The GOP's Sinking Ship
Jude Wanniski
September 28, 1992


There is a general sense of doom among Republicans that seems to have congealed in the last three days. Last night and this morning, all we have heard from party officials and activists, GOP members of Congress, and journalists who are generally in the know, is that it's all over. There's no way for George Bush to pull this out. The despair is regularly laced with the angry comment that George Bush doesn't deserve to win. The faithful last week still held hopes that James Baker III might pull a rabbit from his hat, that something dramatic would happen and the President would finally click. This week opens with an Evans & Novak column under a New York Post headline "BAKER FUMBLES." The column reflects widespread criticism of JBIII's handling of his rescue effort in general, and his handling of the debate issue in particular. "Beyond debates," the column observes, "Baker has missed two chances to complete long passes. He did not press the president to order capital gains indexed for inflation, which would have displayed nerve as much as economic wisdom. He did not try to demonstrate that a second Bush administration would be better than the first through a risky personnel shakeup -- such as immediately replacing Nicholas Brady at Treasury with Jack Kemp."

Paul Gigot last Friday reported in his Wall Street Journal column that Wall Street financier Ted Forstmann, who I have been saying for two years should replace Brady at Treasury, has been telling the Bush campaign that naming Kemp to the Treasury post now is the only thing that can save the President. Forstmann has the campaign's attention because last week he demonstrated he was willing to join the sinking ship as national co-chairman, with JBIII believing Forstmann's intent was that he be named to the Treasury post. "The Reaganauts who abandoned Bush," says Forstmann, "have to be given a chance to vote for someone they respect." He argues that Kemp is the only person available to the President who has the admiration and affection of the American people. They'd vote for Kemp, even though he's not officially on the ticket. If they could vote for a package that included Kemp at Treasury, they'd be willing to come back to Bush, he says. He's so convinced this is the missing ingredient that if it were done, he says he'd fly to London and bet $1 million on the President's re-election.

At this stage of the campaign, I believe Forstmann is right. Nothing the President says will make a difference between now and November 3 because his words have no credibility. Had he taken on Congress by indexing capital gains, he'd have revived his credibility. The re-entry of Ross Perot is actually pulling the President in the wrong direction, however. As Evans & Novak put it this morning, "In fact, dalliance with the Dallas billionaire [by the Bush campaign] is fraught with the danger of luring Bush into advocating austerity in the interest of deficit reduction." It's already happening.

  On "Face the Nation "yesterday, Budget Director Dick Darman spent most of the program explaining how the Bush program of spending cuts will eventually balance the budget. There was not a mention of capital formation and growth from him. Worse, Darman still cannot contain his enthusiasm for his 1991 budget deal, which the President says was a mistake. As far as Darman is concerned, it was only a mistake from "the President's political perspective." The President was on "Good Morning America" today, supposedly to talk about taxes. Instead, he rambled on about how he has tried to get Congress to cut spending for four years and failed! He has Perot on his mind too.

Now, only changing the team will work, and only by elevating Kemp to the Treasury post will he communicate that commitment rapidly enough to shift voter sentiment by November 3. The clearest example is California, a hotbed of entrepreneurial capitalism and Reagan Republicanism, which loves Kemp and loathes the Bush economic team. No Republican has won the White House without California since 1880. It has one fifth of the electoral votes needed to elect the President and practically every political expert in the country says it is in Governor Clinton's pocket. A Clinton landslide would end the GOP dreams of winning a majority of California's 52 House seats and at least one of the two Senate seats. If Kemp were named Treasury Secretary now, his growth message would dominate the campaign, drowning out the Brady/Darman voices and pulling California back toward Bush/Quayle.

By this stage, every time Nick Brady or Dick Darman appear on television in defense of the President, they cost him votes no matter what they say. There isn't a person in either the Main Street or Wall Street business communities who doesn't equate Brady and Darman with the nation's economic difficulties. For its part, the electorate is at least as sophisticated in understanding who has botched up their personal finances and the national economy as they are when it comes to knowing who to blame when their baseball or football team loses year after year. Individually, they may not have a sure grasp of detail, but in aggregate they surely do. If George Bush were the owner of a football team that had lost all its games for four years, the fans would not understand or appreciate why he insisted on rehiring the coach.

Everyone asks, why doesn't Baker simply exercise his power and cut Brady loose? Even the Clinton people to whom I talk don't understand the hesitation, except that the President is loyal to a fault. My only thought is that Baker still views Richard Darman with a mentor/protege affection that prevents him from putting his personal feelings aside to recommend to the President a dramatic shift in personnel -- which would have to include Darman if it includes Brady.

I've always thought it out of the question that Kemp would be offered Treasury, because of the antipathy to him by the Bush team. It's the only play left that has any realistic chance for JBIII, who knows that if the President is defeated November 3, he will be seen as having failed to play the Kemp card all the way. Kemp was actually a surprise choice by Baker to join the team sent to Dallas to argue the Administration case to Ross Perot. Perot had let it be known early this year that Kemp was his favorite in the Bush Cabinet, and at one point it seemed possible that a Perot-Kemp ticket could be arranged -- which seemed formidable to the political pros for the same reason Forstmann now argued for Kemp at Treasury: It would be seen as a clear commitment to a growth agenda.

From what I know, Kemp's plan is simply to address Perot, the entrepreneurial capitalist, not Perot, the Hooverian budget balancer who has emerged with the austerity plan concocted for him. The President's Economic Club speech says it all. If Perot wants the budget balanced, there is no nicer way than to double the size of the U.S. economy, to $10 trillion. An extra $5 trillion of GNP translates into an extra $1 trillion in federal revenues, year in and year out. That covers the $350 billion deficit, with plenty to spare. The only way to get there is with an all-out commitment to capital formation, of the kind Forstmann and I both thought intrigued Perot when we met him last spring -- at his request.

We'll see if Kemp had any effect when Perot appears tonight on the Larry King show. Forstmann, who made his TV debut for the Bush campaign last Friday on "Moneyline," has been invited by Larry King to debate a Clinton businessman later in the week. The GOP ship is sinking, but there are still a few supply-siders bailing as fast as they can.