The Political Interest

By Michael Kramer

BOSNIA, SOMALIA, SADDAM HUSSEIN -- THEY'LL ALL BE Bill Clinton's problems next week. And they'll be the easy ones. Not even the thornier foreign issues that await the new President will nag as much as the nation's domestic economic troubles, the continuing crisis Bill Clinton has been elected to solve. As the deficit climbs, it is hard to know who is telling the truth, who should be blamed (if anyone), and harder still to get a fix on what exactly Clinton plans to do -- largely because the President-elect is enjoying the honeymoon that all newly elected leaders receive.

A political honeymoon is a period during which a politician can say and do the most outrageous things and get away with them. In most respects, Clinton has nothing on his predecessors in this regard. Backing off on his promise to cut the White House staff 25% (which he appears to be doing), or asserting his highest regard for Washington's public schools while enrolling his daughter in a private academy, is small-bore stuff -- par for the course and unremarkable. But Clinton is breaking new ground when it comes to the deficit. The President-elect's insistence that the latest debt numbers are news to him -- that he is a victim whose best intentions may fall before a new reality -- is chutzpah writ large.

Until now, Clinton has reveled in a gift few ever enjoy -- the ability to be at the very center of the action while at the same time being above it, critiquing the problem without bearing any responsibility for it. That he has so far been able to straight-facedly blame George Bush for hiding the truth is a wonder to behold. For as TIME has previously reported, Clinton knew the numbers were getting worse long before the election -- and knew as well that his campaign plan was fraught with faulty assumptions and overoptimistic revenue and spending projections. That was fine for then -- no one caught on, and Clinton won -- but it's about to be his deficit and his hard choices, and as one of Clinton's economic aides says with a laugh, "Seeing the road out is proving a bit difficult."

Which is putting it mildly. Consider the role of Congress, the institution controlled by Democrats that is supposed to be an ally of a Democratic President, a confluence Clinton promised would end government gridlock. In speaking with Congress's Pooh-Bahs, the President-elect's people have heard the following advice, almost uniformly: Clinton must get the deficit down, and Congress is ready to help. O.K. so far. But don't you dare try raising taxes beyond the new levies on the rich that Clinton spoke about during the campaign. Oh? Well, then, which spending programs would Congress support cutting? "Boy, that's tough," said a senior Democratic Senator.

Tough is only the half of it. In an exercise that took weeks, Clinton's team developed a list of 70-odd programs whose gutting would save about $30 billion a year -- or, as one economic adviser says, "virtually nothing." What's worse, says this Clinton aide, "after going over the list with Congress's key players, it's obvious that cutting any of them even fractionally would require the expenditure of enormous political capital," a prescription for Gridlock II.

It was this reality that confronted Clinton when he met with his economic advisers in Little Rock last Thursday. On the table at this point are the following proposals: Do move forward with a multiyear stimulus package in the range of $75 billion over four years. "It'll have minimal impact on the deficit and buy us some goodwill in Congress," says a Clinton aide. Don't squander political capital trying to gut small programs, except for a few to symbolically telegraph Clinton's seriousness. Do postpone a middle-class tax cut, and do tie the stimulus program to a long-term deficit-reduction regime | that will involve major revenue raisers like a gasoline-tax hike and a swipe at the deductibility of employer-provided health-care benefits. "The revenue side is where we'll likely concentrate, because that's what we think will be easier for Congress to swallow," says a Clinton aide. "But even that will require the boss going to the mattresses."

No decisions have been made, and the President-elect has sent his troops back to the drawing board with instructions to "make sure you work it out with Congress." Trouble is, concedes a Clinton aide, "Congress is part of the problem, not part of the solution, and the only victory we've had is getting the media to blame Bush for the red ink," which could have a perverse effect. To the extent Clinton perceives himself as unbound from his pledge to cut the deficit in half in four years, the discipline required to seriously tackle the debt could quickly erode. "Yep," admits a Clinton aide, "that's a real worry. All you can say now is that it looks as if it'll take at least 1,000 days to accomplish our 100-days agenda, which of course we don't yet even have." Or, as George Bush once said, "Nobody said it was going to be easy, and Nobody was right."