Little Rock, Arkansas By early evening on the first day, newspaper reporters had filed their stories and gone to dinner, but Bill Clinton was still at the conference table, talking and taking notes. The president-elect listened intently as Albert Shanker of the American Federation of Teachers explained why children in Europe have higher test scores. A captive audience of important CEOs sat stiff backed and benumbed, while some leading political figures fidgeted sullenly, bit players in another politician's seemingly endless photo op.
On the first day of his pre-inaugural economic conference, Clinton presided over eleven hours of high-minded discourse. On the second, he canceled the luncheon for more talk. Altogether, he and his partner, Vice President-elect Al Gore, presided over nineteen hours of sober dialogue — listening, lecturing, prodding and congratulating conferees on their insights. Afterward, exhausted participants wondered: Good grief, is this what the next four years are going to be like?
Probably. Bill Clinton will be the talking president — both teacher and student, as well as earnest moderator in search of "consensus." If the summit sometimes took on the cloyingly wholesome air of a student-council meeting, its content was as challenging as a graduate-school seminar. Clinton's grasp of government and economics (not to mention his extemporaneous verbal skills) is awesome; he's more confident and zestful than any leader since Lyndon Johnson.
The PR benefits were obvious — a message to the nation via C-SPAN and the evening news that the new president was on the case. But the exercise was more serious — and revealing — than just another photo op. A child of the Sixties, Clinton began his presidency early by conducting a grand national teach-in. "I want my administration to celebrate ideas from the first day to last," he declared, "and I want and need your ideas."
As a teach-in, it taught us a lot about him. At some moments, Clinton gently argued against his own case, trying to provoke a livelier back and forth among the conferees. At other times, he plunged past generalities into fine print — instructing the nation on the immunization crisis or Taiwan's diminishing trade surplus. "And let me complicate this one step further by making sure everybody knows this," he said before deftly recounting the history of Social Security taxes.
In a modest way, the teach-in also gave us a new picture of ourselves. Though corporate leaders and academic policy fighters dominated the table, their impact was leavened by community leaders and citizen advocates of various hues. About forty percent of the 329 conferees were women and racial minorities. "There was a certain magic to the diversity of this conference," Gore said afterward. "That didn't happen by accident. We worked at it."
But the summit also suggested the division of labor that may play out in this administration — "diversity" with a twist. Liberals and labor will be plentifully represented, allowed to speak for the afflicted and propose various remedies. But the big game will belong to the center right: leaders from business, finance and academia who argue for a more painful approach to economic problems. At the end of the talkfest, one dispirited participant said, "Liberals are going to get projects. Conservatives are going to get the economy."
That reality is clearly reflected in Clinton's appointments. To manage the economy, he picked folks mostly from the business wing of the Democratic party. Robert Rubin, cochairman of Goldman, Sachs and one of Wall Street's most successful Eighties titans, will coordinate the debate as Clinton's White House economic adviser. Treasury will be run by Lloyd Bentsen, a skillful advocate for business as chairman of the Senate Finance Committee. The deputy treasury secretary is Roger Altman, another Wall Streeter. To run the Office of Management and Budget, Clinton chose two deficit hawks: Representative Leon Panetta and Alice Rivlin of the Brookings Institution. His chief of staff is an old boyhood friend, Mack McLarty, CEO of a Fortune 500 natural-gas company.
The only exception — and it's minor — is Laura D'Andrea Tyson, the Berkeley professor who will chair the Council of Economic Advisors. Harvard liberal Robert Reich will be operating in a post — secretary of labor — that is a long, long way from the inside action at the White House. Other voices will doubtless be heard, and the internal arguments are sure to be rich and contentious. But conservatives have secured the front-row seats.
Still, as the summit amply demonstrated, Clinton at least does his own thinking. He is a new kind of leader, or at least very different from his immediate predecessors. He needs neither policy instruction nor constant handling from his close advisers; he thrives instead on provoking arguments among them. Perhaps the most important debate in the Clinton years will be the one going on inside his own head.
Clinton's conservative tendencies were also evident in the exasperation he expressed after listening to a stream of liberal economists detail the weaknesses in the economy and suggest $30 billion to $60 billion in stimulative spending. The president-elect didn't say they were wrong. But he did keep changing the subject.
"We're all talking about this stimulus package ... as if the whole future of the republic depended on it," he said. Later he described the impact of pump priming as "peanuts" compared with the stimulus that might be derived from other actions — easing bank regulation or reducing burdensome health-care costs on domestic manufacturers.
Clinton's dilemma is, which comes first, the deficit or growth? A new president doesn't have unlimited time or political capital. Elaine Kamarck of the Progressive Policy Institute reminded him that a new administration typically has a honeymoon of six months or so in which to sell its basic program. Therefore, she urged, Clinton should do the hard part first: Reduce the deficit by cutting entitlements, raising taxes and adopting other unpopular measures.
"Every single one of them is a political nightmare that you will have to get through to make honest-to-goodness, long-term deficit reduction," Kamarck warned. "Spending money, on the other hand, is an easy thing to do. We Democrats do it quite well. We do it quite often."
Panetta, the new budget director, seconded the warning: "If you do the stimulus first, you may not get to deficit reduction. Congress loves to pass the sugar, but it hates to deal with the vinegar."
The starkness of their comments energized Clinton, who seemed to relish the dimensions of his own bind. "If Elaine is right, and I think she is, then we've got six months to deal with health-care reform if we're going to get it done," he said. "It's ridiculous."
