Sobriety test.

• Author: Henderson, Rick

How to tell if the GOP is serious about shrinking government.

ASSESSING THE REPUBLICAN ELECtoral sweep on Washington's Fox Morning News November 10, Texas Sen. Phil Gramm said voters "didn't send us here to raise taxes half as much as Bill Clinton, increase spending half as much as Bill Clinton, or increase regulations half as much as Bill Clinton." Gramm will try to set himself apart from other presidential contenders with an unapologetic, fiscally conservative agenda. But will Gramm's stances position him at the center of his party or on its fringes? Here are several issues the Republicans must confront if they want to be considered serious government cutters:

* Tax fairness. Rep. Dick Armey, the likely House majority leader, wants to replace the current loophole-ridden Internal Revenue Code with a 17-percent flat-rate tax and allow large standard exemptions. Armey's plan would end the use of the tax code as a tool of income redistribution and behavior modification and would restore its appropriate purpose--raising money to operate the federal government.

Armey's tax revolution won't happen overnight. But Republicans could simultaneously fulfill one plank of their Contract With America and launch a preemptive strike for Armey's tax crusade by cutting the tax on capital gains to 17 percent and indexing the gains so that inflation doesn't penalize persons who hang onto their investments.

* Budget reform. Since 1974, Congress has used "baseline budgets." The Congressional Budget Office projects how much federal agencies will spend over the next five fiscal years, building in increases. When spending rises by less than the CBO projects, Washington insiders declare that a spending "cut."

For the past five years, Rep. Chris Cox (R-Calif.) has called for an end to baseline budgeting. Instead, he wants Congress to prepare a one-page budget spelling out how much the government can spend in each of the 19 budget categories. If Congress spends more money in one category than the budget allows, the president can rescind spending until the target is met. And when the budget is up for renewal, if Congress doesn't pass an appropriations bill for an agency, that agency can spend only as much as it did the previous year.

Incoming House Speaker Newt Gingrich promises an end to baseline budgeting. Cox's proposal would further brake spending growth.

* Spending cuts. In 1993, Ohio Rep. John Kasich and Republicans on the Budget Committee proposed a five-year...