George Stephanopoulos, the White House aide, lollygags through budget negotiations with Republican starlets at the Capitol, his feet propped up, acting as if he hasn’t a care in the world, political or otherwise. President Clinton conveys a greater sense of urgency, but not much. He blithely took time off from budget talks to speak at Renaissance Weekend in South Carolina. Later, he sipped champagne and lingered at a New Year’s Eve banquet until 2:15 a.m., chatting amiably.
Clinton believes he’s on a political roll and thus has no need to wrap up a budget deal quickly. Indeed, the White House expects the advantage the president has gained over Republicans in the budget fight to continue right through election day next November. Clinton should know better. In politics, the future is rarely a straight-linc projection of the present.
His own experience in Washington is proof of this. He stumbled early in his p residency, then got his budget and the North American Free Trade Agreement thro ugh Congress and finished 1993 in good political shape. But 1994, the year of h ealth care reform, was a disaster for Clinton, and so was the first half of 199 5. He rallied in the second half, endorsing a balanced budget, doing bett er in foreign policy, and benefiting from a reasonably strong economy.
Now, Clinton is counting on four things that aided him in 1995 to pave the way for his reelection in 1996. They are: solid economic growth, the use of House Speaker Newt Gingrich as a political foil, the marginalization of the character issue, and a measure of success in Bosnia. However, all four of these may vanish in 1996.
With no budget deal, Clinton faces real economic peril. Should talks collapse, a correction in financial markets is inevitable since the current boom is based partly on the assumption that a credible agreement on a balanced budget will emerge. Also, Federal Reserve Chairman Alan Greenspan insists interest rates will rise if there is no budget accord. In short, the economy could be tipped into recession, making Clinton’s reelection problematic at best.
Even with a deal, Clinton may be in economic trouble. The expansion will enter its sixth year this spring, which means that by historical standards, a recession is overdue. Most economists are forecasting continued growth, but they invariably see the future as an extension of the present. One dissenter is economist John Mueller. He projects a weakening economy in the first half of 1996 and negative growth of roughly minus 2 percent in the second half. Mueller bases this on his own economic model, but there arc also indicators of a slowdown in the economy’s recent performance. Manufacturing jobs are a sensitive barometer of economic cycles, and about 254,000 have been lost since March 1995. Moreover, the index of manufacturing activity shows the manufacturing sector is contracting. More broadly, the leading economic indicators have declined in seven of the past ten months. These trends suggest that a recession, while hardly certain, is quite possible.
To assail Clinton on economic grounds, Republicans don’t need a recession. Some are already attacking Clinton for helping the poor through the Earned Income Tax Credit and the rich through the bull market, but leaving the middle class with stagnating incomes, job insecurity, and high taxes. Senate Majority Leader Bob Dole, the GOP presidential front-runner, is expected to address this issue soon.
Since mid-1995, Democrats have relished the contrast between Clinton and Gingrich. Their plan for 1996 is to run against Gingrich, who often comes across as combative and angry on TV. The trouble is Gingrich may be a non- person this year. While 1995 was Congress-centered — and focused almost entirely on the Gingrich agenda — 1996 won’t be. There is scarcely a Republican agenda at all. True, Republicans are debating tax reform and a flat tax, but they don’t intend to move legislatively until 1997.
The truth is Clinton probably won’t have Gingrich to kick around. The media will concentrate on the presidential race and Clinton’s foe, most likely Dole. And Dole has begun difierentiating himself from Gingrich on the budget talks. Attacking Dole as a Gingrich clone won’t be credible. Besides, if Clinton concludes a budget deal with Gingrich, it will make subsequent attacks on the House speaker hollow.
That’s one reason Clinton is so reluctant to reach a deal. He would have to give up both Gingrich and Medicare as supercharged issues, though a deal would have the virtue of neutralizing tax cuts and a balanced budget as Republican issues. There’s another reason. If taxes and spending and Medicare are off the table, the character issue will move front and center. This terrifies Clinton.
Whitewater and Travelgate picked up momentum and press attention in late 1995, and more Senate and House hearings are slated. No telling what Special Prosecutor Kenneth Start will uncork in Little Rock. The issue of Clinton’s trustworthiness — he reversed himself in December on securities litigation reform to appease a special interest, trial lawyers — is a political vein Republicans have only begun to tap.
Finally, there’s Bosnia. Despite White House poor-mouthing, Clinton has gained by pushing a firm military policy The public has qualms about dispatching troops but likes a president to act decisively and lead the world. Now comes the hard part, getting American soldiers through without heavy casualties. Clinton may pull this off. But the odds on big trouble for him in Bosnia — as elsewhere are far greater in 1996 than they were in 1995.
By Fred Barnes
