Bill Clinton's first term effectively lasted two years, until the disastrous midterm elections of 1994. Then came the two-year Clinton-Gingrich government of national disharmony, ending in the President's miraculous revival. Now we have the third Clinton presidency, the second Gingrich Congress, and a gathering storm of investigations that may well dominate national politics for the next two years.
Emotionally, this third phase has begun in a deceptively low key. The 1992 campaign generated high voter interest, and the election of a young president raised public expectations of reform, even of another Camelot. Although 1994 turned things upside down, emotions still ran high as Republicans talked revolution and that very talk aroused fear among a large part of the public. For liberals, the ascendancy of conservatives in Congress seemed to mean, as we said on our Spring 1995 cover, "the fight of our lives." But 1996 has been strangely flat. Political temperatures have been running below normal. Not only was the presidential race lacking in intensity; the public response to the outcome has also been indifferent. To outward appearances, nothing has changed; the incumbent parties have just been returned to their respective branches. Both the President and Republican Congress are supposed to have learned their lessons, rejected extremes, and come together in the center where they will check and balance one another and continue the kind of bipartisan cooperation that led last summer to welfare reform, the rise in the minimum wage, and the Kennedy-Kassebaum health insurance bill.
Last summer, however, seems more likely to have been a pause in the battle than a prelude to everlasting peace. The fundamental ideological issues that divided Clinton and most Democrats from the Republicans in the last Congress remain, and they will likely emerge even more sharply in the coming conflicts over Medicare and Social Security. Liberals should be especially concerned about the likely denouement of these confrontations. Because of the historic pattern of midterm elections in favor of the party opposing the president, Republicans may be confident of emerging stronger in 1998, which could stiffen their posture beforehand. At the same time, explosive indictments and trials in Arkansas and Washington could severely weaken the hand of the President in negotiations and turn the next midterm elections into a rout. A quiet, productive, bipartisan Era of Good Feeling seems the least likely forecast for the next few years.
When the voters speak, they don't necessarily reach a conclusion: There may be no majority for a message. Our habit of reading a "mandate" into election results has nonetheless become so ingrained that even the mixed results of 1996 are widely thought to have conveyed one—this time for divided government. We like to personify the electorate, as if Americans voted with a single mind, avoiding the more obvious interpretation that the public is divided and doesn't have consistent preferences.
In their postmortems, some commentators said the voters who re-elected President Clinton also chose the Republican Congress to keep him on a short leash, even though the pollsters hardly found any such ticket-splitting "strategic voters." Nor did the electorate as a whole make the strategic choice to put the Republicans, much less Newt Gingrich, back in charge of the House. The total popular vote for the House was almost even; preliminary data showed Republicans and Democrats both receiving just over 49 percent of the vote, with the fractional remainder going to third parties. The Republicans won the House because of the way in which votes were distributed. According to political scientist Martin Wattenberg, of the close contests decided by 2 percentage points or less, Republicans won 23 while Democrats won only 9 (as of mid-November, before the runoff elections in Texas and final count in some disputed races). However, among the lopsided races, where the winner had more than 70 percent of the vote, Democrats won 77 and Republicans 53.
Republican victories in close races may have been due to larger and more accurately targeted financial resources, the advantages of incumbency, or districting decisions that concentrated Democratic votes—or to sheer luck. Whatever the cause, with the two parties so closely matched, it seemed rather premature to announce "the age of the Republican House," as a headline in the Washington Post did. If voter turnout had not dropped to a mere 48 percent, or if the Democrats had not been hit with the Indonesian campaign finance scandal in the final month of the campaign, the House might have split right down the middle or gone the other way.
Nonetheless, the single most significant result of the election is that the coming to power of the Republican Congress in 1994 has been confirmed as more than a fluke. Republican gains in the South have decisively ended the old, 80-seat Democratic congressional majorities. While there hasn't yet been a complete party realignment, we have had a regional realignment that fulfills the predictions that Kevin Phillips and others made in the 1960s: Once the South went Republican in presidential elections, so it was likely to go in congressional races after a generation's lag. What's perhaps more surprising is that not only has the South turned Republican; the Republican Party has also become the vehicle of a southern restoration in Congress. Instead of southern Democratic barons, southern Republicans dominate the leadership of both the House and Senate.
