Clinton's retreat on the economy

Robert Kuttner

April 16, 1993|By Robert Kuttner

PRESIDENT Clinton's gradual retreat on his economic stimulus package reflects one part political miscalculation and one part policy confusion.

On the campaign trail Mr. Clinton took pains not to be merely the candidate of deficit-reduction. But in office Mr. Clinton has given just enough credence to that misplaced national obsession that it has continued to be the litmus test of his performance. It would be better for Mr. Clinton to play the teacher role that he performs so well, and to explain to the American people why the deficit is not the economy's main problem.

By failing to do that, the president has allowed deficit-obsession to pervade the debate. Although the broad outlines of his budget survived, he was forced -- by members of his own party in the House and by Republicans in the Senate -- first to accept more deficit-reduction than he really wanted, and then to face the likely gutting of his short-term stimulus program. If the result is slower growth, higher unemployment and continuing voter frustration, he and his party will suffer in the 1994 and 1996 elections.

An unfortunate pattern is taking shape. The president stakes out a position. It is not entirely clear whether it is an off-the-cuff idea, a deliberate trial balloon, or a real priority for the administration. Opposition then mounts, Mr. Clinton beats a partial retreat, and tries to accommodate everybody by splitting the difference.

This has been the case with gays in the military, with higher fees for mineral and grazing rights on public lands, and now appears to be hap pening with the economic stimulus package. The trouble with this pattern is that it signals weakness and invites opposition.

It would be far better for Mr. Clinton to decide in advance which issues he really cares about and then hang very tough. He will surely need to break this pattern when he unveils his health-reform package, or the result will be political and policy disaster.

A related dilemma is the lingering presence of Ross Perot. Mr. Clinton and the Democrats, I fear, have made two grave miscalculations about how to handle Mr. Perot.

The first mistake is to assume that the way to neutralize Mr. Perot and court his constituency is to treat him and his issues respectfully. Mr. Perot has a half-baked, quick solution for every complex problem. He is a classic demagogue. Treating him with deference only gives him stature that he doesn't deserve.

The Democrats have managed to frostily ignore the Rev. Jesse Jackson, a far more admirable, legitimate, and loyally partisan figure than Ross Perot. They surely can treat this phony Mr. Fixit at least as shabbily as they have treated Mr. Jackson.

The second and more serious mistake is to assume that the deficit is really what motivates the Perot constituency. In truth, the deficit is merely a totem -- a symbol for broader popular anxiety that the economy and the government are out of control.

For voters seeking a man on horseback to rescue the Republic, Mr. Perot is the anti-political savior. But the deficit is not what his voters really care about. They care about a sick economy.

If Mr. Clinton and Congress fix the deficit but not the economy, they won't attract a single Perot voter. If they fix the economy by restoring the rate of public and private investment, creating good jobs and raising living standards (as Franklin Roosevelt did), nobody will care about the deficit (as nobody cared much about FDR's.)

Mr. Clinton's mixed signals are also evident in his mixed bag appointees. The pattern of his appointees reflects the Democrats' chronic weakness as a coalition party. Taking Mr. Clinton's Cabinet and sub-Cabinet officials as a group, there are those who believe in public spending and those who believe in deficit-reduction; those who think tax credits are just the ticket and those who consider them a fraud; some who want to deregulate and some who want to re-regulate; "New Democrats" and New Deal Democrats.

In a great many appointments, concerns such as affirmative action or regional representation trumped philosophical coherence. The results have often been random.

For example, the administration was determined to appoint a woman to chair the Council of Economic Advisers. After Mr. Clinton's interview with Brookings economist Alice Rivlin, he passed her over to look at the next woman candidate on the list, Laura Tyson of the University of California at Berkeley.

Ms. Tyson got the chief economist job. Ms. Rivlin became deputy director of management and budget. Fine -- except the two women have diametrically opposed views on the budget and the economy.

If there is to be political and policy coherence from this yeasty brew, it must be imposed by the president himself. That may yet occur, but it means that an awful lot is riding on the shoulders of one William Jefferson Clinton.

Robert Kuttner writes a column on economic matters.

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