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Tony Snow Subject Files
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29
2
5
New paradigon
Post Modern Politics: The Search For A New Paradigm
Remarks by
James P. Pinkerton
Deputy Assistant to the President
for Policy Planning
to the
Indianapolis Corporate Community Council
September 17, 1991
I'm here to talk about politics, but only indirectly.
Aristotle said, "Let me write a nation's songs, and I care not
for its laws." It wasn't that arístotle didn't care about law -
- he did. But he recognized that a nation's culture determines
its politics.
As politically involved as we all are, words like "husband,"
or "wife," or "parent," or "executive," or "environmentalist," or
"jock" or "couch potato" may mean a more to you than "Republican"
or "Democrat." Maybe those cleavages are part of the problem.
Nationwide, only half of Americans even vote. In his best-
selling book, Parliament of Whores, P.J. O'Rourke cites a good
government study decrying the public's "glacial indifference" to
elections. As O'Rourke puts it, "This is an insult to glaciers.
An Ice Age would be fascinating compared with government."
Boring as it may be, we should all be interested in
something that consumes more than a third of our national wealth.
Its ability -- or inability -- to insure domestic tranquility,
provide for the common defense, and promote the general welfare
has profound impact on your lives, today and tomorrow.
Another new book says it all in the title: Why Americans
Hate Politics. What's gone wrong? Why did the system once work
better than it does now?
One thing we know for sure: the problem is not lack of
money. The Federal government alone spends $150 billion a year
fighting poverty. That's $5000 for every poor person in this
country. Someone suggested we just give them the money and let
them start their own war on poverty! But of course that wouldn't
work; we've learned from bitter experience that you can not
simply throw money at problems. Of course, most spending has
nothing to do with poverty. Overall, federal, state, and local
governments will spend $1.5 trillion here at home this year,
excluding defense, foreign aid, and interest on the debt. One-
and-a-half trillion dollars -- does anyone think we're getting
our money's worth? Crime is worse, homelessness is worse, our
cities are worse. The real issue is not quantity of money we're
spending, it's the quality of the results we're getting.
-2-
Consider education: why is it that we spend $400 billion a year,
$5600 per student, up more than 35% per pupil, adjusted for
inflation just in the last decade, more than any other country in
the world, yet we're 14th in achievement? Because the
bureaucratic monopoly system we have now doesn't work, that's
why. Last month we learned that S.A.T. scores went down for the
fourth year in a row.
The German philosopher Hegel said, "The Owl of Minerva takes
flight only in the gathering darkness." Forgive the Romantics
for getting carried away, but he's right: new wisdom arrives when
there is a crisis of the old order. This was Thomas Kuhn's
insight about paradigm shifts. The terminal crisis of the Old
Paradigm is a siren in the night. Not everyone hears it, but we
do. Even if we don't agree on first steps, we know that in the
long run what comes will be different. Agreeing that tweaking
the system isn't good enough, that we need to transform it, is a
start.
Remember the brain teaser in which you have to connect the
nine dots with four lines without taking the pencil off the page?
Today, we need to do more than just get outside the nine dots of
the existing Old Paradigm, or model, of government. As public
and private organizations scattered across the country are
already doing:
For example:
Parochial schools can teach all of us something about
educating children. In New York City, the Catholic schools do a
better job for less than one-fourth the cost. The reason is
simple: they have less than a tenth of the proportionate
administrative overhead, and they never forgot about rigor and
discipline.
Vince Lane, the Chairman of the Chicago Housing Authority,
is transforming one of the most corrupt bureaucracies in the
nation, surviving brickbats from special interests and death
threats from drug-pushing street gangs.
Ford makes as many cars today as it did a decade ago, with
half as many employees. This has been a difficult, wrenching
process, but it beats the alternative to streamlining and
restructuring: which is bankruptcy.
And John Mutz and the Lilly Endowment are working to
restructure education and welfare here in Indiana.
Our ancestors had a great new idea 100 years ago -- modern
bureaucracy -- to solve social problems. Modern bureaucracy
worked well in the era of heavy industry. Of course it did!
