Like Sisyphus, the White House got the capgains boulder close to the top of the hill, but it's rolled back with no time left for another surge this year. The good news is that it has not rolled all the way back, with plenty of determination to make another push next year. We wouldn't go so far as The Wall Street Journal this morning in suggesting the delay means recession. But it certainly means the economy in the next few quarters will be weaker than otherwise, with federal revenues lower too. There's still a very good possibility of a Senate vote on capgains in the time remaining, if the House sends a free-standing capgains bill to the Senate (as proposed last night by Speaker Tom Foley). But there are not the votes to break a Senate filibuster, nor the willingness on the GOP side to hold the Congress in 'til Christmas. The next push will begin in January, with the President's State of the Union message.
President Bush's press conference this morning was more encouraging than we expected on this score. He did bring up capgains without being asked about it, and was animated in urging the press corps to communicate his desire to the people that they push their representatives on this part of his domestic agenda, as well as on drugs and the environment. He spoke of an "honest difference" he has with Senate Majority Leader George Mitchell, but also made it clear that he has been going the bipartisan route on his domestic agenda with no results. Now that he's begun this tactical line, it will get easier to develop. At least, for the first time, he's made a stab at appealing to voters for their support in settling "honest differences" with Congress. The press conference as a whole played well, with Bush at least making a start at rallying partisan supporters who were beginning to doubt he could ever rouse himself.
We'll now watch how deeply the President digs in on sequestration. A weakening will put him in a worse position next year on taxes, which he and OMB Director Dick Darman know full well. The budget numbers are less important to us than these tax implications. We'll also watch to see how the White House now responds to the weakening economy, if it uses news reports to needle the Democrats on capgains, or needle the Fed. The rising gold price suggests betting that the Fed will bend to one pressure or another, but we wouldn't make that bet just yet.
In the remainder of the year, there will be further opportunity to elevate discussion about the capgains issue. The disappointing loss of time this year can be compensated to a degree by legislation next year superior to the Archer-Jenkins 2 ½ - year version or the Packwood 7-year phase-in. Look at the bright side.
What went wrong this trip up the hill? Who's to blame? One GOP congressman complained to me this morning that it was Senators Dole and Simpson and House Minority Leader Bob Michel, all advising the President to throw in the towel, clean up the budget, and get out in time for Thanksgiving at home. I rejected that analysis on the grounds that we should never have expected any of these three to take a bold lead on behalf of capgains, so how can they be blamed? It's the combination, I thought, of the President going at his own kind and gentle pace and Senate Majority Leader George Mitchell running at top speed in his 900-pound gorilla suit that did the job. But all's well that ends well, and I remain persuaded that President Bush is still committed, intellectually and politically, and can get the boulder up even at his own pace. And George Mitchell and the liberal Democrats will lose next year, if not this, because they are essentially trying to hold back history.