President Bush continues his slide into a political abyss. Sounding increasingly like Rodney Dangerfield, he is now complaining that the American people don't realize what a wonderful hard-working President he has been. The latest polls indicate he is now in third place, behind Bill Clinton, who has found himself in front as both Mr. Bush and Ross Perot have been sliding in the last two weeks. Today's dismal unemployment report and a host of related bleak economic data confound the President's Hooverian predictions that prosperity is just around the corner. It continues to appear that he will be going into the November 3 elections with the economy barely pooping along.
As bad as the unemployment numbers were for the President, it liberated the Federal Reserve, which could then cut the discount rate this morning without being accused of bowing to the political jawboning by Bush and Treasury Secretary Nick Brady. We continue to marvel at Fed Chairman Alan Greenspan's skill in composing the myriad interests bearing down upon him, keeping the integrity of the Fed intact, and steering policy between inflationary and deflationary tracks. Given the Fed's insistence on waiting for the unemployment news before acting, global investors clearly understand that the Fed in no way means to inflate the economy back to prosperity. The gold price has climbed back to almost $350, and, as with last December's discount rate cut, Greenspan will almost certainly keep the fed funds rate taut, further assuring markets that he has inflation under control. The 7-to-0 vote at the Fed is especially heartening in that it indicates Gov. Wayne Angell seems to have worked his way out of his flirtation with deflation. This bodes well for the bond market, which had been temporarily without his leadership on price-level targeting. We must see firm evidence that there is no back-tracking, however.
President Bush and Secretary Brady will, of course, be congratulating themselves for having turned Greenspan in advance of today's actions. They have no credibility in the markets because they have been jawboning for inflation for three and a half years. Brady this week actually opined that long term interest rates are as high as they are because of global fears that Ross Perot might be elected President!
Perot's troubles of late are almost entirely due to the fumbling in his campaign organization. I've had several people note to me that Perot's popularity peaked at the time he hired two Beltway political operatives to manage his campaign, Ed Rollins, a Republican, and Hamilton Jordan, a Democrat. Indeed, while I have respect for both Rollins and Jordan as nuts-and-bolts political handlers with anti-establishment instincts, their tendency as handlers will be to get control of Perot, to submerge his natural instincts. While Perot has said he will refuse to allow himself to be handled in this fashion, it is hard to resist. His attractiveness is because he is larger than life, yet the managers will always try to cut him down to size, as Ronald Reagan's managers did in 1980. Remember the slogan, "Let Reagan be Reagan"?
The worst mistake made thusfar was when Rollins, on national television two weeks ago, insulted Jesse Jackson. A serious schism had developed in Democratic ranks when Bill Clinton, then a distant third in the polls, took a calculated slap at Jackson in order to boost his standing with conservative white voters. Jackson had been flirting with Perot at the time, seeing Perot as a way to increase his own leverage within the Democratic Party, which continues to treat him as if he were a straw boss on the liberal plantation. When Rollins was asked about the contretemps, instead of at least remaining neutral, he said he agreed with Clinton! He also said he would not wish to see Jackson associated with the Perot candidacy because Jackson is too controversial!!! The white Establishment of course prefers black leaders to be non-controversial. Some of my best friends think Jesse Jackson is a bad person, although they really can't say why. They really mean: He doesn't know his place.
Instead of keeping Perot on the offensive against the white Establishment, which is what Perot is supposed to be all about, Rollins with that incredible blunder lined Perot up with the Ruling Class. Jesse Jackson, stunned by the rebuff, had no choice but to slink back into the Democratic fold, practically kissing Clinton's polished boot. Clinton's bet had paid off. The nation's most important black political leader, rejected everywhere outside the Democratic Party, at least has a home within it, such as it is. A clearer understanding of what is going on would have led Rollins to bash Clinton for his insult to Jackson. The last two weeks would have turned out quite differently, as the Bush Administration would have watched Clinton and the Democrats squirming, its core constituency among African-Americans splintering. Instead, the Bush political team went to work on Perot, casting him in the image of Hitler and Mussolini, a businessman fascist. For the first time, Perot found himself on the defensive and he is still there, evidence of the shortcomings of his strategists.
Perot had also impulsively agreed to address a national organization of anti-incumbents, headquartered in Florida. Instead, Rollins squelched the idea, on the grounds that there are a lot of very fine people in Congress!!! The next thing you know Rollins will be arranging a Perot breakfast with Senate Majority Leader George Mitchell and House Majority Leader Richard Gephardt. We will have one big happy family. We saw a step in this direction earlier this week when Perot appeared on an ABC-TV "town meeting," with a handpicked audience of crackpots throwing grenades at him for an hour and a half. Under the circumstances, he was quite good, defensive, but under control. At the end of the show, though, he waved around a copy of Paul Tsongas' economic blueprint and announced that it was just about right!!! The best thing he has seen on paper, he said. It was the first obvious stage-managed political ploy I'd seen from Perot, who I'm absolutely certain has never read the Tsongas 78-page brochure. This may have been Hamilton Jordan's idea of how to woo Tsongas Democrats, if there is such an animal. Perot is supposed to represent radical change, not the kind of incrementalism and austerity that Paul Tsongas was pushing. If I'm right about Perot, though, we'll soon see him breaking out of these bounds, reasserting himself. He's not the kind of man to stay too long with a losing hand.
What we will be watching after the holiday weekend and before Congress breaks for the Democratic convention is the status of Jack Kemp's enterprise zone legislation. If it were not for the Perot candidacy, the legislation would be dead for sure by now. But the Ruling Class that controls both political parties in Washington is trying to keep Kemp happy by making believe it might actually pass a significant bill this summer. There have been a thousand attempts to water it down to insignificance and I personally believe it will not make it to the President's desk if it has any chance of producing growth in the inner cities. Ross Perot could make it happen by turning up the heat, reviving his idea of eliminating the capital gains tax in the inner cities if elected. The Establishment would much prefer the more modest Bush-Kemp proposal of a 14% capgains rate, if it came to that. Once again, though, we find that Perot has become much more careful about his positions on anything since he hired political handlers who are trained to reduce risk. In 1980, Ronald Reagan lost his enormous early lead in the polls for exactly that reason, as his managers designed a run-out-the-clock strategy. Only when it was clear he would lose unless he took some chances did Reagan's managers permit that to happen. It's something Perot might contemplate over Independence Day.