My liberal friends are being too harsh on Bill Clinton. I am not uncritical of administration policies: I have objected in print to its overemphasis on human capital as an economic cure and to its reluctance to embrace forthrightly the labor movement. I believe its NAFTA side agreements don't go nearly as far as they should. Still, I admire the Clinton administration. I credit its good faith and basic progressivism and fear that the increasingly sour tone of the liberal left will only backfire.
I have in mind two unfortunate patterns. First, Clinton's liberal critics forget the narrowness of his mandate; they are too quick to blame the absence of a strong working liberal majority in Congress on alleged lack of presidential leadership. Second, they fall into the familiar liberal habit of making the good the enemy of the best.
Perhaps liberals who have spent their entire lives in bitter opposition to Democratic and Republican presidents alike have no instincts on which to draw when a progressive leader, under siege, needs their support. If so, this almost rote need to oppose by some on the left is but the latest tragic consequence of the Vietnam War. Other liberals are sympathetic to Clinton but fear that his program and hence his presidency will fail; they attack him as pragmatists rather than as ideologues. But their carping still reinforces public cynicism and makes his task more difficult.
Liberals already owe Clinton a big debt. In 1991, when he began to plan his candidacy, Bush was considered a cinch for reelection. No other Democrat with national stature--not Richard Gephardt, not Mario Cuomo, not Lloyd Bentsen--was willing to run in a year when a Democrat was sure to lose. Some preferred to wait until 1996 when Democrats might have a fighting chance. Others did get into the race--Tom Harkin, Bob Kerrey, and Paul Tsongas--but they were the Democrats' second string.
Bill Clinton came from the party's starting lineup--the nation's senior governor and widely regarded as the most talented. He headed the governors' education task force. He chaired the Democratic Leadership Council, helping to move it from the right to the center of the party. He had keynoted the 1988 Democratic convention. Clinton did not need to run in 1992 to position himself for 1996.
Why did Clinton declare for president in a year when Democrats were sure to lose? With a passionate belief that the country had to throw off Reagan and Bush, perhaps he felt compelled to run, regardless of personal or political cost. (A highly probable loss would likely have ended his political career.) Or it may have been that Clinton, alone among Democratic leaders, understood America well enough to realize that Bush could be beaten, Desert Storm notwithstanding. So whether he ran because of a combination of personal sacrifice and political nerve or because he's smarter than the rest of us, he's entitled to more credit, and his judgment to more deference, than most liberals are now willing to give him.
Few liberals understood Clinton's campaign. His most important thrust was his advocacy of nonracial universal programs to improve economic security for all Americans, white and black together--because white voters would support such programs from self-interest, not a sense of racial obligation. This Clinton stance was incontrovertible, notwithstanding the condescension with which the media characterized his "New Democrat" approach or the references by liberal cynics to the candidacy of "white boys." During the primaries, few appreciated the significance of Clinton's African-American vote majorities, which consistently helped him beat other Democrats who made explicit promises of racially compensatory programs. It was obvious that black voters did not want to be patronized--they wanted to win. California Congresswoman Maxine Waters made this clear when she signed on as cochair of the Clinton campaign, but many liberals still didn't get it.
Clinton insisted that a truly populist program had to be directed at the broad "middle class," not at segmented interest groups like seniors, Latinos, African-Americans, or blue-collar workers. He urged these groups to transcend identity-interest-group politics by thinking of themselves, in common, as middle-class voters being taken advantage of by the rich. A southerner, Clinton understood better than most that race is America's most difficult problem and that Democrats have not addressed it successfully by patching together programs that independently appeased each coalition constituency.
When it first seemed that Clinton might have a chance to win, many progressives had modest expectations. If, it was often said, Clinton did no more than make Supreme Court appointments who upheld "choice," he would earn enduring loyalty. This alone was sufficient to mobilize liberals to work, contribute, and bumper sticker their cars for Bill Clinton.
GOVERNING WITHOUT A MANDATE
Clinton was elected with 43 percent of the vote. In retrospect, it is clear that most Perot voters were Republicans or fiscal conservatives and that the Reagan-Bush era ended with the narrowest of margins. Clinton's mandate was an inchoate desire for "change," for a focus on the economy, rather than an explicit call for specific programs.
