The five-year “bipartisan” budget deal is really a stunning ratification of Republican values, goals and politics. Barring a massive (and improbable) recession, the deal promotes a political era of prolonged Republican dominance.
Not only are its core elements–budget balance, tax cutting, reductions in social insurance–long-standing Republican goals, but President Clinton did the Republicans the further favors of trimming the jagged edges off the GOP program, adding modest and conservatively styled social benefits for which Republicans can share credit, and isolating his own nominal allies, the Democrats.
This end-game was prefigured last year, when the president embraced the Republican idea that the budget had to be balanced by a date certain, as well as a core objective of the Republican “contract with America” of a $500-per-child tax credit. Budget balance and tax cuts meant social outlay had to be reduced. The rest was detail.
And the detail is even worse. Clinton accepted all but one key Republican tax demand. The Republicans got their massive capital gains cut, inheritance tax cuts and a child tax credit for families with incomes up to $110,000.
Republican negotiators gave up only indexation of capital gains for inflation (and they will be back next year.) Clinton did get the child tax credit extended to low-income working families who pay payroll taxes but not income taxes.
Even with these scant concessions, Citizens for Tax Justice calculates that just one-fourth of the tax relief will go to people making less than $100,000 year. Over a third of all the tax breaks will go to the top 1%.
With both parties supporting tax relief, we needed a spirited debate about who should get it. In this uneven boom, the top 10% are thriving while the rest have only modest income growth and rising insecurity. The bottom 90% are supposed to be the Democrats’ natural constituency. Why wasn’t Clinton their paladin?
With Republicans controlling Congress and a Democratic president, compromise was certainly inevitable. But what’s amazing is how much Clinton gave away before the serious negotiations began.
Chief among these was the faulty premise that budget balance was fiscally and politically imperative. While the huge Reagan-Bush deficits were indeed unsustainable, throughout the postwar economic boom both parties ordinarily accepted moderate deficits of between 1% and 2% of GDP.
Deficits in that range are tonic for growth. They help fund public outlays that spur private development.
This Democratic president came into office promising increased social and public investments to benefit ordinary people. He will go out claiming as his greatest legacy budget balance.
Even the few tokens of social outlay that Clinton extracted from the Republicans are badly flawed. His higher education tax credit is not targeted and are likely to yield tuition hikes.
The roughly $5 billion a year to finance stopgap health insurance to poor children is better than nothing. But this state-by-state program will further splinter a system already far too fragmented.
Children in low-income families will bounce around from Medicaid to employer-provided health care to this hybrid program. And Medicaid cuts will nearly offset the new outlay. It would have been better policy simply to extend Medicaid to more kids.
There is a crying need in this country for a political party to champion people who are not sharing in today’s economic boom. Ordinarily, that would be the Democrats.
With most Democrats in Congress feeling constrained to support their president, House Democratic Leader Richard Gephardt is leading a brave band of souls opposed to the budget deal and the damaging philosophy of Clintonism. The White House is doing everything possible to isolate Gephardt, who was not even invited to the budget negotiations.
In 1996, Clinton’s partisan silence was deafening. He did not urge voters to elect a Democratic Congress to enact a Democratic program because he was not espousing much of one. Mainly, his operatives siphoned the available political money for his own race.
For Democrats, 1998 looks even bleaker. The president’s party ordinarily loses congressional seats in the sixth year of an incumbency.
Vice President Gore has little taste for helping his archrival Gephardt become speaker. And the budget deal leaves Democratic congressional candidates little to campaign on.
Republicans shouldn’t complain that Clinton has stolen their clothes. The fashion is their own, and it will straitjacket Democrats for a long time.