Making U.S. No. 1 Again by Remedying Ills at Home

When Rep. Richard A. Gephardt, the House majority leader, met with Japanese businessmen in Tokyo last fall, he heard a suggestion that startled him: Since Japan was already financing a hefty part of the staggering U.S. national debt, why not issue U.S. Treasury notes in Japanese yen instead of Yankee dollars?

For the Missouri Democrat, that proposal served as more than just a disturbing symbol of the U.S. disadvantage in international economic competition. It also was a rallying cry for a compelling new political idea called economic nationalism.

As Gephardt and other proponents define it, economic nationalism reaches far beyond the controversies over tariffs and quotas that have dominated the political debate over America’s huge trade imbalance. To them, economic nationalism aims at nothing less than a late 20th-Century American renaissance, an effort to reclaim the economic ground the United States has lost in the world arena by reinvigorating the country’s sense of purpose and pride.

“I don’t like America being in a position of dependence on any other country,” Gephardt told some 2,000 delegates to the national convention of the United Auto Workers here in June.

“I don’t want America to be No. 2 or 3 or 4. I want America to be first again, and so do you.”

It was no surprise that Gephardt’s nationalistic rhetoric brought down the house at the Anaheim convention. No industry has suffered more from foreign competition than automobile manufacturing, and the UAW itself has lost fully a third of its membership--some 500,000 women and men--in the last 10 years.

More significant is that economic nationalism is gathering increasing support from a broad range of economic sectors and political blocs. It is forcing the hierarchy in both political parties to reshape the national political agenda.

To its critics, economic nationalism sounds like a phrase that disguises protection of U.S. industries from foreign competition by means of quotas, tariffs and other barriers to overseas goods.

Clean Up Their Act

But the economic nationalists say that they are aiming beyond merely forcing fairer treatment from U.S. trading partners abroad. They want Americans to clean up their own act at home by spending more on industrial research and less on fancy weaponry; cutting the school dropout rate and boosting academic standards, and shifting personal values away from short-term acquisitions to long-term human enrichment.

Economic nationalism has its champions in both parties. But it appears for now that it is the Democrats who are determined to claim this issue as their own. Some see it as the surest path back to the White House.

“It is clearly the umbrella issue for us, the most compelling issue underlying the case we have to make for change,” said Boston pollster Tom Kiley, a top strategist for Michael S. Dukakis’ 1988 presidential campaign. “It has a sense of national purpose and idealism. And it has a populist edge.”

Some Republicans put that argument down as a mark of Democratic desperation. “It’s the closest thing to a populist issue the Democrats have,” scoffs David Keene, chairman of the American Conservative Union.

Yet opinion polls strongly suggest that the climate is right for such a message. An increasing number of Americans believe that the greatest threat to the national security comes not from the communist military power of the Soviet Union, as in the past, but from the economic power wielded by Japan and other capitalist competitors.

Anger Becoming Xenophobic

Moreover, anger and anxiety over foreign economic clout is approaching xenophobic levels. Fully 70% of those questioned in a Gallup Poll for Times Mirror said they were convinced that foreign investment is a bad thing for the United States.

By a 2-1 margin, the Gallup sample concluded that Japan, not the United States, is the world’s leading economic power. And their outlook for the future was just about as glum. By 45% to 33%, those polled said that they expect the Japanese to be on top still by the year 2000.

All this has increased demands from the electorate, particularly among groups most directly hurt by foreign competition, for a firmer U.S. stance on trade.

“I think we need to be tougher on the Japanese to get them to allow our goods into their country,” said UAW convention delegate Douglas D. Nuss, a farm equipment worker from Oelwein, Iowa. “I don’t think that’s protectionism--unless you mean protecting our right to fair treatment.”

“We’ve become pussycats” in the eyes of the rest of the world, grumbled an Atlanta plant manager, a Democrat, who participated in a give-and-take “focus group” session conducted by the Roosevelt Center during the 1988 election campaign.

