The Political Interest

By Michael Kramer

BILL CLINTON HAS BEEN ELECTED TO FIX THE ECONOMY. Everything else is secondary. He knows it, and the nation expects it. The question is how to deliver. After promising change and offering hope during the campaign, the President-elect is currently counseling caution and patience. Each bow to urgency (the people want "aggressive and prompt action, and I'm going to give it to them") is coolly qualified: "We didn't get into this mess overnight, and we won't get out of it overnight."

Dampening expectations is prudent and shrewd, but it won't get Clinton off the hook. A sick economy in 1996 will sink him. No one expects miracles, and few will quibble if the economy isn't completely well, but it had better be on the mend and be seen to be. "If 70% of the people still think the country is on the wrong track," says a Clinton aide, "we're dead." While key policy decisions hang unresolved, several structural and personnel determinations are of equal importance. Foremost is the exact role of the Economic Security Council, the new White House-based group Clinton is fashioning to force a change in policy development without expending precious political capital on a government-wide reorganization. In public, Clinton's aides see the council as fostering team spirit; in private, they predict that the President-elect will order agency heads to subordinate their independence to the ESC.

Several administrations have had economic coordinating offices. Some were workable power centers; others were abject failures. By all accounts, the best was President Ford's Economic Policy Board. "Ours worked for two reasons," says William Seidman, the former Federal Deposit Insurance Corporation chairman who ran the board. "First, Ford insisted that no decisions be made until they passed through the board's processes, which kept end runs to a minimum. Second, ((Treasury Secretary)) Bill Simon wasn't interested in running the day-to-day operation. He forcefully presented Treasury's view but never pulled rank. He was satisfied to be the Administration's public spokesman," a role Simon had codified in the presidential Executive Order creating the board.

Following Ford's example, Clinton will face the challenge of selecting people willing to play their assigned roles without complaint. If his appointment of Harvard's Robert Reich to oversee economic issues during the transition translates into Reich's anointment as Economic Security adviser, the Administration will be well served. "Besides being smart as hell, Bob has the temperament to manage competing egos," says Roger Altman, a Clinton economic-policy adviser. "He is unflappable and well respected, someone the others could work with harmoniously, knowing their positions would be faithfully presented to the President."

Borrowing Ross Perot's favorite phrase, Clinton promises a "world class" economic team, but the entire arrangement will founder if the traditional "first among equals" doesn't get with the program. Here is a brief look at the leading candidates for Treasury Secretary and their strengths and weaknesses:

-- Paul Volcker: The former Federal Reserve chairman, famous for taming inflation, is the odds-on favorite. Volcker's selection (especially in combination with Alice Rivlin, the leading contender for Budget Director) would calm financial markets worried about Clinton's commitment to reduce the deficit. But transition insiders are concerned that Volcker may be "too stubborn. We'd get great press by appointing him," says a Clinton aide, "but living with him for four years could be hell. On the other hand, if he can do to the deficit what he did to inflation, they can call off the '96 election."

-- Lloyd Bentsen: The Texan, who chairs the Senate Finance Committee, wants the post, but Clinton may conclude he can better help by staying put. "He'd send the same signals as Volcker," says a Clinton adviser, "but we haven't worked with him and he may be out of synch with what we want to do."

-- Robert Rubin: The co-chairman of Goldman, Sachs & Co. raised big bucks for Clinton and is well regarded in financial circles. "But he hasn't had any government experience, and he isn't particularly good at public presentation, which the Treasury Secretary had better be good at," says a Clinton aide.

-- Roger Altman: The vice chairman of the Blackstone Group investment banking firm served as Jimmy Carter's Assistant Treasury Secretary. "Roger's the best at working with the rest of us, and he knows Washington," says a Clinton adviser. "He's known for taking the deficit seriously, but at 46 he may be too young for a President of the same age. Yet if all that matters after four years is the bottom line, Altman could help us get on its good side."

The latest from Little Rock is that Clinton has kicked back this and other lists asking for "more names, different names." That's "his pattern," says a Clinton aide, "but he often returns to the original list, as he did with Al Gore." That is why the smart money is on Volcker, Rivlin and Reich, a trio that would satisfy Clinton's desire for a "Wow!" response from the financial community. "All he knows for sure at this point," said this Clinton aide last Friday, "is that whomever he selects had better play well with others. Only collegiality will get results, and without results, Clinton will hit 1997 as a very young ex-President."