Both industry and bureaucracy were created at about the same
time. Bureaucracy has the rhythm of mass production -- assembly
lines, interchangeable parts, standardized work rules. The
Federal government as we know it today was largely constructed
-3-
between 1883 -- the beginning of Civil Service -- and the New
Deal. Let's give credit where credit is due: modern bureaucracy
helped make our lives less nasty, brutish, and short. That was
then. Now the question is: what structure, what paradigm, will
preserve the progress of the past and enable all of us to move
ahead?
The government has gotten bigger since the 30s, but not
better. That the old system doesn't work to solve new problems
is not the fault of the old system's designers; it's our fault,
for not continuously improving the system. So today, it's our
problem. Good intentions yield unintended bad consequences.
This explains the phenomenon we've all noticed -- that the
average government employee is a well-meaning, hard-working,
competent person, trapped in the same obsolete system that
ensnares us all.
Victory abroad gives us the chance to take a long hard look
at ourselves here at home. We must explore alternatives. After
all, the only power we have in this world is the power of an
alternative. Mindful of lessons learned, we shouldn't hesitate
to let go of the dark past.
"Modernism" itself was the movement in art and culture
beginning in the late 19th century through the middle of this
century. Woody Allen said that modernism began when Nietzsche
declared "God is dead" and ended when the Beatles sang "I Wanna
Hold Your Hand." So "modern" refers to a specific period, as we
indicate when we say "modern art." "Modern" is not to be
confused with "contemporary." Picasso, Martha Graham, Mies van
der Rohe, T.S. Eliot, and Freud were, each in his or her own way,
modern. Modernism was inspired and provoked by the Industrial
Revolution. Henry Adams, the famous Gilded Age writer, went to
the 1900 Paris Exposition -- at the dawn of the modern age -- and
was SO overcome by the machines he saw that he compared The
Dynamo to the Virgin Mary. Modernism sought to re-examine our
place in the universe: it extended romanticism, but it was also a
movement toward the abstract, rejecting history and tradition.
Whereas the Pre-Moderns, from Plato to Coleridge, thought that
art was divinely inspired, Andre Malraux perfectly expressed the
secular modern view that, "All art is a rebellion against man's
fate."
I realize that most Americans rarely visit museums, or even
look very long at coffee-table art books by Rizzoli. However,
everyone sees the residue of modern art when they walk down the
street or watch TV. Furthermore, you don't need to be a Jungian
to realize that there is a collective unconscious of signs and
symbols that patterns our thinking. Thus, modernism is just
another in a long series of cultural and political archetypes
that have been encoded into our brains. Modern politics is a
reflected artifact of modern art.
-4-
If the story of the 18th and 19th century is the mostly
successful effort of science to impose order on nature, then the
story of the 20th century is the disastrous follow-up attempt to
impose pseudo-scientific order on human nature. C.S. Lewis,
echoing Dickens, observed that this modern century has been the
best of times and the worst of times. Human nature doesn't
change very fast, but technology does. We have vastly more power
to give life or bring death to millions.
Modern social science gave birth to modern bureaucracy.
Bureaucracy was the chosen instrument of modernization. In the
brave new world of central planning, the theory was that social
engineers would give orders to social workers, who would descend
on the masses proclaiming "we're from the government and we're
here to help you." Communism is modernism on steroids.
I can put it bluntly. If we want to continue to be #1, we
need to transcend the legacy of modernism -- modern thought and
modern institutions, including bureaucracy. You know how
different American society is today compared to 1960 or even
1970. We're different; we're post-modern. Yet the government
has not kept up. People sense it intuitively: modern government
is trying to run a post-modern society, and it is failing.
Every human institution goes through a life cycle of
youthful enthusiasm, maturity, and finally obsolescence,
incompetence, and death. So it is with modernism. So it is with
bureaucracy. Something different came before it. Something
different will come after. To repeat: the dilemmas we face
result from an aging bureaucratic system confronting diverse,
post-modern people. What do I mean by post-modern?
