Beltway Power Vacuum Jude Wanniski June 17, 1991

The White House called last Monday to invite me to hear President Bush speak last Wednesday evening on the South lawn. When I asked the fellow from the Office of Public Liaison what the speech was about, he indicated it would be a major speech on the President's domestic agenda. Along with 2,000 other Americans, I cleared my calendar, spent several hundred dollars on plane fare and hotel, killed two working days, and heard one of the worst Presidential addresses in my experience. The speech lasted half an hour and was interrupted by applause only once, and then only by a fraction of the audience. The good news is that Tony Snow, the President's chief speechwriter, did not write a word of it. The occasion, apparently, was too important for a Snow script. I was also pleased to hear via the grapevine that Budget Director Richard Darman trashed the speech before it was delivered, but it was too late for major alteration.

This was supposed to be The Domestic Vision Speech, which would demonstrate that the Bush Administration does have such a vision. The speech prompted me to remember the complaints during 1975 that President Ford lacked "vision." One day, The New York Times reported that James A. Reichley, an editor at Fortune, had been hired as a White House Assistant to the President. The article actually quoted Jerry Ford as saying Reichley was hired "to supply some vision." President Bush's speech was somewhere in the Ford ballpark, a "philosophical speech" without philosophy, just a jumble about the importance of free markets, government and business working together for the commonweal, a reprise of his "thousand points of light," and a pitty-pat chastisement of Congress for not passing his crime and transportation bills.

On the afternoon of the speech, on the assumption that the President was taking off the gloves, the congressional Democratic leadership in Congress arranged for various pot shots to be taken at the President from the floor of the House and Senate for his lack of domestic leadership. This little bit of bluster apparently caused the President to be even kinder and gentler in his critique: "Gee whiz, they didn't do what I asked them to do." Still, the exchange was the liveliest in months. For all practical purposes, the August recess began sometime in April.

To be sure, in the 26 years that I've been spending serious time in our nation's capital, I can't recall another period when it's been so neutered. Democracy has been so thoroughly suspended by last year's Budget Agreement that Washington these days no longer feels like a power center. Nobody has ever accused Washington of being a city of ideas. It is the city of power, especially now that Moscow has thrown in the towel. Yet it feels like Moscow felt when I first visited that city in 1983 (not today, when the intellectual ferment is palpable). Like Brezhnev and Andropov, President Bush has conceded to be safely ensconced as Boss for the next several years. Like the Politburo, the Congress has composed its differences behind a mask of bipartisanship that approximates a coalition government in crisis. As in 1983 Moscow, there is an undercurrent of dark anxiety in June 1991 Washington, reflecting the steady erosion of national well-being that exists from coast to coast.

Democrats and Republicans hold hands, whistling in the dark, hoping at least that the recession is over, for a while. But they look around, wondering if the USA's best days are behind us. The Wall Street Journal tells us this morning that the nation's standard of living continues to fall. The New York Times reports that children are living with their parents longer and longer. How are we going to pay for the old folks, now living to be 100? How are we going to pay for anything, if the costs of the S&L bailout are going to be matched by the costs of a banking bailout? How are we going to finance the $3 trillion national debt if long-term interest rates keep rising? The future, alas, seems impossible.

The only answer, along this line of reasoning, is to socialize. Socialize health care. Re-regulate the economy, as we've been steadily seeing. Pass the Democratic employment quota bill or the GOP employment quota bill. Freeze taxes and spending in place in a Five Year Plan. Put any spare cash that turns up into a Marshall Plan for the USSR. Turn back all remaining problems to local governments and the thousand points of light.

After the President's speech, I chatted with Darman for a minute on the South lawn. He told me he agreed with my recent "Leaky Faucet at the Fed" missive, coming as close as he ever has to admitting I've been right and he wrong on an economic matter. It was the only thing encouraging about the trip, and not insignificant. Darman, after all, led the way for the Bush Administration in August 1989, blaming the Fed for the weakening economy. For the first time yesterday, in his "Meet the Press" appearance, Darman refused to recommend to the Fed a further lowering of short-term rates, expressing concern about what this would do to long bonds. Unfortunately, he still considers capital gains taxation as a minor matter, advising "Meet the Press" that he views it unlikely the issue will be addressed this year or next. When one of his deputies, Barry Anderson was reported on the broad tape at 3:07 p.m. last Wednesday saying there would probably not be a tax bill until 1993, the Dow industrials tumbled 15 points, falling another 24 the following day, having absorbed the import of the President's speech. Obviously, Darman continues to believe the economy will recover sufficiently in the months ahead to see the President safely through 1992. Clearly, he's now rooting for the Fed to get policy right — to help the economy along. Until now, his criticism of the Fed has been political, fashioning a scapegoat in the event the recession would be severe.

As the "recovery" will no doubt appear in the third quarter statistics, it's possible we may be in this soporific condition for a longer stretch than I thought possible. The Democrats continue to make growling sounds like they are serious about challenging and defeating George Bush in 1992. They show up at all of Pamela Harriman's town & country political parties. At an age somewhere between 90 and 110, Ms. Harriman has to be the last remnant of the original New Deal. But the party's younger, liberal intellectuals, those under 60, are openly worrying that the party is "brain dead," happy enough to have the sinecure of Congress. The only intellectually agile Democrat in Washington is Pamela Harriman.

Can you blame me for trying to persuade New York Governor Mario Cuomo to run for President? There" is no one else I see anywhere, in either party, who can break the Beltway logjam. Newt Gingrich is primarily worried about his own House re-election. Jack Kemp should resign and run for something, to re-activate the supply side. Alas, he has become one of the nomenklatura in the Kremlin on the Potomac. If Cuomo does not take on this cozy power structure that has swallowed up the Beltway, I'm afraid we will be forced to snooze through another six years of speeches on the South lawn as the country goes to the dogs.