The Republicans, after winning big in November 1994, made a devastating political blunder by focusing all their efforts on getting the Constitution amended to include a balanced budget.
On the basis of polling, they reached the conclusion that this idea was so popular with the American people that it overrode all other issues.
They were wrong.
When the balanced-budget amendment lost in the Senate by one vote, the Republicans should have rethought their strategy. Instead, they made the situation worse by switching from support of the amendment to balancing the budget.
They must have assumed the American people wanted the budget balanced at the expense of all other issues.
Not true.
This unwise Republican strategy played right into Bill Clinton's hands. Sen. Bob Dole and Rep. Newt Gingrich approached Mr. Clinton as if the "Contract with America" guaranteed that they had the total support of the American people. Again, they were wrong.
Here's what happened: As his past behavior would forecast, Mr. Clinton did not concern himself with what was in the best interest of the country. Instead, he focused on his reelection. This enabled him to adopt a strategy where he benefited from being on both sides of the budget issue at the same time.
The President's objective was to convince the public that he not only favored a balanced budget, but that he opposed the very cuts needed to balance the budget. This was political wizardry of the highest order.
Mr. Dole and Mr. Gingrich fell right into the Clinton trap. Their strategy failed, leaving the false impression that all they wanted to do was rob the elderly.
Unfortunately, they were not even shrewd enough to have the budget meetings alternate between the White House and the Capitol. Symbolically, this would have clearly reminded the American people that Congress is every bit an equal branch of government.
In addition, Mr. Clinton used his State Of the Union speech to steal all of the other Republican ideas. He suddenly favored everything from smaller government ("The era of big government is over") to family values. In reality he was running against himself, and pulling it off.
The reason Mr. Dole sounded so lost in his reply to the President's speech is that he had been stripped clean. I still don't believe he understands precisely what happened to him and the Republican Party. By focusing exclusively on balancing the budget, the Republicans helped Clinton to resurrect his political career - something Republicans like myself find troubling.
The problem in Washington has nothing to do with balancing anything. We have a serious spending problem. This problem has two dimensions. First, we are spending more than we can afford. Second, we have no method of measuring how wisely our money is being spent, not to mention the billions of dollars that are stolen from programs such as Medicare, Medicaid and Food Stamps.
The current federal budget has years of accumulated wasteful spending in it. And every fair-minded person knows that we must get expenditures for entitlements under control. Entitlements, which are growing sharply, already account for more than 55% of our $1.6 trillion federal budget.
In the current economic situation, the emphasis during the ongoing budget negotiations must be on spending cuts. Moving toward a balanced budget should be secondary.
What will we have achieved if we balance the budget? At least theoretically, taxes can always be raised to achieve this goal. In our current economic situation, the primary goal must be to prudently reduce spending.
Moreover, the balanced-budget amendment is surely a bad idea because it involves the Constitution in fiscal policy.
In fact, during periods of recession and wartime it's usually imperative for the federal budget to run at a deficit. Deficits are sometimes good, sometimes bad, depending on their size, when they occur in the economic cycle, and what the money is being used for. (For example, long-term projects to improve transportation are vitally important to economic growth.)
The simplistic concept being sold in Washington by intelligent members of Congress such as Sen. Phil Gramm is that the federal budget - or for that matter your household or business budgets - must never be in deficit. This makes no practical or economic sense.
To buy my home I took a mortgage and went into long-term deficit. It was the best financial decision I have ever made. Businesses also borrow to grow.
The size of the debt held by the public is $3.8 trillion; this is important, but only in relation to total national income. The deficit and the debt are also important because they indicate that Congress has been spending at a rate that cannot be sustained by our total national income of $7.3 trillion.
During periods of recession we must consider the eventuality of unemployment. For example, if unemployment goes up by 2%, the federal government will face a deficit increase of $100 billion, from a combination of lower tax receipts and higher payments for unemployment insurance.
Faced with this kind of economic downturn, would anyone suggest that Congress raise taxes by $100 billion to balance the budget? That would drag the economy into deeper decline, and maybe worse. During periods of recession Congress must have the flexibility to lower taxes, and to thereby stimulate demand and create jobs.
The Founding Fathers were wise when they gave the power of the purse to Congress. They knew quite well what they were doing. They wanted Congress to use this critically important power freely, depending on the situation being faced.
Let's not forget that it's Congress, using the power of the purse, that ultimately defends the people from the tyranny of a presidential form of government - something the Founding Fathers did everything they could to avoid.
The Republicans have lost the momentum of November 1994 by trying to hide - first behind a balanced-budget amendment, and secondly by making the balanced budget an all-or-nothing issue. They still don't understand what a failure this strategy was.
Now they want to solve all social problems by transferring responsibility back to the states. What happens if they are wrong? Do we return to the Articles of Confederation?
In the final analysis, the famous "Contract with America" was nothing but a political gimmick, which limited the flexibility of the Republicans in their negotiations with Mr. Clinton.
Result: Mr. Clinton wins, Mr. Dole and Mr. Gingrich lose.
Mr. Previdi, a former director of corporate communications at Citicorp, writes on military and political subjects.
