The Lott-Gingrich Administration Jude Wanniski February 3, 1998

CLINTON: There now seems to be nobody left of any importance who does not believe President Clinton had a sexual relationship with Monica Lewinsky and that he lied about it under oath. When the Sunday talk show commentators -- right, left and center -- openly state their belief that the President perjured himself, and when ABC’s Sam Donaldson and Cokie Roberts are ready to pull the plug, and when the President’s only defender in the court of public opinion seems to be James Carville, the lame duck presidency has become the dead duck presidency. There still are those who insist he will never resign, but three years is a long time to drag this thing out. The reports today that Ms. Lewinsky visited the Oval Office 37 times between April 1996 and December 1997, after she had left to work in the Pentagon, are more nails in the coffin. 

THE PARADOX OF THE POLLS: The electorate is making it absolutely clear that the President’s departure, when it comes, should be entirely disconnected from his performance as President per se. His disgrace of the office should be seen entirely as a lapse of moral and ethical behavior, which, if it is not punished, would embed in the culture the idea that as long as the father of the family, the provider, puts bread on the table, or points on the Dow Jones Industrial Average, he can have as many mistresses as he can handle. Those who would pretend that the President should be allowed to carry on in this fashion and lie about it, as long as he is managing the paper flow at his desk, have no comprehension about what a scar it would leave on the national psyche. The prohibition against divorce in Catholic Europe fostered a culture that winked at extramarital relationships. When Henry VIII decided he would break with the church and divorce Catherine of Aragon, the Reformation produced a Protestant Church that permits divorce, but brands the adulterer with an “A.” My 28-year-old son Matthew, a writer, pointed this out in an op-ed he sent me yesterday, observing that the President has put our national family at this kind of crossroad. We’re not ready for that. The President had been forgiven for his indiscretions of earlier years, but cannot be forgiven now without penance and disgrace. I’m not saying this in a judgmental way, but as an analyst.

PRESIDENT GORE: Two weeks ago, when I first drew these conclusions, I wrote to GOP leaders suggesting they begin to think of the spot Al Gore would be in as the new President. I recommended they privately signal they would not oppose a presidential pardon for the President and those of his friends who may have broken laws to help him. The punishment should fit the crime, and to leave the presidency in disgrace would be enough punishment. President Gerald Ford’s pardon of Richard Nixon was exactly the correct thing to do and I admired him for it. At the time, the Democrats were shameful in denouncing the caretaker President Ford, when his action spared the nation the kind of political trial for which the mean-spirited among the Democrats lusted. There is now sotto voce cackling among some mean-spirited Republicans who would like to see a President Gore twist slowly in the wind. The nation will be grateful if it can simply tell its children that the President had to leave because he broke his vows to the national family.

 DJIA AT 8000: As the year opened, we forecast a DJIA at 9000 this year and a long bond at 5.5%. If anything, the forecast looks better now, with the power shift we observe from 1600 Pennsylvania Avenue to Capitol Hill. Senate Majority Leader Trent Lott is now clearly in the driver’s seat of the national government and is not making the same mistakes that House Speaker Newt Gingrich made at the opening of the 104th Congress. The Democrats are staking out policy ground for the kinds of new programs and spending increases the President put forth in his State of the Union message. The Republican leadership, instead of denouncing the Democratic spending Santa Claus, have decided to ignore him. Congress has the power to proceed without having to make major concessions to the White House. With budget surpluses opening up as far as the eye can see, the GOP can deal with Democratic leaders in Congress for the kind of brick-and-mortar spending that can be justified by both parties. The stock market can smell the tax cuts that will cement the Republican control of Congress in November. 

IMF: Please note the op-ed in today’s Wall Street Journal, with a carpet bombing of the International Monetary Fund’s performance in the Asian crisis by two former Republican Treasury Secretaries, George Shultz and William Simon, and the former chairman of Citicorp, Walter Wriston. Lott has asked Sen. Bob Bennett of Utah and Sen Chuck Hagel of Nebraska to be the point men on this issue, one of the most important of our time. Congress will probably have to ante up some fresh capital, with Fed Chairman Alan Greenspan warning there might be dire consequences if it refuses. Lott has warned there are serious problems, both in POLICY and in PERSONNEL. By personnel, he of course means Michel Camdessus, the IMF director who has presided over the worst record of any financial institution in the history of the world. Jack Kemp, who began calling for Camdessus’s removal following the IMF’s complicity in pushing Mexico into its devaluation, is now openly promoting Mexico’s former finance minister Pedro Aspe as the best possible replacement. Wow! Also on the IMF hit list is co-director and chief economist Stanley Fischer, who would of course resign if he had to work for Aspe. In this morning’s NYTimes is a story of Fischer’s latest brainstorm: capital controls for the emerging markets. The logic is inescapable: If the IMF can persuade investors not to invest in the developing world, their stock markets will not rise, which will mean they can’t fall. To prevent the bust, prevent the boom. This was the idea that MIT’s Paul Krugman sold to Thailand in 1996. 

IRAQ: There is still plenty of saber rattling coming out of Washington, but if you look carefully, Lott, Chairman Jesse Helms of Senate Finance, and House Majority Leader Dick Armey are all saying they will support the use of military force by the commander-in-chief, but first they have to see his plan. In fact, there is no plan, only saber rattling. There can be no force if the United Nations has anything to say about it. The Arab League opposes force. Turkey and Saudi Arabia will not allow U.S. airships to fly from their territory. The little planes on the carriers in the Gulf can’t carry enough ordnance to ruffle Saddam Hussein’s feathers. Last week I spent an hour with Iraq’s UN Ambassador, Nizar Hamdoon, at the Iraq mission at 74th and Fifth. He expressed great interest in Jack Kemp’s idea, of a limited number of inspections anywhere in Iraq, which would be followed by a lifting of the embargo six months out if the inspection teams find nothing. Iraq continues to reject the idea of open-ended inspections, believing they are not being made in good faith, a point I have been making since 1994. If you are further interested, I posted a memo yesterday to Lott on my website, which you can find at www.polyconomics.com>. My most relevant client letters on the subject were published on May 9, 1994 (“Crisis Atmosphere”), October 11, 1994 (“Iraq: Send for Colin Powell”), and September 3, 1996 (“In Defense of Saddam Hussein”).