Democratic Candidates, etc.
Jude Wanniski
January 20, 1992


DEMOCRATIC CANDIDATES: You will continue to read that Arkansas Governor Bill Clinton is the frontrunner in New Hampshire, by virtue of polling data in advance of the February 18 primary. This is because Clinton is the Organization Candidate, and only party activists so far have made up their minds, based on who they have been told to support. Only 20% of New Hampshire voters have said they have definitely made up their minds. The rest will not even pay attention to the horse race until the last ten days. I'm not impressed at all with Clinton so far; of all the candidates he seems the most devoid of bedrock principle, which the New Hampshire voters prize. Nebraska's Sen. Bob Kerrey is pinning his hopes on his socialized medicine scheme, which panders to conventional wisdom on what the voters want, but which is sure to bomb. Sen. Tom Harkin of Iowa, the leftwing entry, has had a successful political career based on a promise to keep the Republicans from screwing the little guy, a perfectly sound position for a legislator, but not enough for a President. He's not going anywhere, although he should do better than the 3% he is supposedly polling now. In yesterday's New Hampshire debate, which I watched on C-SPAN, two candidates impressed me most. One was former Massachusetts Sen. Paul Tsongas, who has sharpened his message, clearly being driven by principle, not political handlers and pollsters: He specifically denounced the idea of a "middle-class tax cut," and "Japan bashing," and focused on a combination of supply-side tax ideas with a smattering of middle-class tax cuts. It was also former California Governor Jerry Brown's best national performance to date, as he continued to hammer away at the corruption of the Beltway political process, but also announced his support for an end to most federal business and excise taxes in favor of a simple 13-to-14% flat tax, with minimum exemptions. This finally gives forward thrust to the Brown candidacy. Last Wednesday, I was invited to appear on the CNBC-TV "Insiders" business show, as part of a panel interviewing Jerry Brown. It was his first broadcast appearance in which he said he favored complete elimination of the capital gains tax. At the moment there is not a soul inside the Beltway who thinks Brown has a ghost of a chance. In New Hampshire, he's still ranked first in name ID among all those polled and I believe he will do surprisingly well.

GROWTH PACKAGE: As far as we can learn, the growth package as designed by Treasury and OMB for the President is set in concrete. It can only be altered at this point by a Presidential decision to tell Treasury Secretary Nick Brady and Budget Director Dick Darman that what they have come up with is not good enough. This will not be up to the President's economic advisors, but to his political counselors: Chief of Staff Sam Skinner, Campaign Manager Bob Mosbacher, and most importantly, Bob Teeter, the President's pollster. On capgains, I think the political people will be making a mistake if they do not go for 15%, which was his campaign pledge in '88, not the watered down 19.6%. If he does the latter, Pat Buchanan will roast him for trimming on another campaign pledge and for being a captive of Brady and Darman. On the Brinkley show yesterday, without prompting, House Ways & Means Chairman Dan Rostenkowski clearly signaled a willingness to negotiate a deal that includes capital gains. He's also clearly willing to break the Budget Agreement to get a workable deal; the White House warns a "bidding war" will break out if this happens, which is only another way of keeping Brady and Darman in charge of domestic policy.