The Political Interest

By Michael Kramer

Poor Alice Rivlin. She told the truth and is getting burned for it. Democrats, including Bill Clinton, whom she serves as budget director, have disavowed her list of "illustrative options" designed to boost the nation's wobbly economy. Republicans, distorting her discussion of possible tax increases and entitlement cuts, are running television spots attacking her.

Rivlin is simply doing her job. In urging alternatives for a mid-course correction, she aims to keep Clinton in the White House for a second term.

The President is in a box. Elected to break the gridlock, he is now viewed as its captive. What to do? With the new Congress certain to be more conservative, more partisan and more polarized, Clinton faces several choices. He can keep playing an inside game and seek once more to work with Congress, but perhaps lose in 1996 if little is accomplished. He can champion welfare and lobbying reform and some further-reaching proposals (like abolishing the Education and Energy departments) to prove he's serious about downsizing government. That course could let him posture again as an outsider agitating for change, but those efforts might eventually be seen as small bore. For greater heft, Clinton would be wise to embrace the option Rivlin clearly prefers.

Buried in her 11-page memo, and largely ignored in the simpleminded caricatures attending it, is a commendation for Rob Shapiro's "Cut and Invest" program. Shapiro was the Clinton campaign's principal economic adviser. He is now at the Progressive Policy Institute, the Washington think tank run by the Democratic Leadership Council, the group of moderate Democrats Clinton once chaired.

Shapiro's plan, says Rivlin, "would make life better for the average citizen by taking on the special interests and eliminating tax loopholes and spending giveaways that favor the few while hurting growth." Shapiro has identified 65 such preferences. "Wipe them out entirely," he says, "and you save $225 billion over five years." Among the programs Shapiro would gut are those that defray airlines' costs to expand terminals and payments to farmers whose commodities sell below set prices. To ensure that Congress doesn't pick and choose -- a process in which the strongest special interests would see their favored scams survive -- Shapiro wants a bipartisan commission whose recommendations Congress would have to accept "in toto or not at all. Spreading the pain, like the military base-closing committee did," he says, "is the best way to guarantee that the job is done right."

Shapiro would devote a quarter of the savings to deficit reduction and another quarter to middle-class tax relief in the form of a $710-a-year family tax credit per child. The remainder would be for programs to increase productivity and spark a rise in stagnating personal incomes. "We'd get enough to quadruple funding for infrastructure, basic research, and education and training programs," he says. "We could also expand the Administration's welfare-reform plan."

No doubt the President would like Shapiro's ideas, says a Clinton aide, "but he's still suffering a political identity crisis. He chooses, Chinese menu-like, from different, often antithetical plans so he doesn't offend anyone. Doing that with Shapiro's proposals would rob them of their punch."

If Clinton adopts the tack Rivlin and Shapiro favor, a stance that seeks to get ahead of the coming congressional rush to cut spending in ways he will probably abhor, the President can define the agenda and demonstrate leadership. If instead he merely follows Congress's lead -- or vetoes his way through the next two years -- he could find himself back in Little Rock in 1997.