Are we being too rough on the rascal in the White House? Why shouldn't we just give the man a chance? After all, he was elected. And it is, still and yet, a democracy. And there is, don't forget, a U.S. Constitution. What's the big deal? Bill Clinton can serve out his time as president, and life will go on. It's not as if they're canceling the World Series or sending the United States Marine Corps to invade Caribbean resort hotels.
Yet, I come not to bury Caesar, but to praise him. Specifically, I should like to praise the Clinton administration economists. No kidding. For I was once quite nervous as to how they might perform under the pressure of the Beltway party circuit. However, if I read Bob Woodward's delightfully detailed The Agenda correctly, they are doing pretty damn well considering. Not that they call all the shots, or have carte blanche to veto Hillary's madcap public gambits. But they often offer up advice that is bullish on markets.
Take the classic Clinton administration brainstorm to asphyxiate market forces: the Health Care Task Force's grand scheme to control medical costs via a nationalization of "global budgets." Price controls by another name. Alice Rivlin, then deputy director (and now director) of the Office of Management and Budget, was one member of the economic team who desired not to offend Hillary Clinton and Ira Magaziner but --
According to Woodward's account of a health-care meeting with all the administration players assembled: "There was silence around the table. No one favored the controls, but no one seemed to want to speak up. Who was going to fall on the sword first?
"Alice Rivlin stepped forward and ripped the notion hard. Nixon had tried price controls and they had failed, she said. An intricate health care system would require equally intricate price controls, a complicated task that would take weeks or months to figure out. Her remark started an avalanche. Laura Tyson wondered how price controls might be put in place. How would the government gather the data? How would doctors and hospitals and others report? It probably would take a year to 18 months to implement even short-term controls, she said. And that would presumably be the point at which full reform would begin and price controls would supposedly not be needed.
"Alan Blinder said that one of the first new messages from the new Democratic administration should not be to put one seventh of the American economy under the command and control of the federal government. That would only reinforce the notion that Democrats didn't like free markets."
Excellent perception, Alan. Hope your crystal ball at the Fed works one seventh as well.
What seems to gripe the administration's political whizzes is economic analysis itself -- it's so stuffy. Economics warns of the second- and third-order reactions to top-down social engineering that sees only first-order consequences. And it cruelly binds the yarns one can spin: Its reality coefficient is way too high.
The passage that follows, a confrontation between Rivlin and Clinton campaign hustler Paul Begala, reveals a visceral repulsion for the economic way of thinking harbored by Clinton's politicos. The issue: How to explain the president's flip-flop on fiscal matters (such as the campaign pledge for a middle-class tax cut) early in the administration.
"When Begala arrived, Rivlin was on the phone and eating a chicken sandwich, which Begala noted was dripping from her chin. [That's the way economists do lunch, Paul -- TWH] 'So what do you guys want?' she asked.
"'We have to walk people through the journey the president has gone from November to February. We have to explain why the deficit got worse and how it got worse,' Begala said, focusing on The Story.
"'That's nonsense,' Rivlin said bluntly, her voice cold with assured professionalism. 'Bill Clinton knew where this deficit was going,' she said, adding that they had to face the fact that the campaign fundamentally misrepresented the situation.
"Begala was steaming. To him, Rivlin symbolized all that was wrong with Clinton's new team of Washington hands, and represented the Volvo-driving, National Public Radio listening, wine-drinking liberalism that he felt had crippled the Democratic Party for decades."
How I wish that Begala were, for once in his short life, right. An objective accounting will note that Rivlin's brave protests had zero impact on either the president's health-care debacle or on The Tall Tale he told regarding the federal deficit.
Still, my hat goes off to Mr. Clinton: He may not have the integrity to accept the reality that his economists explain to him, but at least he's had the smarts to seek their counsel before ignoring it. This yields a certain measure of hope. Perhaps one day soon he'll lay down some Astroturf in the back of a Volvo station wagon. Better public policies could be just around the corner.