Clinton/Lott Government II
Jude Wanniski
November 15, 1996


PRE-NUPTIALS: Liberal opinion leaders are complaining that the Republicans are being too hard-nosed in their post-election posturing. They particularly don’t like Senate Majority Leader Trent Lott insisting that President Clinton pay some price for having demagogued on Medicare during the presidential campaign, which of course everyone in the know knows he did. By the way, so did the voters, which is why they only gave the President 49% of the vote, and why they gave the Republicans control of the direction of the national government. What is really going on here is that Lott is making it absolutely clear that he wears the pants in this family. He can’t dictate to President Clinton, or make him “grovel” as the price to be paid. But he clearly is  establishing the fact that the American people want the Republicans to conduct the necessary reforms of public finance, and have only given Mr. Clinton a second term in order to serve as a check on any sudden impulses the GOP might have to shred the social safety net. Senator Lott has been absolutely perfect in his handling of these pre-nuptial arrangements. As long as he continues to demonstrate to the nation that he is in charge on Capitol Hill, and is a reasonable man who will in the last analysis put policy ahead of partisanship, Lott will be able to get the President to happily do things that may shock the Democratic Party’s liberal wing.

MEDICARE: The Wall Street Journal’s lead editorial yesterday, “Medicare Reckoning,” set the right tone for Lott’s negotiations with the White House. The President wants a “bipartisan commission” on Medicare entitlements, because he wants “political cover” for the Medicare cuts he knows will have to be made to save the system. That’s the cynical reason. He also wants a bipartisan commission to shift control of the issue away from the GOP Congress, which Lott points out has the power and responsibility to do the job itself. The President, after all, does have a mandate to play at least a defensive role in such deliberations. The New York Times, which does not really care about providing political cover for the President, correctly observes that a commission would enable the government to solve more easily the thorny problems that would otherwise invite even more demagoguery. Lott, who opposed the 1982 Greenspan Commission on Social Security, which “solved” the problem with tax increases, will not relent on a Medicare commission unless he gets to name the chairman. The White House might ask for equal co-chairpersons, but that would give Mr. Clinton everything he wants. With the right chairman, one who understands how much the entitlement problem can be ameliorated through economic growth, the commission really  could serve the national interest. 

KEMP: Instead of flying off on vacation, Jack Kemp has wisely remained in Washington during these critical post-election days, in the thick of things as Lott, Newt Gingrich and Senator Connie Mack of Florida plan their strategies for the 105th Congress. The “amigos,” as they have been calling themselves for the last dozen years, spent the day yesterday conferring. Kemp’s many detractors inside the Beltway hate to admit it, but he remains not only the favorite for the GOP nomination in 2000, but also the de facto leader of the Republican Party. This is because he remains the leader of the GOP’s growth wing, and Lott, Gingrich and Mack are all card-carrying members of that wing. The Republican governors deeply appreciate the fact that they need a unified party if the central government is going to be able to deal with the mountain of problems involving public finance -- and they can readily see how those channels lead to Lott and Gingrich through Kemp. From his office at Empower America, he has been on the phone with several of the GOP governors as a way of assuring they will be in the “amigo” loop as strategies are developed. Earlier in the week, he met with Michigan’s John Engler to discuss ways of increasing the political effectiveness of the governors in national policymaking. 

CLINTON CABINET: Because domestic policy is going to be in the hands of Trent Lott & Co., the President correctly sees the assembly of his foreign-policy team as his “first and most urgent task,” as his press secretary puts it. The NYTimes has it that Sen. William S. Cohen, the Maine Republican, is likely to be named Defense Secretary. This seems to make it less likely that George Mitchell, the former Senate Majority Leader also from Maine, would get the State Department. Everyone agrees Mitchell is the smartest candidate in the field, but he has no special expertise in the area and one wonders if he has the personal diplomatic skills, after his one failed effort in Ireland. Sen. Sam Nunn of Georgia would like the job and would be terrific at it. Nunn is being cut up by outsiders who can get through to the President, those who would lose influence over foreign policy if Nunn were at State -- telling Mr. Clinton Nunn can’t be trusted to be a team player. This was the rap put on Sen. Bill Bradley four years ago, when President-elect Clinton wanted to put Bradley at State. We could all sleep easier if Nunn were at State, though. There would be forward strategic planning, at last, and no impulsive moves in the middle of the night to bomb Iraq. Nunn was horrified at the bombing of Iraq, but he did scour the UN resolutions until he found a point on which he could hang his hat in support of the President. The Times tells us Richard Holbrook is being considered for State. Holbrook is imaginative, creative, brilliant. My kind of guy. But none of us could sleep easy with him at State. You couldn’t sleep easy with me at State, could you? This is no time for cowboys. 

RANGEL: Our guest this week at our annual fall dinner in NYC, Rep. Charles Rangel, the ranking Democrat on House Ways & Means in the 105th Congress, made it clear he would be a tough cookie in demanding federal assistance to education and job retraining. He has been hammering at that theme for years -- asking what good does it do his constituents in Harlem when a capital gains tax cut produces high value-added jobs, if his constituents can’t qualify for them. The one unsolicited piece of information he dropped was that he would look kindly on the indexing of capital gains. 

TORRICELLI: The National Review, bemused, reports on a recent client letter where I listed Kemp, the Republican governors, Charlie Rangel, and Bob Torricelli, as key “optimists” in the era ahead. Torricelli is the liberal Democrat I endorsed in our New Jersey Senate race, on the grounds that he is a supply-side liberal, who would be the first on the Democratic side of the aisle. He won over his able opponent, Rep. Dick Zimmer, by 10 percentage points when the experts were saying it would be a dead heat. The following day, he told a reporter on National Public Radio that the very first thing he wanted to do as Senator would be to cut the capital gains tax. He is now casting about for a junior Republican Senator with whom he can partner.

THE BOTTOM LINE: Things are going as well as we could expect. We are out of Whitewater into Bluewater. Stocks are up, bonds are up. Fed Chairman Alan Greenspan has to be as happy as a clam, with gold nudging below $380. We have before us the prospect of the honeymoon of a happy couple, Bill Clinton and Trent Lott, divided harmony. As the saying goes, “Thanksgiving is coming. The goose is getting fat. Please put a penny in the old man’s hat.”