American culture today is "post-modern." Artists as diverse
as David Hockney, Allen Ginsberg, Michael Graves, Umberto Eco,
and even Andy Warhol are post-modern. MTV is post-modern. Post-
modernism is eclectic, drawing together the different strands of
earlier styles. Post-modernism is open to new influences, but
also respectful of history in a way that the moderns were not. A
good example of post-modern architecture is Philip Johnson's AT&T
building in New York City, a sleek skyscraper topped with an
ornamental 18th century Chippendale pediment. This eclectic
combination exemplifies post-modernism. When we speak of these
things, we aren't describing what we're for or against. We're
describing what is.
And if our culture is post-modern, then it follows that
everything else will be affected. Remember what aristotle said
about the subservient relationship of politics to culture? Or,
as Barry Manilow might sing: "I write the songs, I write the
laws.'
Two years ago, Senator Daniel Patrick Moynihan wrote that
the underclass is a "post-industrial" -- another name for post-
modern -- social problem. The poverty of the underclass is
qualitatively different from what we have seen before. The new
-5-
problems are violence, teen pregnancy, and drugs. Hundreds of
billions of dollars later, we have figured out that these kinds
of problems can not be remedied by the same old bureaucratic
approaches. With apologies to Mrs. Fletcher, the old lady in the
Life-Alert commercial, modernism has fallen, and it can't get up!
Network TV is modern -- you watch what they put on. Cable
is post-modern -- you have a choice.
The Postal Service is modern. Faxing and E-mailing are
post-modern.
Plastic surgery is modern. Staying out of the sun is post-
modern.
Structures and categories are modern. Organic communities
and fuzzy logic are post-modern.
Keeping the Dead Sea Scrolls secret for more than 40 years
is modern. Using a computer to reaggregate the concordance to
reverse engineer and then publish the text so that everyone can
read it is post-modern.
"Groupthink" is modern. "Just Do It" is post-modern. In a
fast-changing world, you can't wait for decisions to go up and
down the ladder. New organizations are required. At the moment
an airplane takes off from an aircraft carrier, the most
important person on the ship is the sailor on deck waving the
flag. The person who encounters the problem is the expert on the
problem. If the system prevents that individual from acting to
solve the problem, then it's a bad system.
Going to business school is modern. The One Minute Manager
is post-modern.
"Coke Is It" -- modern. It focuses on the product --
suggesting that Coca-Cola is the unitary totality that will solve
your problems. Pepsi's "You got the right one baby -- uh huh" is
post-modern, because it shifts the focus from the product to the
person, acknowledging that the sovereign consumer, not the giant
company, is the ultimate arbiter of what is and what is not "it."
PC -- political correctness -- is modern dogmatism. The PC
-- the personal computer -- is post-modern because it expands
choice and freedom.
Searching for the one theory of race or class that explains
everything is modern. It's been called "the synoptic
aspiration." You all know the first three books of the New
Testament are the Synoptic Gospels, so called because they offer
a unified, all-encompassing vision. The secular synoptic
aspiration manifests the hubris of the moderns on the left or the
right that they could become new men, or supermen. Post-
modernists embrace the metaphor of the market because they know
that one size does not fit all: there is no one solution, only
solutions, plural.
-6-
The effort of the Left to defeat Clarence Thomas for the
Supreme Court is a modern effort to impose monolithic conformity;
the Left is terrified that Thomas's post-modern thinking on
empowerment and individual achievement will threaten their
monopoly on the Black agenda.
The Soviet Union was relentlessly modern. It was a
reasonably functional evil empire in a less complex world.
Russia was pre-modern. Now it is becoming post-modern.
Johnny Carson -- modern. David Letterman -- post-modern.
"Stupid Pet Tricks" anticipated "America's Funniest Home Videos"
-- the ultimate post-modern show.
Paul Simon, the liberal senator, is modern. Paul Simon, the
gatherer of Third World music, is post-modern.
Bureaucratic utopianism is modern. Points of Light are
post-modern.
Austere high rises and empty downtowns at night are modern.
That's the way modern architects wanted it. One of the most
famous, Corbusier, wanted to flatten historic Paris and build
skyscrapers. He said that the cafes of Paris were the "fungus of
the streets," which should have no pedestrians; they should be
"machines for cars." Post-moderns want buildings to be loose and
lively, mindful of history, and above all, mindful of the people
who live and work in them.
