A HARD SELL : CLINTON IS PUSHING CHANGE, WILL THE NATION BUY IT? : Eluding Reagan’s Trap, By Switching the Game

All during the campaign last year, Bill Clinton said he was running on the issue of change. Well, guess what? He meant it.

The economic plan the President presented to the country last week is not just a change. It is a sea-change. It is the most fundamental reorien tation of U.S. government since the Reagan Revolution of 1981--and possibly since Lyndon B. Johnson’s Great Society of 1965 or Franklin D. Roosevelt’s New Deal of the 1930s.

If this plan passes, the Reagan era, defined by huge tax cuts, is over. Ronald Reagan said he also wanted to cut spending, but he never did. Instead, he increased defense spending and didn’t really pressure Congress to curb domestic spending.

Reagan’s tax cuts pulled the revenue plug on the federal government. They created enormous budget deficits. Even if the Democrats got elected, the theory went, they would be under intense pressure to keep spending down.

What a brilliant concept! With no money to spend, Democrats could no longer be Democrats. They were trapped. The Democrats would either have to raise taxes, which would be suicidal, or accept the new reality of smaller government.

But Clinton has not fallen into that trap. He has outsmarted the Republicans. How? By adopting the cause of deficit-reduction as his own.

Clinton is using the deficit to justify raising taxes and cutting defense. Those happen to be two things Democrats have wanted to do for the past 12 years. Remember the Democratic candidate who promised to raise taxes in 1984 and got clobbered for it? Bill Clinton, meet Walter F. Mondale.

Clinton says he is reducing spending on “consumption” and increasing spending on “investment.” Perhaps he knows the difference, but the deficit doesn’t. To the deficit, spending is spending.

Republicans are incensed. They claim Clinton has raised taxes and cut defense far too much, without deep enough cuts in wasteful domestic programs.

They have a point. Sen. Phil Gramm, a conservative Republican from Texas, has released an analysis of Clinton’s plan showing that almost 60% of the deficit reduction comes from higher taxes and 35% from defense cuts. According to Gramm, a lot of Clinton’s domestic spending cuts are really tax increases. The Administration claims, for instance, that the higher tax on Social Security benefits should be counted as a spending cut: benefits paid out are then taken back. Gramm insists that’s a tax increase.

What difference does it make? Whether you call them tax increases or spending cuts, they still reduce the deficit.

The Republicans certainly couldn’t cut spending under Reagan or George Bush. What Reagan did was cut taxes, increase defense spending and try to hold the line on domestic spending. Result: The deficit went up. What Clinton plans to do is increase taxes, cut defense spending and try to hold the line on domestic spending. Result: The deficit should go down.

A smaller deficit would open the way for big new Democratic spending programs on things like health care, worker retraining and technological research--what Clinton calls investment. Where would the money come from? From the tax increases and defense cuts in Clinton’s plan that he hopes voters will now accept in the name of deficit-reduction.

What a brilliant concept! The deficit was supposed to trap the Democrats. Instead, Clinton is using the deficit to get out of the trap and let Democrats be Democrats. If it works, he will reverse the Reagan Revolution. Happy days are here again!

First, however, Clinton has to sell his plan to Congress. How hard can that be when Democrats control both houses?

It will be plenty hard if the voters don’t like the plan. That’s why the whole Administration is working so hard to get the public behind it. The President’s speech Wednesday night was targeted, not at Congress, but at the mass viewing audience. In fact, his message to Congress was a warning: “Our people will be watching and wondering . . . whether we’re all going to conduct ourselves as if we know we’re working for them.”

On Wednesday night, for the first time since taking office, Clinton seemed completely in control. He was a terrific salesman, because he had the one quality any good salesman must have: total confidence in what he had to sell. “Our nation needs a new direction,” he declared. “Tonight, I present to you a comprehensive plan to set our nation on that new course.”

