Trouble with Gergen appointment is where it will take Clinton

Robert Kuttner

June 08, 1993|By Robert Kuttner

WELL, at least we found out what a "New Democrat" is. It's a Republican.

Democrats can find many reasons to be depressed about Bill Clinton's appointment of David Gergen to the epicenter of White House politics, policy and communications. Among them is the perception (and evidently the reality) that it took a Republican to bail out a sinking Democratic administration. The subtext is that Republican equals political grown-up and Democrat equals amateur hour.

It recalls backing Lyndon Johnson in 1964 to vote against an escalation of the war -- and then getting Johnson and the escalation. Didn't the voters elect Bill Clinton precisely to reject the failed policies that Mr. Gergen had helped Reagan sell to the country? Did thousands of Democratic campaign volunteers stay up nights to return Ronald Reagan's communications director to the White House? Don't we get to have two parties? (Could this possibly play into the hands of Ross Perot?)

Another depressing aspect is the triumph of the permanent Washington talk-show establishment, where insider-status trumps ideology or principle, and where center-right is defined as sensible. For the most part, the Gergen appointment has gotten a fawningly good press.

There is the faint consolation that perhaps Mr. Gergen is merely a talented opportunist -- a professional spin-doctor happy to spurn yesterday's patrons (Nixon, Ford, Reagan) in order to serve Clinton's new centrism. However that implies that Bill Clinton is nearly as cynical as Mr. Gergen.

The worst single thing about this appointment, however, is where it is likely to take Mr. Clinton on the issue that matters most -- the sputtering economy.

This morning line has been that Mr. Gergen's appointment represents a new, more centrist Bill Clinton, as if the problem were that Mr. Clinton is too left-wing generally. But the real malady is more complex:

Mr. Clinton has indeed been too casually liberal on the social issues that won't re-elect him, but too conservative on the economic ones that count. Moving to the generic center won't cure this.

Throughout history, liberal Democrats have brokered avant-garde social reforms only when they also delivered the goods economically. Full employment will do far more for young urban blacks -- and whites -- than a thousand Justice Department officials like Lani Guinier.

But while Mr. Clinton has tacked left on social issues, he has tacked right on the economy. A year ago, he was talking about jobs and investment. Today he is talking mainly about deficit-reduction.

At first, Mr. Clinton's economic appointments seemed a blend of liberal and conservative. The jobs with fiscal heft went to budgetary conservatives Lloyd Bentsen at Treasury, Leon Panetta and Alice Rivlin at the Office of Management and Budget, and Robert Rubin as economic czar.

These, however, were seemingly balanced by Labor Secretary Robert Reich, economic advisers Laura Tyson and Alan Blinder, and White House policy aide Ira Magaziner, all of whom favored stressing public investment, jobs and growth. The original Clinton program was one part long-term deficit cut, one part short-term growth package.

During Mr. Clinton's chaotic first months, however, Republicans blocked a public investment and jobs package that was too timid to begin with. Lloyd Bentsen and company persuaded Mr. Clinton that the Fed and the money markets were rewarding his commitment to deficit reduction. Never mind public investment and economic stimulus. Low interest rates would bring recovery.

But today the economy is stalling. The first quarter annual growth rate was a pathetic nine-tenths of one percent. And the administration's own numbers show that deficit reduction alone cannot revive the economy.

Worse, the Treasury's ill-advised strategy of "talking down" the dollar, reflecting the same economic orthodoxy, has now created inflationary pressures. A cheap dollar has an unfortunate side effect. It makes imports more expensive and also allows domestic producers to raise prices to match those of their foreign competitors.

At the slightest whiff of inflation, the Federal Reserve thinks about raising interest rates, and money markets get very nervous. If the Fed does raise rates in this very fragile economy, we will get a stock market plunge and a full-blown recession.

Until David Gergen's appointment, one had expected that the advocates of a bigger investment and jobs program would get a second chance. Next fall, with a softening economy and midterm elections looming, one could imagine the congressional leadership persuading the president to abandon fiscal orthodoxy for a bold recovery program. But standing in the way will be Mr. Gergen, advising the president to hold the centrist course on economics as well as social policy.

Mr. Gergen will get credit for getting Mr. Clinton to abandon the already doomed appointment of Lani Guinier, as a sign of healthy centrism. But in the end it is Hillary Clinton and not David Gergen whom the president sees first in the morning and last at night, and the social liberalism will likely continue.

When it comes to economic conservatism, however, Mr. Gergen is pushing on an open door. His influence will only increase that of Mr. Bentsen, Leon Panetta and the budget hawks.

Unless something changes this disastrous chemistry, President Clinton will enjoy a short-term gain to his image as Washington insider, but a long-term loss to his prospects as president. A good spin doctor can improve the atmospherics. But he can't persuade ordinary people that they're not hurting economically.

Robert Kuttner writes a column on economic matters.

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