The idea that the government can take care of us is modern.
Term limits are post-modern.
A majority of Americans think like this. They are post-
modern. They just don't know it yet.
Some professors might claim that post-modernism is
associated, like them, with the Old Paradigm political left. But
this has more to do with the left's ability to assign labels than
the essence of post-modernism. Indeed, since the contemporary
post-modern era has seen the death of collectivism and the
renaissance of free market economics, one could certainly draw
the opposite conclusion!
History is a feast of ironies. E.J. Dionne observed that
the new left and the counterculture prepared the way for Ronald
Reagan with its anti-bureaucratic, libertarian themes. It was
students at Berkeley who shouted "do not fold, spindle, or
mutilate." Dionne points to the 1971 protest song in which
Crosby, Stills, Nash and Young declared: "Rules and regulations,
who needs them? Throw them out the door!" Thus spoke these
unlikely prophets of the Reagan Revolution.
Post-modernism has evolved from modernism, but it's got its
troubles. Consider the post-modern family. I've already
mentioned the tragedy of the underclass. But the middle class
-7-
faces great difficulty: latchkey kids, no moral guidance,
declining achievement. Parents have their own problems with the
two-worker, long-commute, no-quality-time family grind. We now
know now "Supermom" was mostly myth. And, as Robert Bly wrote in
the best-seller Iron John, or as Billy Crystal discovered when he
spoke to his son's third grade class in "City Slickers," modern
life separates the professional from the domestic, frequently
marginalizing the man to the status of the silly fathers in
situation comedies.
The moderns had a simple vision of the future. A look back
reminds us how far we've come.
The TV cartoon "The Jetsons" had a cute premise -- fast-
forwarding the comic strip "Blondie" up about five centuries.
Hanna-Barbera drew a straight line from 1962 into the future,
projecting that the 24th century would be merely more of the same
-- the modern world with a pseudo-futuristic gloss -- people
wearing uniforms instead of expressing themselves, eating pills
instead of enjoying their food. In this gee-whiz tomorrowland
view of the future, the focus was on gadgets -- socks that would
wash themselves -- not the more profound ways in which people
would change. Thus George Jetson is the literal reincarnation of
Dagwood Bumstead, an archetypal modern man: a nice, slightly
goofy husband and father to his wife, two children, and dog.
Dagwood/George commutes to work to sit in an office and does an
ill-defined private sector bureaucratic-type job that mostly
seems to consist of sleeping. Mr. Dithers/Mr. Spacely discovers
him and blows his stack, with comic consequences. Dagwood and
George are proof of the modern aphorism that 90% of life is just
showing up!
But in the real world, we're not going to be competitive
with the Japanese, the Europeans and everyone else in the 21st
century with that kind of performance. Once both the public and
private sector were bureaucratic; that was state-of-the-art
organization in 1900, or even 1950. The private sector is
changing, not necessarily because it wants to, but because it has
to. The economist Joseph Schumpeter called it "creative
destruction." A quarter of the white collar jobs in the private
sector were restructured out of existence in the 1980s; while the
government mindlessly grew fatter and larger and more out of
touch. Meanwhile, the private sector continues to develop,
creating 40 million net new jobs -- a 50% increase -- in the past
20 years.
If "The Jetsons" are modern, the movie "Star Wars" is post-
modern. Darth Vader flies around in the gargantuan death star,
surrounded by Nazi-like stormtroopers. Compare them to the post-
modern good guys -- Luke Skywalker, Princess Leia, Chewie -- an
ad hoc, multicultural team improvising their way to victory,
using spiritual power (The Force) to overcome evil technology.
Bad modernism confronts good post-modernism and loses,
foreshadowing Operation Desert Storm.
-8-
I think we'd all like to know more about how people who do
post-modernism for a living would define the future. Take Bill
Gates, the billionaire, 35 year old founder of Microsoft. He
once said that all software is a point of view. He's building a
30,000 square foot house in Seattle -- underground. He's
developing a virtual reality of the world's great art, so
visiting his house will be like visiting every museum in the
world.
