State of the Union
Jude Wanniski
January 24, 1994


To understand the dynamics at work as President Clinton prepares to deliver his first State of the Union address, it would help to recall the political climate of Washington, D.C. in the early days of 1965. I remember the period well, as I'd just arrived in the Capital to work as a reporter for the National Observer. President Lyndon Johnson had just been inaugurated in his own right, having demolished the GOP candidate in the 1964 election, Senator Barry Goldwater of Arizona. The Republican Party had been stunned and demoralized by the debacle, which left it with 140 House members and 33 Senators. Worse, it left both political parties with the clear impression that the American people were no longer interested in traditional GOP principles and were anxious to build a welfare state. The best and the brightest minds that could be brought to bear on wiping out poverty in our time devised the "Great Society" legislation that soon was enacted. The only Democrat in town who quibbled about all this social engineering was an intellectual named Daniel Patrick Moynihan, who was labeled a racist by the more liberal nuts for suggesting that the Great Society would pulverize the black family unit and produce "an urban under class," as he called it back then. 

The Old Guard Republicans identified with the Goldwater wing went into the deep freeze, and a new young moderate Republican leadership emerged. These were not exactly Rockefeller Republicans, liberals who could not be distinguished from Democrats. They were pragmatists who would accept the concept of social democracy and offer the electorate moderation and technical superiority in their approach to a welfare state. Their leaders were men such as Gerald Ford of Michigan, Melvin Laird of Wisconsin, Albert Quie of Minnesota, Donald Rumsfeld of Illinois, and in the Senate, Howard Baker of Tennessee and Charles Percy of Illinois. It did not occur to them at the time that Goldwater's candidacy was doomed because it was built around fiscal integrity and a balanced budget, in the Hoover tradition. Goldwater had opposed the Kennedy tax cuts on these grounds. Rep. Robert Dole of Kansas was among the small number of Republicans who voted for the Kennedy cuts -- on the advice of a young Kansas banker, Wayne Angell. With a veto-proof Congress in 1965-66, Lyndon Johnson deepened the foundation for the welfare state with his "War on Poverty," which is what Moynihan was complaining about at the time. 

The agenda of these new GOP pragmatists was published in a 1968 book, Republican Papers, edited by Rep. Laird. It included an essay by Moynihan, "Where Liberals Went Wrong," in which he made his uncanny predictions of the black underclass: "Somehow liberals have been unable to acquire from life what conservatives seem to be endowed with at birth, namely, a healthy skepticism of the powers of government agencies to do good." Moynihan's recommendation was that the welfare bureaucracy be replaced with guaranteed employment. An inner city youth who could not find private employment need only show up and be given a useful public job. In the same book, Milton Friedman offered his cure, a negative income tax. Like Moynihan's jobs, this would theoretically keep family units intact by having the federal government substitute cash, no questions asked, for the welfare rules that were, then and now, destroying families, black and white. The statistics were scary even then, with the non-white illegitimacy ratio in Detroit, for example, rising to 22.8% in 1964 from 13.8% in 1950. It's now more than 65%. As Moynihan put it then, "The Depression has never ended for the slum Negro." 

The Republican strategy was to propose "constructive alternatives" to the liberal Democrats, who immediately labeled these the "Constructive Republican Alternative Proposals" (CRAP). These new pragmatic policies of the GOP were seen as helping elect Richard Nixon in 1968, although the Vietnam War was a larger issue and, in any case, the electorate kept the Democrats in control of Congress. Nixon brought Moynihan into his Cabinet and together they devised a Friedmanesque "Family Assistance Plan" that never got off the ground. On the other hand, Nixon added several new layers to the welfare state, introducing food stamps, revenue sharing, and generous increases to the LBJ entitlement programs. 

All the while the Republican Party was, as a matter of policy, conceding "the Negro vote" to the Democrats. The theory was that it was impossible to compete for black votes because Democrats would always be able to outbid Republicans via their traditional tax and spend policies. Remember, the very word "capitalism" was an epithet in those days, and there is no record in this period of any Republican, in politics or out, suggesting anything like "enterprise zones" as a way of getting capital to the inner cities. The Nixonian alternative was affirmative action contract set-asides, another government handout labeled "black capitalism." It was not until 1978, in our earliest days at Polyconomics, that we suggested the concept of "greenlining," a forerunner of the enterprise zone idea developed by Margaret Thatcher in England the following year. The concept has spent the last dozen years bottled up in congressional committees.

In addition, the civil rights legislation of the 1960s and early 1970s broke the hold of the Dixiecrats in the South, which had been solidly Democratic back to the Civil War. The national Republican party saw an opportunity to grab the disaffected white Southerners in a "Southern Strategy" that was part of Nixon's two election victories in 1968 and 1972. This was all the more reason to concede the black vote to the Democrats. Without direct competition for their votes by the two great political parties, African Americans have had nowhere to go. As far as I know, in more than three decades, there has not been a single television spot paid for by the national GOP that courted black voters. In a very real sense, democracy does not exist for African Americans the way it does for the rest of us. Thus we have Moynihan's urban underclass producing violence, rampant crime and drug usage, a broken public school system, a broken criminal justice system and prisons overflowing with a lost generation of young black men and women. The moral authority of the ruling class has imploded even as federal, state, and local budget deficits have exploded. The cascading social problems have spilled into every corner of American life, poisoning the state of the union, white and black. 

President Clinton tonight will, of course, put a rosy glow on his first year in office. His approval rating, at 59% in some polls, primarily indicates people are happier with the economy now than they were a year ago, and are happier still that he hasn't sent 100,000 troops into Bosnia. What's ahead is another matter. The President will speak of his health care reform, his welfare reform, and his crime reform. None of these really addresses the central problem that we have described above. Indeed, if the health care reform is approved in even remote resemblance to the Billary Plan, it will magnify this central problem. With its bureaucratic mandates and controls, the statist plan will crush what little hope remains among the urban underclass for a shot at the American Dream. It is a plan to turn the United States into Europe, with the social strata frozen in place. The welfare reform will throw the urban underclass into the job market, with no jobs. The crime reform will put the urban underclass into permanent penal servitude, which is where it was prior to the Civil War.

What will the Republicans do? The Clinton Administration is, of course, hoping they will be pragmatic, that they will be drawn yet again into new schemes by which they can demonstrate their moderation and their technocratic management skills. The White House is hoping the GOP will present "Constructive Republican Alternative Proposals," which will spend less and be less intrusive than the Democratic proposals, but which will in the end give national health insurance a good running start on the books. The White House last week went to a good deal of trouble, briefing about 30 columnists on exactly how they plan to do this -- moving left in the House, moving right in the Senate, and coming out in the middle at the end of the day. The Clinton strategists are thus broadcasting at the very outset that they have every intention of winning it all. The intent, obviously, is to encourage moderate Republicans in the House and Senate to think that when they are handed marginal compromises, they will be reasonable, pragmatic. What the hell. 

For the Republican leadership to save the United States from the fate of the Old World, there has to be unity not only behind a plan, but also behind a philosophy of governance. Instead of lining up as fiscally responsible statists, as they did in the late '60s, Republicans this year have to devote themselves to the potential of ordinary individuals, of all creeds and colors. There has to be an end to the Southern Strategy and a conscious courting of the electorate that constitutes one-eighth of the nation. If the state of the union is going to be better in 1995 than it is at this moment, the GOP leadership this year has to be wiser than the Democratic leadership, not more reasonable.