Yet as Yale economist James Tobin and others warned, Clinton's long-term goals — especially public and private investment in the nation's basic economic structure — will be undercut and perhaps even negated if the economy isn't revived. Right now, Tobin explained, there is so much excess productive capacity — idle factories and unemployed workers — and so little growth in consumer demand that investors won't launch new ventures. Deficit reduction upfront would reduce demand even more, making the likelihood of new investment even more remote.
Tobin offered Clinton a way out of his dilemma: "The thing to do is combine the short-run fiscal stimulus with credible deficit-reduction policies that will be phased in at a later time, whether they're tax increases or expenditure reduction."
By Tobin's reckoning, the economy should be stimulated for the next two years. Then the budget cutting can begin in 1995, once prosperity has been restored. That schedule, however, would put the unpopular stuff much closer to reelection time.
If Clinton decides to go the other way, he'll be taking a different gamble. The economy would be allowed to remain soggy for another year or two, with unemployment remaining painfully high, in the hope that everything would turn rosy by 1996. A pain-first strategy is a staple of conservative Republican regimes (it reelected Ronald Reagan in 1984 and helped George Bush win in 1988), but it would contradict the spirit of Clinton's campaign emphasis on jobs and growth — that is, "putting people first." It also requires lots of luck. If the economy doesn't respond in a timely fashion, voters aren't likely to forgive Clinton for having imposed the harsh medicine upfront.
Clinton used Little Rock to define these choices for the public and to emphasize how tricky they are. "The thorny interrelationships of these things," he said, "it's very, very complex. And we want to make the right calls, but I just want to make it clear that these are not self-evident. Because if you go for one hard strategy over another, you may wind up aggravating some of these other issues."
The hours of talk suggested that Clinton will attempt an artful straddle — a token gesture toward pump priming with the real emphasis on deficit reduction. Two days after the summit, he gave his first postelection newspaper interview to the Wall Street Journal and stressed the need for deficit reduction over stimulus. He also cited some controversial ways to cut spending he had previously avoided.
If these inferences are correct, Clinton really will govern as a "new kind of Democrat." Despite his electoral-vote landslide, he received only forty-three percent of the popular vote. His future is threatened by Republicans and by the amorphous following of Ross Perot. In search of consensus, a narrowly elected president sometimes decides to reach out to those who voted against him.
The lineup of corporate talent in Little Rock was another striking indicator of just how different this Democrat wants to be. Executives from AT&T, Xerox, Ford, Alcoa, Aetna Life, Apple, Pacific Gas and Electric, Chevron and Coca-Cola gave all the warm talk about "diversity" a troubling irony. It was a rare moment for so many business honchos mingling with labor leaders and community advocates, but any potential conflict was suppressed by the president-elects relentless spirit of consensus.
The chairman of Dow Chemical preached a new, nonadversarial approach to environmental progress. The chairman of Apple spoke about the need to train flexible workers for the new information age. The chairman of Citibank, a deeply troubled bank, explained how commercial banks could help Clinton revive the economy with $100 billion in new lending if only federal bank examiners would relax. Hugh McColl, Ceo of the fast-growing Nations Bank of Charlotte, North Carolina, now the nation's fourth largest, expressed the essence of business's attitude toward the new administration when he said: "I believe the carrot works better than the stick."
No one imagines Clinton's hearty embrace will convert every Republican exec into a loyal Clintonite. Some were there, including many union leaders, simply because they gave money (forty-six percent of the conferees were campaign contributors). But even the most die-hard Republicans had to be seduced somewhat by Clintons eagerness to listen to them.
In broad terms, Clinton is aiming to realign business interests by luring key sectors that once supported Reagan and Bush to his new party. The outlines of this transaction were suggested by who said what at Little Rock and by Clinton's enthusiastic responses. Elements of the high-tech, communications and banking industries, as well as some old-line manufacturing companies, are either on board or being courted.
If Clinton succeeds, it will confirm and consolidate the Democratic party's long-term drift away from its working-class origins. In terms of governing, strategic alliances with business sectors can certainly make life easier for a Democratic president who wants fundamental reforms. They're also a rich source of campaign money. "Democrats see the high-tech industries as a potential cash cow," said a former Clinton campaign aide. "This industry needs an industrial policy as the defense budget winds down, and that's where Clinton wants to go."
We will learn later what carrots were paid for such cordiality — a price that may be driven higher by Clinton's desire for consensus. By summit's end he was announcing "fundamental agreement on several critical points," including "a remarkable degree of consensus" on health-care reform. His vice-president declared an "impressive consensus" on the mutuality of economic growth and environmental protection.
The new president naturally wishes to foster the sense that as he often says, "we are all in this together." The danger is that he will mistake his rhetoric for reality. His broad proclamation of shared objectives obscures the hard fights that lie ahead, postponing the moment when he will have to identify who is against him, who is blocking the way. Given his narrow mandate, this is probably how Clinton hopes to govern. But a president who is unwilling to polarize public opinion by identifying real villains and opponents may find his consensus turning to mush.
Also palpable at Little Rock was the sense of just how much Clinton wanted to be respected by the big names at the table. He put his own intellectual dexterity on display, but he often responded to statements with ingratiating compliments. "How much does he need the approval of the big players — the Lloyd Bentsens and the Hugh McColls?" the former aide asked. "This may define his limits."
Clinton's political acuity is a great asset, but a nimble mind can also become a burden — and a way to conceal insecurities. "He is a politician who can hear every sound," his aide said. "He has a hyper-awareness of the limitations. The question is whether he will push the limits of what is doable or whether he overperceives the need for consensus."