CUTTING EDGE

By Karen Tumulty/Washington

Dick Armey likes to say that his first waking thought is how to make the day unbearable for Democrats. So when you hear the House majority leader fairly purring about one of them--particularly one who happens to be the new White House budget chief--it's time to wonder: Has the thawing of partisan hatred begun? Is progress in the air? Or is someone about to get rolled?

The Democrat in question is Frank Raines, 48, who is, as Armey sweetly puts it, "a serious guy who understands what needs to be done and is going to do his level best to do it. He is a man who strikes me as not having a lot of guile, and in a Democrat that's refreshing." Across Capitol Hill the reviews by other Republicans are just as glowing. "It's obvious he tries very hard to understand our side," says Pete Domenici, the Senate Budget Committee chairman.

The first and most important trial of the second Clinton Administration begins this week, when the President sends his budget to Congress. The question of what comes next will be the one that counts this year because Republicans and Democrats know that agreeing on the numbers is the only work they absolutely must get done. If the two sides can't come together on this, there is little reason to think they can do anything else that matters.

Which is why it may be appropriate that the courtly Franklin Delano Raines, who has been head of the Office of Management and Budget for less than a year and has no experience in the political warfare of shutdowns and put-downs, is sitting at the head of the table. "We all know how to do the fight," he says. "We just think it's not productive for the country."

His earnest courtship of congressional Republicans has resulted in one early, tentative payoff. For once, no one's lips are forming the words "dead on arrival" to describe the President's plan. But they are guarded. "I'm not sure he has the political stroke yet to get done what he knows has to get done," Senate majority leader Trent Lott told TIME. "I know the budget they're sending up here next week will not be as honest and will have more gimmicks in it than he wanted."

Old congressional hands may regard Raines' style as a bit naive, but in some ways it represents how the second Clinton Administration is rearranging its priorities. "He gets it," says Vice President Al Gore, a longtime friend, who recruited Raines for the job. "In a relatively short time as OMB director, he has acquired perfect pitch." It comes in part from his training as an investment banker, which he shares with the two other prominent members of Clinton's negotiating team, Treasury Secretary Robert Rubin and White House chief of staff Erskine Bowles. Theirs is a culture in which winning is cutting the deal and the politician's concept of a strategic defeat--to fail now so you can triumph later--is just money wasted. That Raines should find himself on the front lines at this moment is also the culmination of a personal voyage in which he managed to take a Democrat's life story and turn it into a Republican's resume.

Central Seattle in the early 1960s was not a land of easy opportunity for Delno and Ida Raines, or for the six children they raised in the house that Delno built from the remains of one the highway department planned to demolish. They named their fourth child Frank Delno, after his uncle and his father, but someone at the hospital misrecorded it on his birth certificate as Franklin Delano Raines, a name he has since come to use formally.

Frank has only hazy memories of the year the bottom fell out. His father was hospitalized, losing his job as a mechanic and forcing Ida to go on welfare. Delno regained his health but never his economic footing. For a while he picked beans at a truck farm on the city outskirts, making little money but guaranteeing that the family would have at least one thing on the table at suppertime. The Raines family ate beans so often "I'm amazed I can still eat them," Frank says now. Ultimately, Delno, who died last August, supervised a maintenance crew for the Seattle Parks Department. Ida scrubbed the bathrooms and corporate offices at Boeing--a company at which her son would one day be appointed to the board.

On Sundays they would pile the family into their secondhand station wagon and gape at the prosperous neighborhoods of Bellevue, Laurelhurst and Washington Park. "They used to drive by nice areas to show us what you would get if you worked hard and went to school," recalls Frank's younger brother Michael, now the regional sales manager for an online service in Southern California. Each of their children attended college; all but one graduated.

As imposing as their stack of disadvantages may have seemed, there was one with which the Raines family did not have to contend. Seattle's inner city was a place where racial integration had evolved naturally and comfortably. It was an environment in which there were few limits on a child blessed with intelligence, self-assurance and drive. "I didn't feel out of place anywhere," Raines says. "It never dawned on me that I shouldn't be able to succeed."

With Delno and Ida working almost all the time, informal supervision of the kids fell to the Filipino war bride who lived across the street and the sharp-eyed Italian grandmothers who had raised their own children on South Elmwood Place. Frank worked for a Jewish grocer from the time he was 8 until he was 14. A year after Raines left, Franklin High School was tight with racial tension, which eventually fueled riots in Seattle's Central Area. But the Class of 1967 was still a harmonious blend of Asians, blacks and whites, and Raines was its star. The yearbook could hardly hold all his honors--student-body president, gifted singer, statewide debate champ and a nearly 4.0 average. Though he was slightly built and wore enormous glasses, Raines was even captain of the football team. "Mr. Everything," the Seattle Times called him when he got a four-year scholarship to Harvard. Five years later, the paper touted the 23-year-old Rhodes scholar as a "super black"--which may help explain why the OMB director bristled the first time his press staff made note of his race in a news release and ordered that it never happen again.

He is the first to admit that his opportunities were opened by others. "I was clearly helped at a variety of stages of my life because people gave me a chance to perform." His high school debate coach, Eva Doupe, arranged the scholarship that sent him to debate camp his sophomore year and once spent an hour persuading the football coach that Raines should miss a game in favor of a crucial out-of-town debate tournament.