And yet the 1996 election may portend another shift that partly offsets the rise of sunbelt conservatism. As the southern votes for Goldwater in 1964 and Nixon in 1968 foreshadowed future changes in Congress, so Clinton's victories across the southernmost rim—in Florida, Louisiana, Arizona, New Mexico, and California—may foreshadow a Democratic resurgence in what might be thought of as the Latinized South. The "power shift" to the sunbelt that Kirkpatrick Sale wrote about in a 1975 book by that name partly reflected the region's faster population growth. What the theory of sunbelt conservatism didn't anticipate, however, was yet another wave of demographic change within the region: the growing populations of Hispanics and the retired elderly, both of whom this year swung sharply toward the Democrats in reaction to Republican policies on immigration and Medicare.
In this election, Clinton's turnaround victories in Florida (the first win by a Democrat since 1976) and in Arizona (the first since 1948) didn't translate into Democratic gains in those states' congressional seats. That's the historic pattern. But the surprise triumph of Loretta Sanchez, the Democratic challenger to the right-wing Congressman Robert Dornan in Orange County, California, may be indicative of turnover to come. And, according to the Los Angeles Times, Sanchez managed to win even though turnout in high-Latino areas of the district was only 40 percent, compared to 60 percent in low-Latino areas. There are a lot more Hispanic votes where her margin came from.
The more immediate relevance of these changes is to presidential races. Republicans have always counted on heavy majorities in Orange County to win California; the much-touted "Republican lock" on the electoral college depended on an edge in three big states—California, Florida, and Texas—all of which may now be in play because of the southern-rim demographic trends. There's surely no Democratic electoral lock, but the Democrats could develop an electoral edge because of concentrated advantages in the largest states. Think of the Mexican border as a coast, and the Democratic base, now anchored on two coasts, may become, if you will, tri-coastal. Interpretations of the 1996 presidential race have focused overwhelmingly on the idiosyncrasies of the candidates and Clinton's repositioning in the center. That is how many people reconcile his victory with the conservative shift in the Congress and state capitals. But just as the Republicans' control of Congress was not exactly a fluke, the re-election of a Democratic president may also have reflected deeper trends. It's as if American government had performed a novel gymnastic feat—a reverse double flip, with the legislative and executive turning over in opposite directions. If this were just dizzying, that wouldn't be so bad, but it also seems to have left a paralysis of the liberal impulses.
WHAT CAN BE DONE?
Clinton starts his second term with so negligible a mandate, and so little room to maneuver, that he has much less opportunity than in 1992 to disappoint his supporters. They're not expecting much. Two decades ago, several prominent political scientists worried that rising expectations threatened the "governability" of the democracies; that doesn't seem to be our problem now. If one candidate in 1996 offered to stuff money into the voters' pockets, it was Bob Dole with his 15 percent tax cut, and his offer was turned down by a public that, according to polls, doubted he could balance the budget, too. Public cynicism does have its upside. The Democratic campaign, oddly enough, may have been more believable because it stuck to measures that were modest or, as the pundits liked to describe them when they weren't discussing Ross Perot, "small bore."
There actually were some ideas in this year's Democratic campaign that did not deserve that description. (Don't wrack your brains; I'm going to mention them.) Making two years of college universally available (through the mechanism of a tax credit) would be a historic extension of publicly financed education. Providing health insurance to the unemployed and to children wouldn't be universal coverage, but it wouldn't be small-bore either. Creating jobs for former welfare beneficiaries would be no little achievement. But Clinton's promises were hedged, and the actual money to be spent on these initiatives is modest. The pledge of a balanced budget in 2002 has ruled out programs proportionate to the problems.
Consider what we ought to be doing, not just to repair last year's welfare legislation (see Mary Jo Bane, "Welfare as We Might Know It," page 47), but also to address the larger dilemma of poverty and stagnant wages. We have properly and reasonably made it national policy that people cannot indefinitely remain dependent upon welfare and must take jobs. It is also national policy, however, to raise interest rates as soon as unemployment slips under 5 percent, and to lower trade barriers and make unskilled American workers compete directly with Third World workers earning wages that couldn't provide subsistence here. Officially, these are not problems; the poor will find jobs at living wages if only they try hard enough. But at some point the illusions will die, let us hope before the poor and their children do. In a sense, time limits apply not only to beneficiaries, but also to government. If we won't provide public employment, we will have to increase private demand for the labor of the poor, a tricky task in this day of reengineering when companies are figuring out how to get rid of marginal workers. Yet, for the moment, eyes are closed to the bigger problems, and little will be done.