People like Gates -- or like you -- can help us think
through the post-modern experience, and hopefully invent better
ways to adjust. The message I'm giving you today is this: you're
right. The American people are a lot further along in adapting
to post-modernism than the government. We're not the experts;
our sorry record shows that. You're the experts. What can you
tell us? How can we catch up? How can this government again be
of, by, and for the people?
The government used to work, why doesn't it work as well
anymore?
The first 500 times I heard someone older than I talk about
how the schools used to work, how the Post Office was a model of
efficiency, delivering mail four times a day in big cities, how
case workers once helped people up from dependency, I dismissed
them as sentimental nostalgics. Sure, I knew that the crime rate
was much lower in the past, but I couldn't imagine that the
antique, encrusted bureaucratic structures of today could ever
have been responsive and efficient. But as I learned more, I
came to see that institutions that are now bankrupt and decadent
and controlled by special interests once worked pretty well. The
moral of the following stories is that government does not have
to be slow and incompetent. Government can work, if it moves
with the times.
For example:
The New Deal was a modern success. When Franklin Roosevelt
came into office in 1933, unemployment was 25%. Many people had
given up on the American system, and were looking overseas, to
Italy, Germany, and the Soviet Union for a "more modern"
alternative. Fortunately, Roosevelt had new ideas, and the
willingness to be bold. As Michael Barone has described so ably,
Roosevelt put Harry Hopkins in charge of the Civil Works
Administration, On November 2, FDR approved Hopkins' plan for
putting people back to work. Not welfare -- Roosevelt despised
welfare -- but rather public jobs. Working in an unheated
office, Hopkins met the challenge. By November 23, he had
800,000 people working. Two weeks later, that total had grown to
2 million. The CWA wasn't burdened with red tape because Hopkins
didn't let it accumulate. He kept his workers too busy doing
real work repairing streets, digging sewers, building
playgrounds. By January 1934, just two months after he started,
Hopkins had 4.25 million Americans on the job -- 8% of the U.S.
labor force!
-9-
On other occasions, when the need was urgent, Americans have
risen to the challenge:
In September, 1939, when Hitler started World War II, the
U.S. Army had 174,000 men -- ahead of Portugal, but behind
Bulgaria. President Roosevelt knew we had to prepare for war.
As Eric Larrabee recounts, he didn't waste time with procedure
and protocol; he wanted the best officers he could get. He
picked George C. Marshall to be Army Chief of Staff over 34 more
senior officers. Marshall developed the U.S. military into a
force that could defeat the Axis powers, expanding the army more
than 50-fold, to 8.3 million men. When Marshall needed help, he
displayed the same willingness to ignore standard operating
procedure and reach out for the best that Roosevelt had displayed
in picking him. In December 1941, Dwight Eisenhower was just a
temporary brigadier general at Fort Sam Houston in Texas.
Marshall brought him to headquarters to run Army War Planning,
leapfrogging 350 more senior officers. Soon, Ike was commanding
the Allied forces in Europe.
The Pentagon itself is proof that leaders can make the
system respond. Started in 1941, the building covers 29 acres,
with 3.7 million feet of office space. It was finished in just
16 months.
The military's World War II paradigm -- huge draftee armies,
massive bombing, overwhelming logistics -- worked well against
Hitler and Tojo. But we made the mistake of using the same
modern approach in Vietnam, which was a more subtle post-modern
war, where hearts and minds and television mattered more than
military firepower. We failed.
The Pentagon did indeed learn its lessons. The military
showed a professional desire to improve, not just a bureaucratic
desire to survive. The brass updated doctrine, strategy, and
tactics.
Today's military is leaner and faster, composed of smart
volunteers using smart weapons instead of blind avalanches of
materiel. Defense Secretary Cheney showed leadership and
imagination when he promoted Colin Powell over the heads of many
more senior four stars to the top job, because, like Roosevelt
and Marshall a generation before, he wanted the best.
America's post-modern soldiers made short work of the enemy:
Iraq's military was the mother of modernism. Norman
Schwarzkopf's ideas about surprise and maneuver were not new:
they are timeless, but eternal truths must be relearned and
adapted to new circumstances. Robert E. Lee would feel right at
home in Schwarzkopf's army.
