A One-Term President Jude Wanniski December 23, 1993

President Clinton has definitely been crippled by the American Spectator's latest steamy revelations about his manly appetite. There's nothing so far in the sex stuff that is likely to cause him more than extreme embarrassment. This will be enough, however, to dog him and Hillary for the duration of their brief stay in the White House. Yet in so many intangible ways it will affect their ability to conduct the people's business. This isn't because the American people really care about his personal predilections, if Hillary doesn't, but because he could not keep them out of public view. He was careless. There are few grown-ups in the country, excepting perhaps the editors of The Wall Street Journal, who find the story incredible and believe the Clintons' strained denials. [The Journal 's brand new Washington Bureau Chief, Alan Murray, made the scandalous decision to shield the paper's readers from any mention of this important story, which has all of Washington holding its breath, waiting to see how it plays out.] 

The greater importance of the Spectator story is that it has given new life to the far graver problems the Clintons face regarding their Arkansas financial dealings. Nobody believes the President cares about money, as long as he has enough in his pocket for a Big Mac, but there are a lot of laws on the books, and it at least appears some may have been broken. Why else would the White House be going to such excruciating trouble to try and hide pertinent records taken from the office of White House counselor Vincent Foster after he committed suicide? While The Wall Street Journal remains in denial, The New York Times is properly furious that on December 20 the White House finally admitted to taking the records, after six months of obfuscation and uncooperative responses to federal investigators. In this morning's Times, the lead editorial plainly asserts: "Release the Whitewater Files...Hand them over." The problem for this Democratic President is that the Times has a new editorial page editor, Howell Raines, who has more journalistic integrity than you can shake a stick at, and who would quit in a nanosecond if the Big Guys at the top of the masthead suggested he go easy on the President.

My own genuine wish is that the President survives the revelations to come, when the whole story inevitably plays out. The alternatives might appeal to some more partisan souls, but they would be extremely messy. Paul Craig Roberts, whose syndicated Scripps Howard column is one of the finest in the nation, was the first to suggest way back on November 11 that the financial shenanigans surrounding the Whitewater land deal in Arkansas could lead to an Oval Office welcoming committee for Albert Gore. Even Roberts, in his "Clintongate" column today, seems to be wishing that when it's all over, all we will see is merely "a pattern of bad judgment and lies," but that's the least we can expect.

Ordinary Americans of both parties, I can assure you, have to be hoping for the best, worried that the fragile economic recovery will somehow abort if the administration's energies and credibility are chewed up by this unfolding crisis. For this very reason, the '75 recession was directly connected to Watergate, as President Nixon was too preoccupied to even wonder why his economic policies had intensified the stagflation of the period. The President aside, the most important man in Washington today is Senate Minority Leader Bob Dole, with Fed Chairman Alan Greenspan a close second. How they handle themselves in the period ahead should assure the country and the world that there are enough competent people on Capitol Hill and in the permanent government to keep the White House distractions from damaging the economy. Both Dole and Greenspan had ringside seats during the Watergate era and understand the political sensitivities.

In our Tuesday report by David Gitlitz, "Clinton, the Fed & the Arkansas Scandals," we worried explicitly that scandal politics could spill over into economic policymaking -- observing both the President and Treasury Secretary Lloyd Bentsen breaking their truce with Greenspan. We learned later in the day that Senator Dole was issuing a statement apparently timed to be read by the Fed Governors as they began this week's critical meeting of the Federal Open Market Committee:

The Federal Reserve's policy-making arm -- the Federal Open Market Committee -- meets today, and recent statements by President Clinton have made this meeting more important than ever. President Clinton and I agree that low long-term interest rates are an important goal of monetary policy. But, by publicly trying to pressure the Fed on interest rates, President Clinton may have put short-term politics ahead of the long-term interests of the economy.

During the past 30 years, it has been my experience that whenever a President -- regardless of party -- tries to manipulate monetary policy from the White House, the economy suffers. The simple fact is that the men and women of the Federal Reserve have demonstrated that they have the expertise and wisdom needed to keep inflation under control and guide monetary policy toward low long-term interest rates -- without any public coaxing from the White House.

The statement made the wires and Investor's Business Daily , but just as importantly, it reached the Federal Reserve governors  -- an important vote of confidence at exactly the right time. Dole actually had hammered the Fed back in 1986, trying to jawbone Paul Volcker into an easier monetary stance. His press office says he was aware of that when he issued his statement Tuesday, simply acknowledging that he was wrong in '86 and it was part of his learning experience. In any case, the Dole statement is of enormous importance to Greenspan, who may no longer feel quite so alone in the political trenches. Of course, if the President persists in his jawboning, and the bond market retreats, Dole will be in a perfect position to blame the retreat on the President, which is why the President -- given everything else he has to worry about -- will resume his truce with Greenspan. There's been not a peep out of the Fed during or since the FOMC meeting -- with Greenspan tightening the screws against leaks. The Dole statement may have been enough to produce the handsome rally in bonds we saw yesterday.

In the same way, Dole's importance as leader of the Loyal Opposition can be clearly seen in his October 3 statement aired on CNN questioning the use of shock therapy in Russia. Russian officials I spoke with in Washington yesterday emphatically credited Dole's October statement with the Clinton Administration's retreat from its support of shock therapy, as announced in the Times lead story of this past Tuesday: "U.S. IS ABANDONING 'SHOCK THERAPY' FOR THE RUSSIANS." Strobe Talbott, Clinton's Ambassador-at-Large for Russia, even stole Dole's line, without attribution, that we must find a way for "less shock and more therapy" for Russia.

The architects of shock therapy in the Administration, the IMF and World Bank are all beside themselves, outraged at being identified as the culprits in the Russian elections. They are mounting a propaganda campaign in Moscow and Washington, trying to persuade the world that they really never tried shock therapy, and the Russian people really voted for a faster pace of reform. See the ludicrous account by Adi Ignatius in this morning's Wall Street Journal . Their problem is that Senator Dole and his staff, having struck a blow for sanity in U.S. foreign economic policy, have enjoyed the experience and seem to have established a permanent watch on the situation. President Clinton travels to Moscow next month to meet with Boris Yeltsin -- a welcome break from the Arkansas problems that are sure to be swirling around him when Congress returns with fallout from the grass roots. Somehow, I suspect the portfolio of policy advice he takes with him to Moscow will be heavily influenced by fresh thinking on the subject from Dole and other congressional Republicans. 

Is it premature to make the call that Bill Clinton will be a one-term President? I may be wrong, but where I wouldn't have ventured such a guess a week ago, I do now. I'd originally sized him up a year ago as "A Transitional President," [1-12-93], with his 43% of the vote being a vote against Bush. Even so, I observed back then that he could find himself in office and make the needed personal conversions to present himself seriously for a second term. The cloud that is now over him and Hillary is so dark that it now seems almost impossible that a second term could happen. There will, of course, now be serious contenders in the '96 Democratic primaries, trying to rescue the party from the wreckage it can expect next year in House and Senate races. 

Can President Clinton slog on under this cloud for three years? Probably so, as for the first time in several decades there is no Cold War that requires the presence of a Commander-in-Chief who is in no way crippled. It would have been much nicer if these Arkansas scandals had not appeared, and the nation were spared the unpleasantness that will linger. But what's done is done.