Conscious of Shortcomings

At the same time, however, Americans seem to be increasingly conscious of their own shortcomings. In the same Atlanta focus group session, a Republican woman who had voted for Ronald Reagan spoke of a link between contemporary values and America’s difficulty in competing for world markets.

“It seems like you hear more and more about Japanese workers and other countries being able to produce better products,” she said. “And there doesn’t seem to be any more pride in workmanship. It’s a lot of wanting to take instead of give.”

In addition to shedding their illusions, “Americans have also lost a sense of their own identity,” according to pollster Stanley Greenberg. In a recent survey taken for the World Policy Institute, a research group, Greenberg found that voters believed once-traditional American values such as hard work and strong family ties had become more typical of Japanese society than of their own.

This turbulent mix of emotions has placed a premium on candor and insight in political leadership.

“If you try to be a simplistic demagogue, unless the economy goes to hell in a hand basket, that’s not going to work,” said Arkansas Gov. Bill Clinton, a 1992 Democratic presidential prospect who has been in the forefront of efforts to improve U.S. competitiveness at the state level. “You have to have credibility.”

Accepting Responsibility

Clinton acknowledges that the United States bears much of the responsibility for its predicament.

“You can’t blame the Germans or the Japanese for the fact that we are undereducated,” he pointed out. “You can’t blame them for the money we waste in the draining effect of the federal deficit--or the fact that we’d rather spend money bailing out the savings and loan industry or promoting mergers and acquisitions than investing in emerging technologies.”

Democrats claim that economic nationalism is an issue cut to the activist cloth of their party.

“It’s a Democratic issue because it points to a role for government that is beyond the imagination of the Republican Party,” said Tennessee Sen. Albert Gore Jr., a 1988 presidential contender who is expected to try again in 1992.

“Actually,” Gore pointed out, “economic nationalism is not one issue, it’s several issues.” He talks of improving education, of making capital more accessible to new enterprises, of speeding the flow of information though a government-created network for transmitting information from supercomputers.

Avoid Past Mistakes

Gore cautioned that “Democrats have to be careful” to avoid past mistakes and not use economic nationalism as a wedge for “over-interfering” in the economy or in the lives of individuals.

Democratic strategists see economic nationalism as a way to deflect the charge that they are too often absorbed with the parochial and often esoteric demands of selfish constituencies.

“This gives us a chance to talk about something real, something that is part of America,” Paul Tully, political director of the Democratic National Committee, said.

The Democrats hope to strike a chord with the millions of voters who can identify with those who have been forced, by America’s declining competitiveness in foreign trade, to give ground in their own lives.

“I don’t think anyone in this country would say they would rather do with less,” said Bryan Mitchell, a UAW service representative from Danville, Ill. “I think more people have come to realize that some gears have slipped in the economy.”

Effect of Unemployment

Mitchell’s wife, Cheryl, a production worker at a General Motors foundry, worries about the impact on their three teen-age children of growing up in a community with a 34% unemployment rate.

“I think our children’s attitudes about school and drugs reflect our own general feelings about the future,” Cheryl Mitchell said. “And our own feelings are that the future is not so bright.”

The make-America-first slogan of the economic nationalists is reminiscent of the America First movement of 50 years ago that sought to keep the United States out of World War II during the months before Pearl Harbor. But proponents reject the accusation of isolationism.

“It’s just the opposite,” Ohio Democratic Party Chairman James Ruvolo said. “We all know we’re in a global marketplace. The question is where we stand in the global competition.”

Indeed, unlike the America Firsters of half a century ago, the economic nationalists by no means want the United States to secede from the world. Instead, leaders of the new movement want America to flex its economic and political muscles to get a larger share of the global action.

Alert to the Potential

The Republican White House is plainly alert to the potential of this political movement.

“The Bush Administration will not get positioned as being soft on trade,” one White House political strategist said. “We are not going to let this issue slip away.”

As evidence of President Bush’s determination, the aide pointed to Bush’s recent decision to cite Japan, along with Brazil and India, for unfair trade practices under the tough U.S. trade law enacted last year.

