accounts would draw healthier senior citizens out of the regular Medicare system. The HMOs would attempt to keep their costs down by screening out senior citizens who were more likely to become sick, while the savings accounts would only attract senior citizens who were or thought they were healthy. Premium costs in the regular system would continue to rise and pressures would mount to replace it by a privatized system of vouchers. It was a controversial plan, but Gingrich and the House Republicans were determined to see it passed even if they had to shut down the government.

Initial versions of the Republicans' deregulatory agenda made their way through House and Senate committees, but in June, the bills began to encounter stiff opposition from environmental groups. Even organizations like the Wilderness Society, which had been close to Republicans, began strenuously lobbying against the bills and widely publicizing their opposition. Spurred on by environmental groups and by news reports of deadly E. coli bacteria in hamburgers, Republican moderates in the House and Senate began to back away from Gingrich's and Dole's regulatory reform bills. The public also began to get alarmed. After a warning of pesticide contamination in baby food, a bipartisan poll conducted by Republican pollster Ed Goeas of the Tarrance Group and Democrat Celinda Lake of Lake Research found that 78 percent of voters wanted the elimination of pesticide residues from baby food even when told that this would mean "higher costs to businesses that are passed on to consumers." Luntz wrote a memo to the House leaders warning that 62 percent of American voters and 54 percent of Republican voters wanted to protect the environment rather than cut regulations. "The public may not like or admire regulations, may not think more are necessary, but puts environmental protection as a higher priority than cutting regulations," Luntz wrote.

In the Senate, Dole found that he couldn't break a filibuster. In the House, Gingrich faced a revolt led by Representative Sherwood Boehlert of New York and other members of the "Tuesday Lunch Bunch," a weekly gathering of Republican moderates. On July 28, the Republican moderates joined Democrats to kill seventeen riders restricting the EPA that DeLay had attached to an appropriations bill. Over the next months, Republican moderates would join Democrats in blocking other parts of the Gingrich agenda-from the closure of the cabinet departments to the defunding of the EPA, OSHA, and the NLRB. The Gingrich revolution had suffered its first major setback-at the hands of the public and the environmental movement. Gingrich's next defeat would come during the struggle over the budget.

The American Association for Retired Persons (AARP) and consumer health care lobbies like Families U.S.A. recognized the danger that Medicare-Plus posed to Medicare. But what finally turned the public against Gingrich's plan was that the tax cuts in the Republican budget, totaling $245 billion, almost exactly equaled the amount the Republicans hoped to prune from Medicare. It seemed as though Gingrich was trying to pay for the tax cuts, most of which would benefit the Republicans' wealthier constituents, by raising Medicare premiums and reducing medical services. The public might not support a complicated new government health care initiative, but it backed Social Security and Medicare and wouldn't countenance any changes in coverage and premiums unless they appeared to make the programs more viable. As Clinton and the Democrats seized hold of this combustible issue, Gingrich and the Republican Congress's popularity plummeted. Clinton, the Democrats, and the movements that had backed them began to pull themselves out of the abyss into which they had been cast by the I994 elections.

By the end of I995, Gingrich and the Republican leadership had lost the trust they had gained. Armey had promised that "the people's House must be wrested from the grip of special interests," but the Republicans had merely changed which special interests held Congress in thrall. People saw the hand of K Street in the Republican program, and recoiled. A Times-Mirror survey found that 72 percent of the public thought that lobbyists' influence over Congress was equal to or greater than what it was before.

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