Reconciliation was marked by confusion and misunderstanding on Capitol Hill. Still, this unusual procedure permitted the Reagan Administration to have its budget considered and approved as a single package.

In 1974, Congress passed a budget act to assert control over the federal budget and free itself from executive dominance over spending plans. In 1981, that act instead provided the Reagan Administration with a tool to put forth its economic program as a single philosophical package and to restructure basic social legislation to reflect that philosophy. The tool is reconciliation.

Reconciliation has been slowly ripening on the budgetary vine for several years. The combined adroitness of key Administration budgeteer, David Stockman, who went from Michigan congressman to director of the Office of Management and Budget, along with the current economic climate, provided a unique opportunity for the executive branch to use congressional procedures to bypass normal congressional control over the federal budget.

In the aggregate President Reagan's budget does not differ significantly from budget growth during the early 1970s. If the budget is slightly disaggregated, however, it is clear that the Administration is dramatically altering U.S. spending patterns.

As part of his program for economic recovery announced last February and March, President Reagan called for $475 billion in budget reductions over fiscal years 1981–86. He also proposed the use of the budget reconciliation process provided for in the 1974 Congressional Budget Act as the vehicle for implementing the first installment of these massive cuts in federal spending. In this paper I will discuss the Reagan budget plan in broad outline, and then compare certain aspects of it with the outcome of the reconciliation process and with some recent budget trends.

Reconciliation forces Congress to consider issues in redistributive terms and alters traditional roles and relationships, but this legislative technique may be short-lived.

The 1981 battle of the budget might leave a deeper imprint on legislative behavior than on federal programs and expenditures. The process that produced the omnibus reconciliation bill was extraordinary in its scope and in its integration of diverse legislative activities. More than 30 House and Senate committees were drawn into the reconciliation process and more than half of the Members of Congress participated in the conferences that resulted in the reconciliation decision. The outcome was not a perfectly consistent set of budget decisions, but for a legislature that thrives on the dispersion of power, reconciliation demanded much more cohesion and coordination than Congress normally achieves.

It is too early to determine whether reconciliation will become a permanent feature of the congressional budget process or whether it will be applied as extensively in the future as it was in 1981. If it were confined to a few committees and only changed the budget at the margins, reconciliation might not affect basic legislative roles and relationships. But if it continues to demand the active cooperation of numerous committees and tries to change major parts of the budget, reconciliation would certainly lead to a redistribution of legislative power.

The Reagan Administration's budget revisions for fiscal year 1982 reflect a basic shift in the domestic policies of the U.S. national government which can be expected to have profound effects for American federalism. The 15-year period up to 1978, the year in which California voters brought the taxpayer's revolt to the front pages by passing Proposition 13, was a period of growth and activism in the domestic policy of the U.S. national government. The biggest spurt in domestic spending was Lyndon Johnson's Great Society program; Richard Nixon's domestic policy initiatives in 1969 and 1971 also boosted domestic spending. The Carter Administration tried to slow down the federal domestic spending machine after the California fiscal earthquake in 1978, but failed to do so. The Reagan Administration has succeeded, and has done so dramatically.

President Reagan's success lies not in the size of federal budget cuts but in that he has been able to make cuts at all. He has a long way to go before the New Deal is repealed or even derailed.

The Reagan budget has been viewed as revolutionary, as an unprecedented break in the tradition of modern social policy. According to Russell Baker, “… in the end even the Democrats were agreeable to the death of the New Deal, which took place this week at the Capitol.” Yet this view runs up against the fact that Ronald Reagan cut his political teeth on the New Deal, admired FDR and emulated his political style, was an ardent Democrat and an early labor organizer, and has cast his political appeal to many groups who were raised up by the New Deal to non-poor status. Is the Administration of President Reagan a repeal of the New Deal or a replay? A close look at the budget, and the political context that produced the budget, gives some partial answers.

For our purposes, the New Deal is defined as the loose set of principles and policies that has developed from the 1930s to the 1970s and formed the “mainstream” of American domestic politics. For the moment we consider the Great Society to be part of that tradition. President Reagan himself apparently does not share this assumption, viewing the New Deal as having more in common with progressivism than with the Great Society of Lyndon Johnson.