Bill Clinton’s Excellent Adventure : How a President Can Promise One Thing and Deliver Something Else

Even as wife Hillary is preparing a blueprint for America’s moral regeneration sweeping enough to embarrass Joan of Arc, Bill Clinton has trapped himself in a maze of his own making--of commitments divided between Wall Street and Main Street, between populism and elitism and between Christophe of Beverly Hills and Joe’s Barbershop in Hope, Ark. This confusion, exemplified by the Administration’s new trickle-down economics of taxing the middle class back to prosperity through deficit reduction, is what has public confidence plummeting--and put Clinton’s credibility at risk.

Presidential job approval keeps dropping to new record lows as more Americans reluctantly conclude that William Jefferson Clinton is what his enemies say: a $200 haircut in an empty ideological suit running a White House staffed out of Mr. Rogers’ Neighborhood and the Yale Daily News. Each day now, Washington (and the country) asks: Where will it all end?

Because no other elected President has fallen so low in the polls so quickly--in just 20 weeks becoming the butt of jokes from Kansas City to Korea--that is precisely the question: Where will it end? Political Washington is uncomfortable with the possibilities, but three stand out.

Clinton may get his economic program largely enacted, then rebuild his credibility with a confused, angry Middle America--although this looks difficult. Or he can quietly give in and let the major decisions be made by the same bipartisan business-financial Establishment that made them under George Bush. Or he can stick with his blurry objectives, Oxford cronies and inept strategies and take the chance that a follow-up fumble on health reform could make his struggling regime a shambles by Labor Day.

Alas, the weakness of the economic package now raising cold sweats on both sides of Capitol Hill reflects its roots in Clinton’s fatal pattern of ambiguity and straddle. Voters are confused--in part because Clinton is confused. To the average American, the U.S. economy is weak, and consumer confidence is again softening as job worries intensify. The optimism of business and financial leaders isn’t shared on Main Street, especially the still-depressed main streets of California and the Northeast.

Moreover, what the public wanted during the 1992 campaign--and what candidate Clinton promised to provide--was economic stimulus and jobs. On Election Day, 1992, jobs topped the deficit as the most important issue by 48% to 28%, according to pollsters at NBC News.

With good reason. California and at least a half-dozen states in the Northeast--including Massachusetts, Connecticut, New York and New Jer-sey were still in, or only beginning to come out of, what local economists called the worst downturn since the 1930s. While erosion was less severe elsewhere, Bush’s relative indifference to unemployment offended voters nationwide, and voter desire for action elected Clinton. Since November, polls have continued to show voters are more concerned about stimulus than deficit reduction. When Clinton visited San Diego for a town meeting 10 days ago, everyone asked him about taxes and jobs; nobody said, “What about the deficit?”

Indeed, since the 1930s, the Democrats’ ability to capture the White House from the GOP has depended on promising to stimulate a weak economy--Franklin D. Roosevelt in 1932, John F. Kennedy in 1960, Jimmy Carter in 1976 and Clinton in 1992. Clinton, however, has become the first to respond with fiscal contraction--a chicken-feed stimulus package dwarfed by defense cuts and a huge tax increase, including middle-class levies clearly violating his campaign promises.

Much of the explanation lies in Clinton’s confused economics and divided loyalties. During the critical December-January period, the President-elect was understandably influenced by two sets of economic data: statistics for late 1992 that seemed to show a significant recovery beginning and evidence of an unusual consumer-confidence surge because of Clinton’s election. As a result, the new President gambled on ending the Democrats’ long record of launching new Administrations with traditional stimulus. He dropped the $40 billion to $50 billion of stimulus promised during the campaign and instead offered a small-potatoes $16-billion package that was quickly ignored as little more than a payoff to Democratic constituencies. In addition, he proposed sweeping new taxes, partly to reduce the budget deficit.

In doing this, Clinton not only broke his promise to the middle class, but shrugged off the continuing fiscal anguish in such states as Connecticut, New Jersey and California, which had all just elected a Democratic President for the first time since 1964. Clinton shifted because he was listening to new advisers from Wall Street, people who emphasized reducing the deficit--even by squeezing higher taxes out of the middle class--because that would produce an indirect stimulus by reducing interest rates.

The result is a new Democratic version of “trickle-down” economics. Bring down the deficit and interest rates, and although the initial profit will go to bond and stock-market investors, important additional benefits will trickle down as new business activity produces more jobs. To be sure, no 20th-Century Democratic President had ever kicked off his term with neo-trickle-down, but powerful interests were pushing it--Wall Street-funded anti-deficit lobbies and scared congressmen hearkening to contributors.

So Clinton bet his chips and now he may be losing the gamble. The new President could have easily enacted the taxes on the rich he promised in 1992--a 36% top rate on incomes higher than $200,000 and a 10% surtax on millionaires--but he went for more. Middle-class wallets had to be tapped to get big bucks for deficit reduction and to fund new programs. So the Administration rejiggered its income-tax rate increases to hit the $140,000-a-year upper-middle class and aimed new energy levies on average-income households. The result, as everyone knows, is that voter support for tax increases has plummeted, dragging down Clinton’s ratings in the process.

This is fitting, because Clinton’s mistake was not just one of economics but of integrity--of keeping his promises. For a Democratic President, tailoring economics for the bond market while the unemployed sit and wait is a bit like getting a $200 hair cut in Air Force One while the runways at LAX are blocked and average travelers sit and wait. It’s nice, high-living stuff if you can get away with it--but the odds are you won’t.

When the voters elected Clinton, they wanted an “old Democrat” in one sense--someone who’d stimulate the economy to create jobs--but they also wanted a “new Democrat” willing to forswear taxing the middle class. What they got, though, was a new kind of new Democrat: a man willing to scrap both stimulus and his pledge to Middle America and impose massive taxes to reduce deficits and help the bond market. The record shows, however, that increasing taxes on the middle class to pay for now-you-see-it, now-you-don’t deficit reduction is a proven political rat hole. Voters have every reason to be skeptical.

Clinton is courting trouble. It’s not hard to imagine Edmund G. (Jerry) Brown Jr. entering the Democratic primaries again in 1996 to replay his 1992 accusations about Clinton being loyal to elites, not the people.

But the greatest mistake may be to think that Clinton’s troubles are over if the Senate join the House in swallowing most of his unpopular tax package. Should the economy continue to soften, it will be at least as much Clinton’s fiscal prescription as Bush’s legacy--and the Administration could find itself fondly remembering the days of $200 coiffures and 45% job approval.