No Detroit Followup in Sight
Jude Wanniski
September 15, 1992


White House chief-of-staff Jim Baker has had five days to follow up on the Detroit Economic Club speech that showed so much Reaganesque promise. What we've seen, though, is worse than nothing. The Baker White House has permitted Treasury Secretary Nick Brady and Budget Director Richard Darman complete freedom to spin the economic agenda to their own tastes. This morning's Wall Street Journal has a lead story by Alan Murray, who takes his cues from Darman, which clearly indicates that the Brady-Darman budget deal completely dominates the President's economic agenda. Jack Kemp and Rep. Vin Weber are characterized by the Journal's chief financial correspondent in Washington as being "unfortunately" not "fiscally prudent" for urging the President to put economic growth ahead of the budget deficit. When the White House last week retracted the President's New Jersey pledge to never, ever again raise taxes, this also indicated JBIII's willingness to allow Brady and Darman to control the agenda. The Bush-Quayle campaign is now putting out a "Backgrounder" on "The President's Agenda For American Renewal" that does not even mention taxes, let alone capital gains.

Because I so much admire Jim Baker and Bob Zoellick, I've so far forced myself to swallow the line, attributed to Baker, that the President cannot get rid of Brady and Darman at this late hour because it would disrupt the government. I've even forced myself to buy Baker's argument that the President could not index capgains by executive order because the Justice Department lawyers would have thrown a fit. But no matter how hard I try, I cannot understand why the President does not demand that this Congress index capital gains right now, before it adjourns. As there is $7 trillion in unrealized capital gains tied up out there in voter land, it would be a very popular thing for the President to do. The GOP platform favors it. He got a round of applause in Detroit last week when he said he wants to index capital gains. And Governor Bill Clinton, his Democratic opponent, who is now leading by more than 15 points in the opinion polls, is on record as favoring indexing capital gains! This would seem to be a "no brainer," but the White House has resisted all appeals that the President ask Clinton to join him in asking Congress to do this marvelous thing.

The explanation I get is that this Congress isn't going to do anything to help the President. The objective, though, is to persuade the electorate that the President means business, which he can only do by showing a willingness to fight for that which Congress most wants to refuse him. The President could do this by simply asking for a "sense of Congress resolution" that it is not the intent of Congress that inflated capital gains be indexed. How could Governor Clinton and the Congress refuse? With such a resolution in hand, the President could advise the Attorney General that he is changing the regulation and the Justice Department bureaucrats could go fly a kite. Only a lawyer would say it is not enough that the two presidential candidates and the Congress say inflated gains should not be taxed. If a law must be passed, it runs into the excuse that it violates the Brady-Darman budget deal.

  If the Congress did refuse, the President would have his issue. He could underscore the stubbornness of the Democratic Congress on capital gains over the last four years as the source of the economy's problems. It would restore his credibility with the American people by showing action, not promises or words. We hear Vin Weber is telling the White House that if Clinton would undertake precisely this initiative, he would cinch the election. The Bush Administration would go down, with all hands on deck. Jim? Bob? Are you there?