Yet the Bush Administration was blindsided when members of Congress from both parties attacked its plan for a joint arrangement with Japan to develop the FSX advanced fighter aircraft.

“Two years ago nobody would have said anything,” Gephardt asserted. But in the newly sensitized political environment, when the FSX deal was announced shortly after the presidential election, “all hell broke loose.”

‘Coddling of Japanese’

Citing Japan’s huge trade surplus with the United States, critics demanded to know why the Administration did not insist that the Japanese buy the finished FSX from the United States, instead of co-producing the plane.

“This coddling of the Japanese is not the attitude that made our nation great,” warned Sen. Jesse Helms (R-N.C.). “It is not an attitude that will preserve this nation as one after the other of our fine industries are destroyed. If we are to survive as a nation, we must take a stand.”

Another Republican foe of the proposal, New York Sen. Alfonse M. D’Amato, evoked the industrial and military might that had defeated the Japanese in World War II. “The shipyards that launched those aircraft carriers and merchant ships are largely shuttered and dark,” D’Amato said.

Only the U.S. aerospace industry is still able to hold its own in global competition, D’Amato said. “Yet here we are,” he lamented, “ready to sell it for a handful of silver. Wake up, America! This is our future--our national security is at stake.”

Congress ultimately approved the FSX deal, but only after the Bush Administration renegotiated and extracted terms more favorable to American business.

Waiting for Hard Times

Even as the political parties scramble to claim economic nationalism as their own, some skeptics maintain that it is little more than an idea waiting for hard times to come.

Republicans say that if the Bush Administration can stave off a serious recession, the Democrats will not be able to use economic nationalism to blunt Bush’s reelection campaign in 1992.

“It’s just a superficial issue, a way for Democrats to wrap themselves in the flag,” former Republican National Chairman Frank J. Fahrenkopf Jr. said.

Moreover, Democrats are vulnerable themselves. Despite Gephardt’s contention that the Bush Administration might accede to Japanese pressures and issue yen bonds, for instance, it was President Jimmy Carter who was forced, in 1978, to issue bonds in foreign currencies because investors had lost faith in the dollar.

Republicans who dismiss the potential of economic nationalism point to the 1988 presidential campaign, when Dukakis’ efforts to blend concern over the trade deficit with a populist appeal were overwhelmed by Republican emphasis on peace and prosperity.

Failed to Communicate

The Democrats say that Dukakis merely failed to communicate his message effectively.

“I don’t think the issue was exploited effectively by Dukakis,” said former UAW President Douglas Fraser, now teaching labor relations at Wayne State University in Detroit. Dukakis failed, Fraser said, “to appeal to feelings of patriotism, the feelings that our flag and our country are being treated unfairly. “

Gov. Clinton believes the case for economic nationalism can be made even when the outlook is no worse than mixed, as it is now.

“The first thing you have to do is assume that people are pretty smart,” he said, “and you have to find simple, compelling ways to explain how all these issues are affecting them.”

“You don’t need hard times to make this issue work,” Democratic pollster Peter Hart added. In a recent private survey that Hart conducted, in which Bush was rated on his handling of nine issues, the President got his most negative ratings on “dealing with the trade issue and the loss of American jobs.”

Hart concluded: “This issue is working against George Bush right now.”

Worrying About The Japanese An increasing number of Americans believe that the greatest threat to the national security comes not from the communist military power of the Soviet Union, as in the past, but from the economic power wielded by Japan and other capitalist competitors.

A Gallup Poll, conducted for Times Mirror, showed anger and anxiety over foreign economic clout is approaching xenophobic levels and has increased demands from the electorate, particularly among groups most directly hurt by foreign competition, for a firmer U.S. stance on trade.

Here are some of the results. Is foreign investment in the United States a bad thing? Yes: 70 No: 18 Who is the world’s leading economic power? Japan: 58 U.S.: 28 Who will be the leading economic power by the year 2000? Japan: 45 U.S.: 33