One of the teachers Raines impressed at Harvard was the future Senator Daniel Patrick Moynihan, who hired Raines as a summer intern when Moynihan was appointed to the new post of urban-affairs adviser by Richard Nixon. At 20, Raines found himself briefing the President and most of his Cabinet on campus unrest two weeks before a nationwide antiwar moratorium. Raines' own experiences as a protester five months earlier may have provided his first taste of how inhospitable the "vital center" can be. He led a demonstration against both the militant students who occupied a university building and the administration' that decided to respond by calling in 400 policemen. Both sides condemned him. Raines later told the Washington Post, "Unless someone took the initiative, this was going to turn into a confrontation between the administration and the radicals and we would see the institution torn apart." It's hard to imagine better training for the job he has now.

for as long as anyone can remember, it seemed that raines was destined to do something big in politics. he and steve pruzan, his high school debate partner, would talk seriously about the day raines might become the first black president. in 1977 a congressional seat opened up and pruzan began organizing a raines campaign. instead, raines took a job in the carter white house that included his first stint at OMB. when carter lost, raines went to work, making millions of dollars, first as a partner doing municipal finance at the manhattan investment house lazard freres. when the travel for that job became too much for a man with a young family, he accepted an offer to become vice chairman of the federal national mortgage association, known as fannie mae, the nation's largest investor in home mortgages. his family's rocky beginnings, he says, "have a way of focusing your attention on making sure that you'll be economically successful, because you remember when you weren't." yet economic security has never insulated raines from the realities of race he has downplayed so skillfully in his professional life. even now, he says, if he goes shopping in casual clothes, "1 out of 3 times there'll be a store detective watching me."

The OMB director's job can be a post of unequaled power in shaping economic policy, or it can be relegated to little more than government bookkeeping, massaging the numbers so they justify decisions made elsewhere. George Bush's budget director, the brilliant and calculating Richard Darman, managed to commandeer virtually the entire domestic agenda from his post in the Old Executive Office Building. "Some people come to Washington to take over a department and don't know that they can't do much without OMB's approval," Darman once observed. "But they learn--some more painfully than others." Leon Panetta, Clinton's first budget director, wielded similar clout by virtue of his mastery of fiscal arcana, his understanding of Capitol Hill and his rapport with Clinton. When Panetta was elevated to chief of staff, however, his replacement, Alice Rivlin, lacked the political acumen to translate her economic credentials into real sway. She was not even invited to the negotiations with G.O.P. congressional leaders during last winter's government shutdown.

Panetta's departure leaves an enormous vacuum, and Raines appears eager to take advantage of it. In a White House that churns out micro-initiatives every day, Raines has squelched the Administration's habit of making such announcements without checking whether OMB has sanctioned a plan to pay for them with cuts elsewhere. This month he stepped in to require a more thorough vetting of measures that would tighten food-safety regulations. "There were more people running around with their own little pet projects," says White House spokesman Michael McCurry. "Raines has reined it in."

Raines also has no patience for Washington policyspeak, or political euphemism. He cares little whether his Medicare plan is referred to as a cut or by the kinder formulation, "restraining growth," that the Republicans insisted on last year. His ideas go well beyond making the numbers balance. Until now the U.S. government's relationship with the troubled District of Columbia had been a squabble over how large the federal subsidy should be. Last month Raines unveiled a bailout plan that would totally transform the contract between the two, opening a debate that all sides agree was long overdue.

Within the Administration, Raines' first budget has produced a fair share of acrimony. For starters Clinton has for the first time committed himself to balance, with numbers credible enough to stand up to scrutiny on Capitol Hill but big enough to accommodate the promises he made during the last campaign. Meanwhile, a cohort of departing Cabinet secretaries, whose relationships with Clinton were more deeply rooted than the new OMB director's, seized their final chance to make demands. Housing Secretary Henry Cisneros, for example, facing $1 billion in new low-income-housing cuts, lamented in a memo to Raines that found its way to the Wall Street Journal, "Now is not the time to change course. I believe this is a serious mistake."

More basic have been strategic questions such as how far to move toward the G.O.P.'s higher Medicare cuts and how much to slash discretionary spending in the later years of the five-year budget. Seasoned congressional hands, such as the departing Panetta and legislative-affairs director John Hilley, had argued for holding fast to what had proved to be a winning position last year. As Panetta said of Raines in an interview, "Inevitably, he's going to have to hold his cards when it comes to a negotiation." Raines and Bowles wanted to show more flexibility early, on the theory that it might help soften up the opposition. A few days after the election Raines even went so far as to approach G.O.P. strategist Ken Duberstein and House Speaker Newt Gingrich with the idea of writing a budget together--a prospect the Republicans found laughable after fighting a bruising campaign over that very issue. "I don't think it was being naive," Raines contends. "I think it was setting a tone."

Congressional Democrats are worried that the Administration has done more than that. Even before laying down his opening marker, the President has moved significantly on Medicare, after successfully lambasting the Republicans as the enemies of old people in the last election. Clinton is also sounding flexible about Republican demands for a broader cut in the capital-gains tax. Is the Administration negotiating with itself, nervous Democrats wonder? What is it getting in return for the $14 billion it has offered to give up on Medicare? And what is the value of a deal if it leaves the President's party standing for nothing but V chips and school uniforms? A significant value, Raines would argue, if it finally produces a balanced budget.

--With reporting by John F. Dickerson and J.F.O. McAllister/Washington

With reporting by JOHN F. DICKERSON AND J.F.O. MCALLISTER/WASHINGTON