Greenspan? Gipper? Gates?

• Author: THOMPSON, NICHOLAS
• Position: The United States economy

Republicans can't bear to give Clinton creditor the economic boom. But they should.

IN THE EIGHTH INNING OF THE FIRST GAME of the 1954 World Series, the New York Giants brought in Don Liddle to pitch to Cleveland Indians' slugger Vic Wertz. Liddle's pitch was down the center of the plate and Wertz crushed it. The ball rocketed 425 feet to deep center field where Willie Mays dashed back, glanced over his shoulder, stretched out his arms, and made a dazzling catch often considered to be the greatest in baseball history. According to legend, Liddle returned to the dugout and said to a teammate, "Well, I got my man out."

To his opponents, Bill Clinton is Don Liddle. The economy is booming on his watch, but only because of the work of others. Larry Lindsay, George Bush's chief economic adviser, suggests that Ronald Reagan is the real Willie Mays. Conservative pundit Robert Novak thanks entrepreneurs and says that giving credit for the boom to Clinton is like ascribing "the Johnstown flood" to "a leaky toilet in Altoona" Senate Majority Leader Trent Lott joked recently that "Some people say `Well Bill and Al deserve the credit.' I agree. Bill Gates and Alan Greenspan"

Of course Republicans are going to try to pry all the credit away from Clinton before the elections. They can't run against unemployment (it's down), productivity (it's up), inflation (it's barely rising), or the budget deficit (we've got surpluses). Most of all, as the President says, "They can't run against the longest economic expansion in history." Almost by necessity, they have to run on the grounds that Clinton, and consequently Gore, has merely been a fortunate bystander. If they can make that stick, George W. Bush may be able to neutralize the Democrats' strongest argument; if they can't, Gore has a much clearer line to victory. And, unfortunately for Republican partisans, they've got a tough case to make.

Agendas

Presidents don't run the economy in a real sense. They don't write business plans and they don't pour concrete. They rarely inspire workers to get out of bed in the morning, and they don't even directly set interest rates. According to Bob Woodward of The Washington Post, when Clinton began to lay out his first economic plan, he said to his advisors: "You mean to tell me that the success of my program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?"

To a significant extent, the answer was yes. A president can't will an economy to health, and it is extremely hard for him even to legislate it. But although a president may not have his hands on all of the country's economic levers, he can at least make sure that they are greased and synchronized. He can make sure that the Federal Reserve and the White House are acting in concert. He can't control bond traders, but he can understand the games they play. He can increase consumer confidence; he can help smooth capitalism's sharp edges.

It didn't take long for Clinton to figure all of this out, and it didn't take long for him to develop his economic strategy: Appoint (and listen to) the smartest non-ideological technocrats around, work like hell to keep the Fed and the bond markets happy, avoid disasters, and give your most wild-eyed political opponents enough rope to hang themselves but not enough to mess up the balance you've found. It's not a strategy that brings thunderous applause in campaign speeches, nor is it the public-investment strategy that Clinton laid out in his 1992 campaign treatise, "Putting People First." But combined with Clinton's intelligence and good sense of timing, it's a strategy that has worked during the globalized gyrations and technological boom of the '90s. He may not be Willie Mays, but he's still miles ahead of Don Liddle.

Balance

The most memorable line from Clinton's 1992 campaign was James Carville's: "It's the economy, stupid" The recession of '90-'91 was over, but productivity was low and the budget deficit had become a national burden. As Ross Perot and Clinton supporters relentlessly pointed out, the national debt had grown into the equivalent of a 267-mile-high stack of 1,000 dollar bills. The government hadn't run a surplus since 1969, but most of the debt came from Ronald Reagan's quixotic attempt to end stagflation (he succeeded) and raise revenues (he failed) through a tax-cut-and-spend policy based on decreased top marginal tax rates and increased military expenditures.

Bush in turn was virtually helpless against the charges of fiscal irresponsibility. He had built the debt with Reagan and, swamped by the bailout of the collapsed savings and loans, punted when given an opportunity to tackle the budget problems early in his term when the economy was still growing. It was only in 1990 that he belatedly bit down, raised taxes, and pushed congressional discretionary spending caps: courageous moves that left him to be pummeled for breaking his "read my lips" promise. Bush seemed ill at ease dealing with domestic issues, he did too little too late, and, when the economy began to slow, the debt climbed and confidence in the U.S. economy sank. Interest rates were sky-high and when Iraqi tanks rolled into Kuwait sending oil prices upwards in 1990, Federal Reserve Chairman Alan Greenspan moved too slowly to reduce rates and prevent a recession. Bush's chance for victory plummeted with the economy and its belated "jobless recovery" as his term ended.

The sagging economy gave Clinton an issue to run on, and the newly-elected President began to counter the downward spiral of confidence before he even took office. In December of 1992, one month before his inauguration, Clinton summoned 300 of the nation's top economists to Little Rock and took notes as they batted ideas back and forth and C-SPAN beamed the images to the country. Even his enemies concede that Clinton is smart and he impressed people with his knowledge, ability to learn, and obvious desire to deal with economic issues head-on. Afterwards, The New York Times editorialized that: "Mr. Clinton promised voters that he alone would make the important economic decisions. Judging from this week's performance, he's up to the task"

Soon thereafter, interest rates on long-term bonds dropped. The markets suddenly had confidence in the young president from Arkansas. He was not a stereotypical Democrat who disliked Wall Street and capitalism too much to understand them. Interest rates are essentially the price of money--how much do you have to pay back down the road...