The little engine that couldn't.

ON December 21, 1987, the Democrat-controlled Congress wrapped 13 appropriations bills into a $600-billion, 1,400-page omnibus spending bill, dumped it on President Reagan's desk, and then adjourned. Reagan's unhappy options: sign into law the most expensive spending bill in the history of Western civilization or veto it and set in motion a Christmas Eve budget train wreck. In the end, Reagan blinked (thanks to advice from Jim and Howard Baker), the bill was signed, and House Speaker Jim Wright and Senate Majority Leader Robert Byrd were exalted. It was perhaps the low point of the Reagan Presidency.

There's a useful, if painful, lesson here for Newt Gingrich and Co. as they prepare to go mano-a-mano with Bill Clinton to decide the fate of the GOP fiscal revolution. Throughout the 1980s, congressional Democrats played fiscal hardball with the White House; they played to win, and invariably did. They routinely used the threat of a budget train wreck as a strategic offensive weapon in policy disputes with Reagan. Most importantly, they almost never blinked first.

Will the Republicans? One thing seems certain about the looming budget fight: if this GOP Congress has anywhere near the fierce loyalty to its agenda of shrinking the government that Jim Wright and the Democratic leadership of the 1980s had to their agenda of expanding it, conservatives will score a resounding victory by early November. The balanced-budget blueprint, the family and economic-growth tax cuts, the dismantling of failed Great Society social programs, the Medicare fix, and the real end to welfare as we know it -- every one of these long-sought conservative goals will be achieved in full. As veteran budget analyst Harrison Fox of Citizens for Budget Reform has put it: 'All that can prevent total victory is Republicans themselves.' However, if Republicans remain unflinchingly committed to the budget revolution that won them 50 House and 8 Senate seats last November, the White House will almost assuredly fold like a cheap dime-store tent. Let's not forget this isn't Clint Eastwood in the Oval Office, it's just Bill Clinton.

Even if Clinton vetoes Republican budgets, he still can't conceivably force concessions from a unified Republican House and Senate. Remember, Clinton's beef with Congress is that it's not spending enough money. (We're talking about a GOP budget of $1.6 trillion, more money than is spent by all of the Fortune 500 companies combined. Even if Republicans have their way, spending will still rise by an enormous $350 billion over the next seven years. This is hardly scorched-earth fiscal policy.) Since the Constitution gives only Congress the power to appropriate funds, Clinton can veto Republican balanced budgets till doomsday, but he can't force Republicans to spend a dime more money than they want to. To paraphrase House Appropriations Committee Chairman Livingston: 'When you veto a zero, you still get zero.'

The real battle looming is not between Republicans and Democrats, but rather between Republicans and Republicans. At stake is the soul of the party in the post-Reagan era. Now we find out who really runs the GOP: conservative visionaries Newt Gingrich and Dick Armey? Or Bob Dole, Bob Packwood, John Chafee, and other centerfield Senate Republicans whose concept of a bold new agenda for America is a slightly less expensive version of the liberal welfare state?

'There are a dozen, maybe two, Senate Republicans who are deathly afraid of a budget train wreck,' concedes one Senate leadership staffer. 'They are desperate to avoid the politics of gridlock.' These are the same GOP senators who have spent the past six months voiding much of the Contract with America. They now want to chop off the legs of House conservatives by plotting a separate peace with Clinton on the budget. Sen. Pete Domenici is already sketching the outlines of a deal with White House Chief of Staff Leon Panetta that would balance the budget over 8 or 9 years (rather than 7) and neuter the tax cuts.

Any such negotiated settlement with the White House would be a monumental political and policy blunder. Almost nothing could do more to resuscitate this comatose Presidency and re-establish Bill Clinton's policy 'relevance' than this. And any budget that Clinton would willingly agree to is a budget not worth having.

It's not clear why so many Republicans are terrorized by the prospect of a budget train wreck. A train wreck -- Washington's metaphor for a fiscal stalemate between the White House and Congress that causes a short-term shutdown of the government -- conjures up the image of a kind of mutual assured destruction: everyone loses. In reality the only casualties would be hundreds of liberal spending programs. Under the Anti-Deficiency Act, all 'essential federal activities' -- the FBI, the military, the courts, the air-traffic-control system, and other agencies that protect Americans from 'an imminent threat to life or property' -- must remain in full operation if the budget is not approved. Social Security checks would still be sent out. Everything else, though, from the Legal Services Corporation, to the National Endowment for the Arts, to the Department of Education, would grind to a halt. (Sounds as if I died and went to heaven!)

Newt Gingrich was right on target when he explained that the GOP isn't the least bit reluctant to allow Clinton to close down federal operations, because 'it's their government, not ours.' Clinton's threatening conservative Republicans with the prospect of a government shutdown that would largely defund the agencies of the Left is as if Harry Truman had threatened that if Japan didn't surrender, he would drop the bomb on New York City.

Republicans have been in Washington too long if they believe that Americans would fret over a five- or six-day time out from having to pay taxes for a multitude of nonessential government activities, such as the Small Business Administration, transit subsidies, or Title X sex-education grants. It's no great catastrophe if the public schools have to economize by cutting condom-distribution programs. Former Reagan Administration budget director Jim Miller, who is urging Republicans not to blink first, recently conjured up the ultimate liberal nightmare: 'If Clinton shuts down the government, most Americans may not even notice.' How many Americans are even aware that there were seven temporary closures of the government between 1981 and 1990?

If Clinton vetoes appropriations bills or the extension of the $5-trillion debt ceiling, Republicans have a rare opportunity to unilaterally impose a de facto balanced budget immediately. Gingrich and Dole could essentially confront Clinton with an ultimatum: until you accept our seven-year balanced budget plan, our tax cuts, and our welfare overhaul, we will suspend any further borrowing this year and prohibit you from spending money on all but the essentials of government. In fact, Nick Smith, Christopher Shays, and 150 other House Republicans have declared unequivocally in a letter to the President and the congressional leadership that they will refuse to raise the statutory ceiling on the debt until 'legislation is enacted ensuring a balanced budget by 2002 or sooner.'

Engaging in a high-stakes budget collision with the White House is unarguably a high-risk political strategy. Senate Republicans worry that voters' attitude will be: A plague on both your houses. But it's of no small consequence that the roles in this year's budget conflict between Capitol Hill and the White House will be reversed from the institutional struggles of the 1980s: this Congress is trying to balance the budget, not bankrupt it. In any face-off with the White House, Gingrich and his allies have the enormous public-relations advantage that they are the ones on the side of the angels. More importantly, the central virtue of a knock-down, drag-out budget fight between congressional Republicans and the White House is that it will help sharply define for 1996 voters the ideological grand canyon between the two parties.

The danger to the GOP majorities in Congress is the growing public perception that Republicans are doing too little, not too much. I became aware of this at a political summit of Perot supporters in Virginia earlier this summer where participants blasted this 'do-nothing Congress.' One frustrated voter told me that, yes, he realized there is an ideological war over the size and scope of government in Washington. But he asked: 'Which side of the war are Republicans on?'

It's a fair question. We'll have the answer in a few weeks.