Bush’s Illusionary Legacy : CLINTON TAKES ON A CRUMBLING FOREIGN POLICY

“It would be the supreme irony of fate,” President-elect Woodrow Wilson wrote to a friend before his inaugural, “if my Administration were to be chiefly occupied by foreign affairs.” Eighteen months later, Sarajevo leapt into the headlines, and the descent to World War I began.

Foreign-policy failures broke Presidents Wilson and Lyndon B. Johnson. The approach of war and the botched peacemaking attempt at Versailles wrecked Wilson’s domestic-reform program, while the Vietnam War divided Johnson’s party and undermined his ambitious domestic agenda. Both presidential failures condemned their party to the political wilderness for a generation.

Bill Clinton take note. Many voters assumed a vote for Clinton was a vote for a President focused on domestic issues, but President-elect Clinton and his supporters are discovering that the road to a successful domestic economy lies through the realm of foreign policy. They are learning that George Bush’s foreign-policy failure--not too much foreign policy, but the wrong foreign policy--is the greatest single problem the Clinton Administration will face. Unless the President-elect is both lucky and careful, Bush’s foreign-policy failure will play the same role in the Clinton Administration that Ronald Reagan’s economic failure played in the Bush years--a legacy of doom the new Administration can neither control nor evade.

The herald of the “new world order” leaves office with the world in a mess. Fascism and worse looms in Russia; Yugoslavia’s descent into barbarism continues unchecked; the European Community is increasingly unable to cope with its own problems, much less bring order to its troubled neighborhood. Iraq still seethes; Iran is ever more assertive; the disintegration of civil society continues across much of northern black Africa and the intensifying struggle over South Africa’s future will be a constant headache for the Clinton team. Bush’s politically motivated decision to sell warplanes to Taiwan reduced America’s China policy to incoherence even as the Russian collapse and the progress toward Korean reunification introduce new and worrying elements into the Asian balance of power.

Closer to home, Cuba’s transition from communism is unlikely to be smoother than transitions in Eastern Europe; the Clinton Administration could well face waves of immigrants and prolonged instability in the Caribbean. The march of democracy in Latin America is less impressive than at the start of the Bush years. Sanctions have had no effect on Haiti; dictatorship has replaced democracy in Peru; Venezuela’s coup plotters are more popular than the elected President; Brazil’s democracy has yet to establish a stable regime and Argentina seems to be backing away from its economic reforms even as its president concentrates power in his own hands.

The broader foreign-policy failures of the Bush years will be trouble enough, but President Clinton will be even more painfully harassed by the legacy of Bush’s international economic policy. Here the record is of almost unmitigated disaster. Despite its rhetorical commitment to free trade, the Bush Administration leaves office trailing an ignominious record of trade failure. Bush has not been able to get a General Agreement on Tariffs and Trade treaty, and the North American Free Trade Agreement will not be ratified here or in Canada without substantial changes.

Meanwhile, the Asian-Pacific nations are so alarmed by the protectionist components of the NAFTA agreement that they are moving toward the organization of an Asian Free Trade Area--from which they propose to exclude the United States. Instead of the grand global market that the Bush Administration sought, the Clinton Administration faces the prospect of a world of blocs in which Germany and Japan will enjoy privileged access to vast markets, while the United States is left to consummate free-trade agreements with Latin America--outside of Africa, the world’s slowest growing and most debt-laden region.

To avoid this fate--which practically guarantees the United States years, if not decades, of economic stagnation--Clinton will have to get the GATT talks back on track, but it won’t be easy. The Bush Administration, consistent if misguided, used both GATT and NAFTA negotiations to create an international economic system based on trickle-down economics, and the Clinton Administration will have to reshape these treaties to bring them into harmony with its own economic philosophy. At a minimum, Clinton will probably have to ask Congress to extend his negotiating authority past its current cutoff date in March; it could easily be a year or more before he can bring a GATT agreement to Congress.

All these will be headaches for the new President, but his most fundamental problem is to succeed where Bush failed: to develop a global program for economic growth. Without this, there is little he can do to stimulate the domestic economy. In the good old days when John F. Kennedy was President, tax cuts and deficit spending used to work because they created new economic demand that was filled primarily by U.S. producers. The demand created new jobs and new profits here at home; the taxes on those profits and jobs helped rebalance the budget.

Reagan got far different results. In today’s international economy, U.S. deficits and tax cuts don’t stimulate the U.S. economy alone; they stimulate the Mexican, Korean, Japanese, Chinese and German economies by stimulating imports. The government gets less revenue from growth; the deficit swells. This is what happened to Reagan’s tax cuts and what will happen to Clinton’s economic program unless he can build an international consensus for international stimulus.

If Europe--which really means Germany--Japan and the United States all act together for growth, nothing can stop them, but only the United States can take the lead in generating a global growth strategy. This is precisely what the Bush Administration failed to do.

Germany doesn’t want domestic inflation; the United States and Japan don’t want high interest rates; the Japanese government, paralyzed by scandals and by its ties to special-interest groups, is unable to act decisively on the economic front. The Bush Administration--timid and vacillating in its approach to international economics--could never get beyond these roadblocks, and simply gave up in despair. The result was a prolonged economic slowdown in the United States, which ultimately cost Bush his job.

As Ross Perot might have said, it’s really this simple: If Clinton can provide international economic leadership, the global economy will be healthy and the U.S. economy will grow along with it. If he fails, four years from now he will be packing his bags for Little Rock.

The President-elect seems to know this is true, and Robert B. Reich, the Harvard professor named to coordinate the economic policy transition, is also committed to international growth initiative right up there with national security, arms control and the spread of democracy as a major foreign-policy goal.

He’s talking the talk. If President Clinton walks the walk, if he brings Germany and Japan along on a practical global recovery plan, he will have done more than any President since Harry S. Truman to build a framework for domestic prosperity and international peace. He will have also done more than any Democrat other than Franklin D. Roosevelt to make his party the majority party in American life.