Talk about strange. With the help of a Republican Congress, Bill Clinton has now fulfilled just about all of his major campaign promises, including that ““middle-class tax cut’’ he talked about in New Hampshire in the winter of 1992. He said then he would cut the deficit in half; he’s cut it by more than 80 percent. (Yeah, yeah, it happened because of the strength of the economy, but he would have been blamed if the deficit soared, so he deserves some credit when it plummets.) He said he would invest in education and job training for the new economy; his $1,500-a-year credits now make junior college essentially free for anyone who needs it. He said he would persevere on health insurance; he won an impressive $24 billion - raised partly through a new cigarette tax - to cover nearly 3 million uninsured American children, the largest health-care initiative since Medicare in 1965. He promised last year to fix welfare reform so that it wasn’t cruel to legal immigrants and single people in trouble; no one believed he could do it. He did.
That’s the good news. The bad news is that the same huge bill that fixed welfare reform may have also wrecked it. In a bow to the AFL-CIO, Clinton somehow got the GOP to agree that workfare be subject to federal regulations requiring minimum wage, worker comp, family leave and other job protections. Even some Democratic governors believe this will destroy innovative welfare-to-work programs in their states. Remember: employers need incentives to hire welfare recipients, who are often not exactly shipshape for the world of work. Under the terms of the bill, these workers could even conceivably be eligible to be paid what’s known as the ““prevailing wage’’ (more than $20 an hour in many areas). This of course means they won’t be hired at all, which is precisely the goal of unions trying to protect their members.
Clinton wimped out on other issues, too, including Medicare reform, which the Senate was ready to tackle but he wasn’t. Most egregious of all were capital-gains tax cuts that give the richest 1 percent of Americans 32 percent of the benefits; the wealthiest 5 percent of Americans will eventually receive close to 50 percent of the breaks. These cuts serve no economic purpose, as Treasury Secretary Robert Rubin has long argued. Clinton deserves points for overcoming oblivious Republicans who didn’t believe the working poor should get the $500-per-child tax break. (The GOP conveniently kept forgetting to count the payroll and excise taxes this group pays.) Even so, American income disparities are now significantly worse than those of our major allies. Yes, the president raised income taxes on the affluent back in 1993. But by meeting, even exceeding, Republican demands on capital gains this year, Clinton will be remembered as a president who saw widening gaps between rich and poor, and helped them widen further.
Of course, if he hadn’t caved on capital gains, there would have been no deal. Was it worth it? As doctors say: ““First, do no harm.’’ By that logic, why mess with an economy that’s working? Left alone, the surging economy would balance the budget by next year; with the new tax cuts and spending increases, it will take five years instead. A true conservative would have urged Congress and the president to do exactly nothing right now.
But for anyone with a bias for action, last week’s accomplishment was hard to resist. Sen. Daniel Patrick Moynihan, while still deeply skeptical about the tax cutting, raised a couple of fresh points in support. Until the $500-per-child tax credit, the United States was the world’s only industrial democracy without a ““family allowance’’ - explicit social recognition of the cost of raising children. After a half century of discussion, the country opened a new chapter in domestic affairs without anyone’s much noticing. ““As I get on in years, I begin to think the more you debate social policy, the less social policy you get,’’ Moynihan said, suggesting that the same phenomenon applied to the plan for health insurance for kids, which was debated in the Senate Finance Committee in a single afternoon: ““Is there an inverse ratio between the amount of debate and the legislation that emerges?''
Some argue that the big debate between the parties is now dead. The White House claims that Clinton has once and for all ended the ““false choice’’ between Democratic tax-and-spend and Republican cut-and-run. Under this theory, according to aide Rahm Emmanuel, money for education and children’s health will now be ““walled off’’ as investments or even entitlements, instead of old-fashioned spending, and thus difficult to slash. Perhaps so. Groups like the Children’s Defense Fund were almost as happy with this bill as the country-club crowd. The problem is that the walls are made of paper. The next hurricane - economic or political - could easily capsize the good ship Bipartisan before it anchors for long in the Potomac. This deal, like everything else in Washington, is still hostage to the winds.
