Pocketbook Politicking

A presidential campaign is a referendum on the past and a roll of the dice on the future. Bill Clinton is basing his case for a second term primarily on what he asserts are the accomplishments of his first, especially his claims for an economy that his policies nursed back to health from an enfeebled state of four years ago. Clinton tells his story with proud numbers: 10 million jobs created since he took office, 4.5 million new homeowners, exports up by 30%, the federal deficit slashed by 60%. The message is clear: See what I have done to make America better off. Well, yes . . . but.

The numbers he cites are accurate enough, but his effort to take credit is implausible. Presidents, as columnist Robert J. Samuelson notes, “are mainly economic spectators” who have little real control over the nation’s massive, $7.5-trillion economy. Sometimes, of course, they get lucky. When Clinton was elected, the economy was just starting to recover. Later he benefited from the Federal Reserve Board’s deft handling of interest rates, which kept inflation under control and brought mortgage rates down.

CLINTON’S ECONOMIC success can also be attributed to the failure of some of his own policy initiatives to pass Congress. Most notable were the costly Health Security Act, which would have put the government into the business of regulating one-seventh of the economy, and a $50-billion economic “stimulus” package that would have taken effect too late to stimulate much except the deficit. Finally, but not least, Congress--which for the last two years has been under Republican control--has been instrumental in forcing Clinton to focus on deficit reduction. Budget cuts, which meant less federal borrowing, helped free up savings for private investment while pushing down interest rates on borrowing to finance expansion and job creation. The credit, only marginally deserved, has gone to the president.

Clinton has proclaimed that the era of big government is dead, but at the Democratic convention he outlined 22 initiatives for supporting education and technology growth and to help the unemployed. All are intended to spur economic growth, and they add up to a not insignificant $111 billion in tax cuts over six years. On specific points he wants to give a $1,500 tax credit for tuition at community colleges to students who maintain a B average and stay off drugs, a $10,000-a-year tax deduction for college tuition, and a $500 tax credit for each child under 13. Like his opponent, Bob Dole, Clinton favors elimination of capital gains taxes on profits from most home sales.

HE SAYS HE’S AGAINST deep tax cuts, arguing they would produce larger budget deficits, and like Dole he has promised to reach a balanced budget by 2002. But here the real game-playing begins. In the words of the nonpartisan, anti-deficit Concord Coalition, Clinton remains “perpetually vague about long-term spending reductions.” He would have to cut federal spending by roughly 25% to bring the budget into balance by 2002, a date, it should be noted, that arrives a year after the end of what Clinton hopes will be his second term. A lack of specificity in outlining what programs have to be cut may be sound politics, but it hardly qualifies as policy.

By demagoguing the GOP position on slowing the rate of growth in Medicare spending, Clinton has made it all that much harder to forge the bipartisanship that’s absolutely necessary if the issue of curbing Medicare and other entitlement costs is to be addressed with candor and courage. Getting reelected is Clinton’s first priority. The real test will be demonstrating political boldness if an electoral victory is achieved.