Clintonomics Watch: Opposition
Jude Wanniski
March 5, 1993

 

The solid party-line vote in the Senate Wednesday on extension of unemployment benefits seemed to be one more sign of White House strength on behalf of the Clinton economic plan. The President's team is using every hardball tactic in the book to maintain a partisan united front and there does not seem to be anything in sight to slow down the juggernaut. Republicans are running in nine different directions. The business community is splintered nine different ways. The President is claiming credit for the rally in the bond market as evidence of the worthiness of his plan, and Fed Chairman Alan Greenspan seems to be happy to giving him the credit. What's going on? If we believe the plan, enacted as is, would cripple the economy and balloon the deficit, shouldn't we be scared to death? Shouldn't the stock market be falling fast? Bonds too?

No. Nothing really has happened so far. Legislation has not been drafted, which means the Plan remains conceptual. There have been no hearings. Budget numbers and economic assumptions are changing wildly from day to day. The vote in the Senate Wednesday, which added $5.8 billion to the federal tab, was a cheap way for the Democrats to show solidarity with the President, but it also signaled business as usual. The idea that the markets are being driven by a genuine belief that the Clinton Plan will drive down the deficit is preposterous. At the moment, though, it does not matter that hardly anyone in Congress really believes in the Clinton Plan of "shared sacrifice." There is the universal assumption that Some Plan will eventually pass into law, and if you are going to be a part of the process, you have to pay public obeisance to it as the price of admission. We saw this in the surprising announcement from Sen. David Boren [D-Okla], our favorite Democratic Senator, who had initially dumped on the Plan. He now says he supports the Plan "unconditionally," which is to say he will vote for it in the Senate Finance Committee even if he fails to have it amended to his liking before the final vote. This is a horrifying thought, except that Boren knows what he's doing. He has strengthened his position by letting the Republicans on the committee know they will have to cooperate with him prior to the final vote. Boren wishes to kill the energy tax. He is also a supporter on capital gains.

This morning I called several business lobbyists in Washington whom I've gotten to know over the years. Not only is there a general state of anxiety about the Plan and about the sense of momentum in the air, but also a peculiar feeling of a disconnection from reality. Horace Busby, a lifelong Democrat who was an advisor to Lyndon Johnson, writes one of the most thoughtful newsletters out of the Beltway from that perspective. His February 28 letter, "Stunt Man," is circulating on Capitol Hill as a cogent commentary on that disconnection. Busby writes that "old-timers" see Clinton as a clone of Hubert H. Humphrey, an ebullient idea-a-minute politician "who never got any of his proposals passed; he was too full of himself to care about niceties." He predicts great difficulty for Clinton once he tries to engage the Democratic Congress in serious work: "There's no 'Boll Weevil' uprising, but there are many Democrats turning away from the Clinton program. Curiously, the new group seems to feel no need for mustering Congressional support behind what they do; it is a delusion. No Congress is ever eager to raise taxes. Presentation of the Clinton plan still a hodge-podge is not mustering support the President seems to expect."

The broad public opinion polls are giving the President rather high marks for his performance thus far, but that's only because they loved his performance in his State of the Union speech. The great majority of Americans wait for opinion leaders to analyze policy detail before they focus on such a complex program, and the details are not yet available. Informed opinion on the program, such as it exists, is overwhelmingly opposed, as evidenced by congressional mail. When I appeared on C-SPAN last week to discuss the plan, Brian Lamb told me that for the first time he had to arrange two telephone lines for the call-ins, one pro-Clinton and one anti-Clinton, since on a previous show, the anti-Clinton calls were swamping the pros by 30-to-l. C-Span has the most informed of all television audiences. As the Clinton Plan makes its way through Congress, this tidal wave of opposition will be felt, forcing constant amendment of the Plan. What emerges at the end of the pipeline will not resemble the original blueprint in many ways.

The news accounts of Hillary Rodham Clinton's work on health-care reforms would have us believe that the most expert people in the country will soon descend from a mountaintop in Wyoming with stone tablets. Hillary will personally part the Red Sea and 37 million Americans will find themselves with free health insurance at a tremendous saving to the American taxpayers! A friend in Washington, a consultant to the health care industry, pointed out to me that there were no representatives of small business OR big business in Hillary's group of experts. The reason they were excluded is that it would be impossible to put together a health reform scheme if any businessmen were present to pick it apart. The White House also excluded any representatives of the medical profession, as doctors and nurses are now defined as "special interests," and obviously capitalist tools. Ira Magaziner, the President's pal from Oxford who is helping Mrs. Clinton with the nuts and bolts, is the fellow who some years back designed an industrial plan for the state of Rhode Island, which The Wall Street Journal reminds us this morning, was defeated by the voters in a state referendum by a 4-to-l margin.

President Clinton is enjoying himself immensely so far, an Arkansas Traveler with a Coast-to-Coast talk show. Eventually, a gong will sound, the theatrics will end, and Congress will begin hearings. Reality will connect. The New York Times may even discover that the "tax-the-rich" features of the Clinton Plan will hit the paper's primary circulation area harder than anyplace else on earth, as half the people in the country with nominal incomes above $100,000 live within 90 miles of the World Trade Center. The Times, a longtime champion of an energy tax, will also discover that Senator Byrd of West Virgina, chairman of the Appropriations Committee, has protected his state's soft, dirty coal from the tax, and that New York City, which burns cleaner natural gas and uses electric power, will be clobbered.

The scene we have been witnessing thus far is as close to being a real life exercise as a friendly Monopoly Game is to being a hostile takeover on Wall Street. President Clinton will be happy to realize, some months from now, that Federal Reserve Chairman Alan Greenspan, who will be 67 tomorrow, has wisdom and experience in these matters, and will happy to share that wisdom and experience with the young President. Treasury Secretary Lloyd Bentsen, 72, will also lend an experienced hand as the Plan travels across Capitol Hill. Chairman Daniel P. Moynihan of Senate Finance, who will turn 66 a week from Tuesday, will provide the third leg of the anchor as a leader of the growth wing of the Democratic Party.

Greenspan has been generous to Mr. Clinton, but he knows, as we do, that the continuing strength on Wall Street is essentially a Greenspan Bull Market. President Clinton deserves credit insofar as he has been willing to leave Greenspan alone. This is no small thing, as it puts the young President in the strong-dollar category of U.S. Presidents, along with Ronald Reagan, not the weak-dollar category of Presidents Bush, Carter and Nixon. Remember which of these Presidents won re-election? Someday Mr. Clinton may even think back at who it was who first pushed him into support of Greenspan and he may recall getting a memo from Rob Shapiro to that effect. Shapiro, the young Harvard-trained chief economist at the Progressive Policy Institute, was blocked from appointment in the new administration by Robert Reich, the Harvard-trained Secretary of Labor or so I'm told by journalist friends. Shapiro, I'm confident, will be treated more favorably by history than Reich.

I called Horace Busby yesterday afternoon to thank him for his insight and we talked awhile about the young man in the Oval Office, whom he knows far better than I. Busby says it will take us another six months to learn what Bill Clinton is made of, for it will take the President himself that long to make that discovery. "He is only now realizing that this is not Arkansas."