Nonetheless, many liberals quickly forgot the vagueness of the mandate, the narrowness of the base, the early improbability of victory, and the original modesty of their own expectations. Instead, liberals have convinced themselves that voters expressed clear support for sweeping jobs programs, single-payer health insurance, or ending discrimination against gays. Many liberals pretend there is a congressional majority for these initiatives, if only the right presidential speech were made. And, they insist, these programs have failed only because Clinton has suddenly lost his political skill, has no courage, or surrounds himself with the wrong advisers.
The economy is stagnant, the recovery is jobless, and low interest rates alone clearly won't stimulate private investment if there is a shortfall of demand. More public investment is needed for both stimulus and for technological advance. When economists at Clinton's economic summit last December proposed a $60 billion stimulus package, liberals cheered. When Clinton suggested that $30 billion might be viable, they began to suspect the clarity of the president-elect's vision. When the president concluded that he couldn't get more than $16 billion through Congress, liberals groaned at the tokenness of it all. Then Republican leader Bob Dole organized a filibuster to defeat even that small program. Liberal critics complained implausibly that the program failed because it wasn't big enough to inspire support.
Several progressives have argued that the failure of the public investment agenda will haunt Clinton politically, since the economy will not be healthy by the next national election. They assert that the mildly contractionary budget may cause Democrats to lose seats and a Senate majority in 1994, and perhaps the presidency itself in 1996. While they may be correct, none have convincingly explained how to conjure the 60 votes needed to keep a stimulus program from being filibustered to death.
On the other hand, Clinton has demonstrated a keen feel for the country's mood, so his political judgments should not be dismissed so easily. While a slow economy could yield a Democratic debacle, Clinton could also rout the Republicans. Clinton's one-vote budget victories in the House and Senate may yet be seen as courageous, not the least for revealing the lack of a Republican program beyond protecting the rich and for exposing Ross Perot as shallow and hypocritical.
Further, while liberals appropriately scorn the notion that deficit reduction might spur a recovery led by low interest rates, a deflationary budget might keep interest rates from rising and thus help establish more propitious background conditions. Mortgage interest rates, for example, are at a 23-year low, a fact for which Clinton might legitimately claim partial credit.
Substantively, the president has negotiated a program more progressive than liberals give him credit for, and the reality of its progressivism may yet penetrate public consciousness. The most truthful criticism of the budget was conservatives' insistence that the plan reduces deficits only slightly--because the biggest spending cuts in this five-year plan won't take effect until after 1996. It's hard to see how that would be severely contractionary in the short run. If the economy is still (or is again) stagnant, spending cuts will likely be reversed. The budget plan's essence is not deficit reduction but an immediate restructuring of federal taxes to redistribute income from the rich to the poor. Liberals' stubborn reluctance to credit this is self-defeating.
A PROGRESSIVE BUDGET
Liberal critics of deficit reduction rely on the Keynesian truism that when unemployment is high, government should spend more than it collects so the economy will be "stimulated." Deficit reduction could hurt job growth by taking more purchasing power out of the economy than it puts back in via lower interest rates. While this rather stylized theory is valid, liberals should remember another Keynesian truism: low-income consumers have greater "propensity to spend" than high-income people. Since the poor are more likely to spend dollars and less likely to save them, income redistribution is "stimulative," even if net government spending is unchanged.
With these principles, take a realistic look at Clinton's budget. About $24 billion of new revenues, raised mostly from taxes on the rich, will go to the poor, in the form of additional food stamps, a child immunization program, and an expanded earned income tax credit (EITC), a program where low-income families can claim a federal tax reduction or subsidy. A family headed by a full-time minimum-wage worker (earning $8,840 a year) with two children, for example, will get a subsidy of $2,528 for 1994 under the Clinton budget, a 27 percent increase over current law. By 1996 this subsidy will grow to $3,370, plus an automatic inflation adjustment. This is the beginning of nonpunitive welfare reform, since the EITC rewards the poor for working; it does not create social service bureaucracies but fights poverty by increasing poor people's income. And since the poor are more likely to spend it quickly than the rich, the EITC expansion is stimulative.
Clinton's emphasis on the EITC should give pause to critics who didn't notice what he was up to until the fight was over. Clinton's original budget proposed extending EITC eligibility to those with incomes up to $30,000. This proposal was resisted even by congressional liberals who felt that Clinton's EITC would cover families well above the poverty line and become another indefensible government expenditure. Clinton, however, insisted on a high cutoff, eventually settling for $27,000. This assured a "middle-class tax cut" for families below that income level, more than offsetting the gasoline tax increase. More important, support for what has become the government's biggest antipoverty program is now anchored in the lower middle class, voters whose opposition to antipoverty expenditures can otherwise be anticipated.