In no area is the immobilization of presidential initiative more evident than in economic policy. With the Federal Reserve under Alan Greenspan, Clinton has little, if any, influence on monetary policy. Under his commitment to a balanced budget, he cannot make aggressive use of fiscal policy; he had to surrender the idea of public investment as a source of growth at the beginning of his first term. Trade policy is immobilized by international agreements, ideology, and corporate lobbying (see Robert Dreyfuss, "The New China Lobby," page 30). No wonder that conservatives, with their radical tax plans, seem to have the bolder (if more foolish) economic ideas. And no wonder that Wall Street has been so comfortable with Clinton; he's thoroughly boxed in. But if the United States faces a recession in the next four years, what options does the President have? Pilot programs and "values" won't do.
The balanced budget amendment would extend the immobilization of economic policy far into the future. After failing by a single vote in the Senate at the opening of the last Congress, the amendment is now far more likely to pass because of the addition of two Republicans and shifts in membership within the parties. The great danger of constitutionalizing budget balance is that in the early stages of a national crisis, economic or military, Congress will be paralyzed by the requirement of a 60 percent vote in both houses to borrow funds. In a recession, as revenues fall and benefit claims rise, the federal government would have to cut expenditures, not only denying aid to those in need but also reducing aggregate demand and aggravating the downturn. Instead of "automatic stabilizers"—the programs such as food stamps and unemployment insurance that augment demand in recessions—we would have "autodepressants," an innovation that modern medicine has somehow overlooked.
Under the amendment, Congress could circumvent the requirement of a 60 percent majority by declaring a recession, but its members are likely to delay doing so for fear of the self-reinforcing effects of such a declaration. The Founders rejected any limitation on the borrowing power of the federal government because, as Hamilton said in the Federalist, it was impossible to anticipate the dangers the United States might face. Now, having created the strongest economy and government in the world without a constitutional barrier to borrowing, we seem about to decide that the Founders were wrong.
Barring calamities—including those self-inflicted by constitutional amendment—the most important business of the next four years will be the reform of Social Security and Medicare. If one thing were clear from the election, it might be the public support both these programs enjoy, but that will not be enough to keep them whole. Both face long-term fiscal problems that in another era would have been addressed by shaving benefits, modifying institutional arrangements, and expanding revenue without altering the foundations. As Richard Leone argues in this issue ("Why Boomers Don't Spell Bust"), America has the resources to fulfill the nation's social contract with the elderly. But now the foundations will be at stake, and the contract may well be broken.
The critical issue is not so much the magnitude of future cuts in benefits as the structural changes in the programs that may be adopted in the process. Conservatives and the financial interests allied with them want to promote what Robert Reich calls "the secession of the affluent" by allowing people to opt out, wholly or in part, into private alternatives: personal savings accounts (PSAs) in Social Security, medical savings accounts (MSAs) under Medicare. In neither case does privatization improve solvency. Even the Republicans' own Congressional Budget Office projects the MSAs as a net cost, not a saving, to the Medicare trust funds. And as Theodore Marmor and Jerry Mashaw pointed out in these pages ("The Great Social Security Scare," TAP, November-December 1996), Social Security could invest in index funds and thus also capture higher projected returns from equity markets. What privatization will do is produce sharply different results for the affluent and the poor. It's ironic that just when disparities of income and wealth are increasing in the economy, conservatives want to change Social Security and Medicare in ways that will intensify inequality.
During the campaign, elite journalists frequently echoed the Republican view that the Democrats were "demogoguing" Medicare and cited the relatively small differences in budgetary savings between Republican and Clinton administration Medicare proposals. But the budget numbers don't correctly measure the distance between their positions. The Republican approach encourages insurers running MSAs and other private plans to cherry-pick the healthy elderly. It does not take a genius to discover enormous opportunities for profit at the expense of the trust funds if Medicare pays $5,000 per beneficiary to private plans that can avoid enrolling patients in nursing homes and appeal to the 80 percent of healthy seniors whose costs average $2,000 a year. The sicker the remaining population in the government program, the higher will be its costs, the more the program will have to cut back physician and hospital payments (under a "look-back" provision in the Republican plan), the more providers will refuse to accept Medicare—and, in the long run, the more likely Medicare as we know it will "wither on the vine," as Gingrich put it. Today Medicare guarantees to the elderly a set of defined benefits. That is how Americans understand it; that is what they expect of it. The Republicans, however, would like the program to provide only a defined contribution for the purchase of varying insurance packages. But if costs increase faster than the contribution, the program may no longer buy the benefits that recipients are now guaranteed. This is a fundamental redistribution of risk from the government to the elderly, who have good reason to fear the consequences.