The speech did exactly what it was supposed to do. It rallied the public behind the program. The CNN-USA Today-Gallup poll interviewed the public last weekend and viewers of the President’s speech just after it was over Wednesday night. There was a complete turnaround.

Before the speech, Americans were solidly opposed to a new energy tax by better than 2-1. People who watched the speech favored it 3-2.

Before the speech, a majority of Americans opposed any tax hike on Social Security. A majority of those who watched the speech favored the increase.

Before the speech, Americans were split over whether Clinton’s plan would reduce the deficit. After the speech, two-thirds of viewers said it would.

Before the speech, half the public said Clinton was not proposing to raise taxes in a fair manner. Only 20% of those who watched felt that way afterward.

By 5-1, those who watched the speech said they supported the President’s plan. In fact, 62% said they were “enthusiastic” about it. Clinton needs more than passive acceptance of the plan. He needs the public to pressure Congress to pass it, as they did with Reagan’s plan in 1981. “We need your help,” the President told an audience in St. Louis on Thursday. “You have to show up at events like this. You have to tell your member of Congress how you feel.” So far, that seems to be happening.

And to make sure it does, Clinton has his permanent campaign at full throttle. He is barnstorming the country. He is sending the Cabinet out like a campaign team. He even spent 90 minutes yesterday morning answering questions from children on national television. Where Reagan used conservatism to sell his program, Clinton is using populism: his unusual ability to reach out to people, to make them feel he’s on their side.

He’s doing exactly what Reagan did in 1981--rallying the public to put pressure on Congress and overcome congressional inertia. Here’s Clinton’s rallying cry, repeated at every campaign stop: “The price of doing the same thing is higher than the price of change.”

The first element in Clinton’s sales strategy is, “Keep the people behind you.” There are two others. One is, “Hold the package together.” The President said Wednesday night, “If the package is picked apart, there will be something that will anger each of us and won’t please anybody. But if it is taken as a whole, it will help all of us.”

He can’t let the Republicans take it apart. And they’re already starting to do that. The President has to argue that it’s this or nothing. That puts the Republicans on the spot. Bush’s program was to do nothing. Everyone knows where that got us. And right now, the Republicans have no alternative plan. So it’s either adopt the President’s program or keep on doing what we’re doing and pay “the price of doing the same thing.”

The final element in the sales strategy is “Don’t divide the country.” As the President puts it, “We’re all in this together.” He said in his speech, “I did not seek this office to place blame. There is plenty of blame to go around.”

There’s something in the President’s package for everyone. For the liberals, there’s new domestic spending and defense cuts. For Reaganites, Clinton insists that his ultimate objective, like theirs, is economic growth. For the Establishment, there’s deficit-reduction.

Interestingly, deficit reduction is also a big concern for Ross Perot’s anti-Establishment movement. So Perot’s in the program, too. Clinton promises Perot’s supporters not just deficit-reduction but also campaign finance reform and an end to tax-deductible lobbying. Perot’s supporters are returning the favor. By a 2-1 margin in one poll taken Thursday night, Perot supporters said they thought Clinton was “now much closer to Ross Perot’s economic positions than he was during last year’s campaign.”

Even if Clinton sells the program, it has to work. That means a convincing, long-term economic recovery. Right now, the economic indicators are pointing toward a roaring economy during the 1990s. Inflation and interest rates are down. Productivity and investment are up. “All Clinton can basically do about this is screw it up,” a Federal Reserve official said last week.

That’s exactly what some people think his program might do. After all, raising taxes and cutting spending are what you to do to slow the economy down.

If that’s the case, Clinton will be another Jimmy Carter and the Democrats will be doomed. But if the economy does come roaring back, it will validate everything Clinton wants to do. And destroy the Reagan Revolution.

After all, we always knew the Reagan Revolution would have to be paid for. The GOP figured the Democrats would have to pay for it once they got elected. If Clinton’s plan succeeds, however, it won’t be the Democrats who end up paying the price of the Reagan Revolution. It will be Bush.