Clinton's insistence on high eligibility has already paid off. In the final days of the House budget debate, the administration distributed data detailing for each wavering congressperson the number of middle-class voters in his or her district who would get a tax break. It provided the votes needed for victory. One Democratic congressman reportedly decided to support the budget after White House lobbyists demonstrated that 1,300 households in his district earn more than $180,000 and would have to pay higher taxes; 51,000 households, on the other hand, would be eligible for increased EITC subsidies. Even in California, with its legions of professionals and entrepreneurs, only 300,000 upper income households will pay more, while 2 million households will get a higher subsidy.
Many of those eligible (perhaps as many as 20 percent), however, don't file for the EITC. The nonfilers are mostly the lowest earners, who are entitled to a cash EITC subsidy. Some (household service workers, for example) may not file because they avoid the Social Security system, but others are unfamiliar with the program or intimidated by the paperwork. The food stamp program, also expanded by the budget, has even higher nonparticipation rates, about 40 percent of those eligible. Forecasts of the budget's contractionary effects assume this nonparticipation will continue.
Herein lies an opportunity. What if liberals, instead of blasting Clinton for being insufficiently progressive, helped turn this budget into a more stimulative package? They could help do so by supporting educational campaigns to assist families in applying for food stamps and filing EITC forms. If all those eligible were to file for the EITC for the 1994 tax year, budgetary assumptions would crumble. Some $5 billion of extra economic stimulus might be pumped into the economy, helping the budget better to fulfill liberals' goals.
The Center on Budget and Policy Priorities conducts such a campaign to inform the poor of their EITC rights. If progressives truly want the Clinton presidency to succeed, if they want to even a score with Senators Dole, Boren, Nunn, and the like, joining this effort is a worthy project. The center's phone number is (202) 408-1080.
Some of the budget's cuts are less contractionary than they seem. One reduces administrative costs of college loans because of a Clinton demand, partially implemented, that students be able to borrow directly from government without bankers' skimming fees off the top. This reform was won after a bitter fight with the banking industry over the principle of universal middle-class entitlement to higher education.
Another big "spending cut" is less interest paid on the national debt because interest rates are expected to stay low. This is not the kind of contractionary budget reduction that Keynesians fear. Federal interest payments go mostly to wealthy bondholders with low "propensities to spend," so reducing these payments does not have the negative impact on private purchases that, say, laying off construction workers from canceled highway projects would. Because of this, deficit reduction is less harmful to job growth than it first appears. Think about the reverse: nobody would argue that a good way to stimulate the economy is to raise interest rates to force higher government expenditures for debt service!
Consider the biggest domestic budget cut: reduced payments to doctors and hospitals under the Medicare program. This cut wasn't seriously fought by senior citizen advocates because the elderly will not likely suffer much; rather, hospitals will shift charges to insurers of other patients. As seniors' lobbyists knew, if Clinton gets his national health care plan, payment systems will be restructured, making these Medicare cuts irrelevant.
Clinton insisted on defense spending cuts greater than Republicans or the Joint Chiefs wanted. His goal of one-for-one conversion, using defense savings for domestic stimulus, did not prevail. Given this, should the president have attempted to preserve an obsolete Cold War defense establishment solely for its stimulative effect? Progressives should not place themselves in the position of arguing, even implicitly, for this alternative.
The budget compromise certainly did not fulfill Clinton's promise to make a priority of public investment--attempts to spur economic growth not with diffuse effects of higher spending but with targeted projects like road construction and education or training programs. Clinton's liberal critics argue that the administration has abandoned investment because conservative advisers (Treasury Secretary Lloyd Bentsen, Budget Director Leon Panetta) have the president's ear. But few congressional opponents of Clinton's budget would have been won over by greater public investment while numerous deficit-conscious supporters would have been lost.
Liberals who mourn Clinton's unwillingness to take his public investment strategy to "the people" in a populist crusade forget that "the people" whose senators sabotaged Clinton's plans live in conservative places like Oklahoma, Georgia, and Nebraska--not Chicago, Brooklyn, and Los Angeles. Even at the height of his popularity, in 1992, Clinton was unable to save Wyche Fowler's Georgia Senate seat. History offers examples of many failed presidential crusades against Congress. Harry Truman's successful scapegoating of the "do-nothing" 80th Congress was the exception; it followed three years of Congressional defeats. For now, Clinton has chosen not to embark on an all-or-nothing crusade against conservatives, but liberal critics, with no responsibility to consider the risks, unhesitatingly urge him on.