Although Medicare is likely to occupy the central focus not just of health policy but of budgetary politics, Clinton has some opportunities to work piecemeal on his original health care reform agenda. One of the ironies of the 1993 Clinton plan's defeat is that many of its provisions would have expanded choice and given patients new rights to appeal or circumvent insurers' denials of coverage. Those concerns ought to be the basis of a revived agenda that emphasizes protecting the rights of patients in managed care, improving quality measures, and promoting insurance pools that expand consumer choice beyond what individual employers are able to provide. As the bipartisan reaction to drive-through hospital deliveries indicated, Republicans may be willing to put aside their general distaste for regulation when middle-class constituencies demand limitations of managed care. As a result, even with divided government, there may be some opportunities for progress on this front.
Similarly, while this Congress is unlikely to initiate any expansion of publicly financed health coverage, Clinton's proposal for the health insurance for the unemployed may pick up support. Both parties have hailed the Kassebaum-Kennedy bill as guaranteeing Americans the right to keep their health insurance when they change or lose their jobs. What they haven't stressed is that the legislation does nothing to help the jobless pay for coverage. After the bill goes into effect and especially if a recession hits—that is, if the government has the capacity to do anything in a recession—there may be pressure to respond to the bill's most obvious limitation. No doubt other targets of political opportunity will emerge over the next four years. They are far more likely to develop, however, if the President uses his bully pulpit to create them. Clinton has been extraordinarily adept at taking the dominant conservative framing of the issues, ceding on points he felt he could not win, and then using the conservative frame—family values, responsibility, a balanced budget—to defend his policies and criticize his opponents'. But unless he and his party reframe the debate, particularly about economic policy and entitlements, they will be in deep trouble on the truly decisive choices of the next four years.
THE DEMOCRATIC TENSION
The choice between contesting conservatism and turning it to (moderately) progressive purposes is exemplified by the internal conflicts within the Democratic Party. Although Clinton's campaign this year wasn't built around any major initiatives, it synthesized the themes and policies advanced by the party's contending factions. On the one hand, the President evoked concerns for values of opportunity and responsibility that New Democrats emphasize; on the other, he made the protection of Medicare, Medicaid, education, and the environment into a campaign mantra.
But within days of the election, two groups representative of the tensions among Democrats issued reports from pollsters with contrary stories about which themes won the race. On behalf of the Democratic Leadership Council, Mark Penn, who advised Clinton in 1996, said his polls confirmed that the President won because he had returned to his original stance as a New Democrat. On behalf of the populist Campaign for a New America, Stanley Greenberg, who had advised Clinton in 1992, said his poll showed that most Clinton voters responded to such traditional Democratic concerns as Medicare and education.
They may both be right. The overwhelming majority of Democratic voters, as Greenberg contends, respond to the traditional themes, but that doesn't answer the question of what's necessary to win elections. The core Democratic constituents may amount to perhaps 35 or 40 percent of the electorate, enough to go down to thunderous defeat; the additional voters attracted by New Democratic themes may well provide the margin of victory. The left would like Democrats to try to win elections by expanding the electorate, but no one has figured out how to get low-income and minority voters to the polls in the numbers that this strategy requires.
Thus, however uncomfortable they may be together, the two factions need each other. If one side pulls out—for example, into a third party—they will both go down to defeat. Some New Democrats may abhor the labor unions and "liberal fundamentalists"—no matter, they can't win elections without them. The Republicans have analogous and, if anything, less comfortable alliances between cultural conservatives and libertarians. On each side, writers in magazines and experts in think tanks can attack one other with abandon, but political leaders who need to assemble majorities at the polls and dedicated workers at the grass roots can't afford to be so cavalier. It's not that they can't grasp contradictions, as one friend likes to say of Clinton; they have an institutional need of ambiguity. Still, when vital principles are at stake as they will be in the fights over the balanced budget amendment, Social Security, and Medicare, political clarity should not be too high an expectation.