President's Agenda Will Require
Flexing of Political Muscle
ALLEN MURRAY - WSJ POLITICAL CAPITAL REPORT
For Bill Clinton, winning a second term was sobering. Having spent much of his life running for the U.S. presidency, he suddenly could no more.
In an interview in the spring of 1997, he was surprisingly subdued -- until the subject turned to golf. Then he pulled two clubs out of the closet and gave me a 15-minute private lesson in the Oval Office, skipping his weekly lunch with the vice president to do so. Golf engaged him more than government.
In the first 48 hours after his re-election, George W. Bush signaled a different approach. He invoked the words that also are the name of this column -- Political Capital -- and said he intends to spend some. He will need to.
The big domestic ideas of President Bush's first term were largely pain-free: tax cuts, increased education spending, a new drug benefit for seniors. His big ideas for the second term -- a Social Security revamp, tax revisions, deficit reduction -- will provoke some powerful opposition.
Fighting insurgents in Fallujah, of course, may consume most of the president's political capital in coming weeks. Fighting a battle over a Supreme Court nominee could consume the rest. But if he ever gets to his domestic agenda, here are a few of the obstacles he will find in his way:
1) The seniors' lobby. Mr. Bush's advisers like to say he has broached the third rail in U.S. politics and survived. That isn't quite right. He has nimbly approached the issue, but so far has avoided direct contact.
A handful of free-lunch types argue that the government can create private accounts for future Social Security recipients without cutting benefits. The trillions of dollars in debt that would result aren't a problem, they say, because it is simply a formal recognition of obligations that already exist.
Mr. Bush signaled last week that he rejects the free-lunch approach. "There are going to be costs," he said. Real Social Security overhauls have to include gradual increases in the retirement age and a reduction in cost-of-living adjustments.
2) The tax-cut lobby. Mr. Bush's first term represented the high-water mark for tax cutters, but it is over. In his comments last week, he never mentioned "making the tax cuts permanent" -- a rallying cry of his campaign.
That is a bow to reality. Swelling budget deficits rule out further revenue-losing tax cuts. Instead, the president is talking about "revenue-neutral" tax revisions. That suggests he still is eager to keep rates low, but recognizes he probably will have to find a way to pay for them. The militant supply-siders won't like that; Mr. Bush will have to keep them in line.
3) The governors. Revenue-neutral tax revisions create winners and losers, and the states likely will be at the top of the loser list.
The reason is in the numbers: To pay for lower tax rates, any tax-overhaul effort needs to "broaden the base" -- eliminate some of the special deductions, credits and preferences in the tax code. The president also has said he wants to keep the mortgage-interest deduction and the charitable deduction, and he wants to expand tax breaks for health care and savings.
So what is left? The deduction for state and local taxes, which last year cost the Internal Revenue Service more than $70 billion. Eliminating that deduction would raise a lot of money to pay for other revisions, and it also would suit conservatives by discouraging state governments from raising taxes. Moreover, it has a convenient political twist: The highest-taxing states -- such as New York, and the District of Columbia -- also tend to be painted in Democratic blue.
4) Pharmaceuticals companies. The big drug-company executives, who are meeting outside Washington Thursday to celebrate the election results and plot strategy, think they have dodged the bullet. They are wrong. The outrage about high-cost drugs is a red-state phenomenon, with solid Republicans such as Jo Ann Emerson of Missouri leading the way for drug reimportation from Canada.
If Mr. Bush is serious about getting the budget under control, he will have to take on medical costs. And he can't get Congress to deal with medical costs unless he also figures out a way to resolve frustration over drug costs. That means getting the pharmaceuticals executives who were so generous to his re-election effort to get their heads out of the sand.
I am rooting for the president on all these. His ambitious second-term agenda is designed to keep the U.S. at the cutting edge of market-oriented economies and avoid the welfare-state drift that would otherwise accompany the baby boomers' retirement.
It isn't going to be easy. |