Though the budget compromise didn't boost public investment, it did fulfill other Clinton commitments. Clinton promised not to tax the middle class but to raise new revenues from the rich. This promise was essentially fulfilled, though Republicans have characterized the tax increase of 4.3 cents per gallon as a middle-class burden. This is silly. All told, the net effect of this "middle-class tax increase" might be from $10 to $20 a year for the typical middle-class family. Meanwhile, those earning $200,000 annually will pay about $1,500 each year in new income taxes. Ninety percent of new revenues in this budget come from families with incomes over $100,000. That comes close enough to fulfilling a promise of tax fairness (and a lot closer than previous leaders have come).
THE SCORECARD TO DATE
By the time Congress went into summer recess, one could look back at a flood of liberal Clinton initiatives and some spectacular appointments; as this is written, Republican senators needlessly delayed a vote on the confirmation of Joycelyn Elders's appointment as surgeon general because she supports a responsible program of sex education. Yet the liberal outcry against this outrageous filibuster pales in comparison to liberals' vilification of Clinton for withdrawing the nomination of Lani Guinier in the face of certain Senate defeat.
Congressman Barney Frank courageously defended Clinton's adoption of the Sam Nunn-Joint Chiefs "don't ask, don't tell" position on gays in the military. In an op-ed article, Frank praised Clinton's leadership in elevating the status of gays to a national civil rights issue while Frank acknowledged that he himself would prefer no loaf to half. But are liberals really willing to accept no loaves on the full range of Clinton compromises since January? Was the country better off under George Bush?
A cynical press has focused almost exclusively on Clinton's compromises, and many liberals have joined this chorus. Meanwhile, there is no constituency praising Clinton for the half-loaves he's extracted from a conservative Congress. In addition to the budget, here are a few accomplishments, most including some compromises, from the first six months. None would have been delivered by Bush:
- The Family and Medical Leave Act (which Bush had vetoed).
- The Motor Voter bill (compromised to end a filibuster).
- The Rio Biodiversity Treaty, signed.
- Immunizations for uninsured children.
- National service program (compromised to end a filibuster).
- De-privatization of college loans.
- The abortion counseling "gag" rule, repealed.
- Funding reestablished for international family planning.
- Reversal of the ban on hiring the air traffic controllers whom Reagan fired.
- Stunning progress in minority and women appointments.
- A ban on the import of assault rifles and a pledge to sign the Brady bill.
There has been positive administrative change as well. Clinton's Labor Department has reversed 12 years of declining labor standards enforcement and just negotiated the largest back-pay settlement in history--$13.2 million to Food Lion workers (and another $3 million in fines) for overtime and child labor violations. The Justice Department has revived antitrust enforcement. Grazing fees on federal lands have been increased to reestablish conservation as a national priority. The administration has taken a less obsequious stance toward Japanese trade barriers, and the mission of the defense research agency has been redefined to give greater emphasis to civilian technology.
Liberals need to learn how to bargain with this administration, as conservatives have done more astutely. For example, liberals are fumbling NAFTA. After 40 years of presidential free-trade preaching, Clinton proposed that labor and environmental standards be harmonized upward as part of a Mexican trade deal. While some, including Congressman Richard Gephardt, reserved judgment until they saw whether side agreements approached this goal, most liberal and labor leaders forfeited the endgame when they decided to oppose the accord regardless of what the side agreements achieved. While business lobbyists pressed administration negotiators to water down the standards, the left offered virtually no promises of support if supplements were toughened.
We now enter a debate over national health care reform. The Clinton proposal includes many compromises with insurance companies, business groups, doctors, hospitals, and drug companies, not to mention the fiscal conservatives in Congress. But the proposal will also include provisions unimaginable before the Clinton presidency: universal access and coverage, a one-tier basic benefit package, emphasis on prevention, and openings toward long-term care.
Liberals will have another opportunity to grumble about how the good is the enemy of the best. Or we can begin to appreciate a president and administration who, notwithstanding the never-satisfied plaints of liberal friends, forge ahead to implement an agenda of economic justice, equality, and decency.