Ever since his election, the press has analyzed his every appointment and utterance, searching for signs of what he’ll do. So far, we’ve come up short. He gave a long interview to The Wall Street Journal in which he talked tough on deficits and sounded like Bill the Bold. But was he simply telling the Journal’s readers what he thought they wanted to hear? We don’t know. Even he may not know.
Speculation is futile. Clintonomics is an empty phrase, not a policy. We will know what Clinton does when he does it. It’s better to ask what he should do. The answer is that he should concentrate on a few big problems instead of trying to fulfill a host of small promises. Specifically:
Although they don’t immediately threaten the economy, their persistence poses long-term dangers. As the government goes deeper into debt, rising interest payments on its borrowings crowd out other government spending. Since 1959, the interest burden has risen from 6 to 14 percent of all federal outlays. Likewise, huge deficits may ultimately depress private investment by raising interest rates and discouraging businesses from borrowing. Lower private investment rates would in turn gradually undermine the prospects for higher living standards.
As Clinton concedes, it will be hard to control budget deficits unless health costs are controlled. Consider the projections of the Congressional Budget Office (CBO). By the year 2000, Medicare and Medicaid spending is forecast to reach 23 percent of federal spending, up from 13 percent in 1991. The same process is squeezing take-home pay. Soaring health insurance premiums are draining more money from wages and salaries.
We have, as the Los Angeles riot reminded us, a society within a society. A vast group of Americans remain removed from the mainstream in neighborhoods that have too much crime and too few jobs. The persistence of so much poverty sows fear and tears at the idea of America. It is our biggest social problem. Even skeptics of social activism (like me) believe that some programs can help: say, tax cuts for the working poor, Head Start or better policing. But these programs cost money.
The trouble is that it would require almost heroic discipline by Clinton to focus on these critical problems. He’s burdened by all his campaign commitments, much as Bush was burdened by his “read my lips” pledge. He promised to revive the economy. The accelerating recovery may enable him to reject a “stimulus” package. But it will be harder to ditch his promises to improve the economy’s underlying growth rate by spending more on roads, new technologies and workers’ skills.
Unfortunately, this pitch sounds better than it is. Yes, technology is important, but most new technologies come from private firms. Yes, skills are important, but our schools suffer mainly from lax standards, not inadequate money. Some of Clinton’s proposals might be nice if we could afford them-but we can’t. This is certainly true of two of Clinton’s best-known campaign proposals: a middle-class tax cut and “national service” for college students. Money spent on them will divert funds from critical needs.
Recall that the budget deficits are projected by the CBO to total $1.1 trillion in the next four years. Providing health insurance for the uninsured would require more money, because even successful health-cost controls won’t instantly yield big savings. Likewise, a meaningful welfare reform or an expansion of Head Start could not be done on the cheap.
Clinton knows this. But he also knows that concentrating his attack on the nation’s biggest problems may be political poison. The spirit of sacrifice is alive on the nation’s editorial pages; it is not yet obvious in Congress. Deficit reduction? An energy tax is a good idea, but Congress isn’t chanting for one. Cut unessential programs (say, Amtrak)? No chorus there, either. Health-care politics is a swamp: a tangle of interest groups-doctors, hospitals, insurers-that constitute an eighth of the economy.
Nor is it obvious that Clinton must effectively address these big problems to win re-election. It is precisely because this trio-the deficits, health care and poverty-are chronic ailments that their political impact is hard to gauge. They may gradually get worse; but they won’t inevitably trigger a crisis or alter the business cycle. If the economy seems healthy in 1996, the odds favor the incumbent.
The upshot is that Clinton may be sorely tempted to fudge the most contentious issues. Perhaps he can shrink the budget deficit by creating a new “capital budget” that would absorb spending on new technologies, transportation and even education. Presumably, borrowing for these programs could be justified as an “investment in the future.” Then the deficit for the remaining operating budget would drop. This, of course, is a gimmick. Perhaps health coverage can be expanded by mandating companies to provide extra benefits. But without effective cost controls, the mandates would simply depress take-home pay.
What’s at issue is whether Clinton will make wise choices-and if so, whether he can sell them. There may be a constituency for change, even discomforting change. Certainly Ross Perot’s big following suggested that. But the constituency will not coalesce on its own. Only the president can popularize the case for shared sacrifice.
Whatever Clinton does, it will be calculated. His economic summit told us more about his political character than about his economic policies. His vast knowledge of policy means that any inconsistencies in his positions almost surely reflect deliberate choices, not inadvertent confusion. He may try to skip deftly around all of his promises. But too much fancy footwork could spawn cynicism and resurrect another Clinton: Slick Willy.