On the ground -- on the sand -- in the Persian Gulf, our
soldiers demonstrated the ingenuity and the flexibility that
wins. They redesigned their jeeps, in complete violation of
regulations. They built practically overnight a special bomb
-10-
they were told would take two years. They used condoms to keep
sand out of their rifle barrels.
When soldiers told Schwarzkopf that their boots weren't
suitable for the desert, Stormin' Norman got them Hushpuppies.
The men and women of Desert Storm -- average age, 26 -- lived up
to the WW II motto: "The difficult we do immediately; the
impossible takes a little longer."
Our failure to learn led to defeat in Vietnam, when the us
military had 3 million men and spent over 9% of our gross
national product. Learning the lessons of Vietnam enabled us to
defeat Iraq with a military of 2 million men and women, spending
5.3% of GNP. With forward-looking thinking, less can be more.
The rise and fall and renaissance of the U.S. military
indicates the potential of all public institutions to regenerate,
degenerate, and regenerate again.
In their own ways, Hopkins, Marshall, and Schwarzkopf are
perfect illustrations of Roosevelt's dictum that "new conditions
impose new requirements on government, and upon those who conduct
government." They were public servants who made the system work
for the public, not the other way around. Visionary public
sector entrepreneurs, like Bob Woodson, Polly Williams, and Kimi
Gray still exist, in spite of the obstructions of the old,
bureaucratic paradigm.
The challenge for the rest of us is to study these past
examples of excellence and apply them to what we do and how we
vote. Until we bring in new blood, the government will remain
mired in modernism, doing things the same old way. Don't take my
word for it: visit a government agency and look around. Ask
yourself the question that organizational guru Peter Drucker
suggests: "If we weren't doing it now, would we start?"
In any system, there's always a tension between those who
want to get things done and the rules. You need both. But when
people always lose and red tape and regulation always win, it's
time to reinvent the system.
Private sector bureaucracies can be just as bad. Ross Perot
built Electronic Data Systems up from nothing into a billion
dollar company and then sold it to General Motors. Comparing the
two very different corporate cultures, Perot said that if an EDS
employee sees a snake, he kills it. If a GM employee sees a
snake, he immediately runs to ask for instructions, and his boss
forms a task force to study snakes. Perot said that it took GM
seven years to design a new car, while we won World War II in
three and a half! Fortunately, in the free market, companies
face the ultimate test of the market, where stupidity and
inefficiency are punished, and innovation and customer
satisfaction are rewarded. Thus IBM, one of the greatest
American companies a few years ago, is still trying to sell Big
Brother to people who want to be their own Gutenberg.
-11-
Whether an institution is public or private, military or
civilian, certain principles of effectiveness always hold true:
1)
a clear sense of mission, and a supportive internal
environment that reinforces that sense of mission;
2)
a system of rewards and incentives, not necessarily
monetary, but always tangible;
3)
flexibility: an organizational suppleness that
encourages experimentation and risk-taking;
4)
a sense of empowerment, where authority matches
responsibility, so that people at each level know they
can get something done; and
5)
accountability.
Unfortunately, the parallel process for renovating
government has broken down. Our politics are in a rut, locked
into a mindset, or paradigm, that tolerates the slow
deterioration of government, even as it costs more and more.
It's time to think about the nature of modern bureaucracy in the
post-modern age. As Chesterton said, there can be no talk of
reform without talk of form.
The Old Paradigm rested on old technology. The limits of
that technology required uniform, top-down mainframe
administration. Why can't we use new technology to create a
citizen-driven desk-top, user friendly, 800-number government?
The "New Paradigm" is an attempt to define an appropriate
politics for post-modern America. Here are the elements I see:
First, global markets -- free trade is reality. If we don't
deal with reality, other people will! The President's promotion
of a North American Free Trade Agreement is an acknowledgment of
the interdependent world economy. Vice President Quayle's
initiative to reduce the costs of litigation is based on the
realization that the U.S. has 25 times as many lawyers per capita
as Japan, costing our economy $300 billion a year. International
competition is a race with no finish line. We can't afford to
cripple ourselves with 18 million lawsuits a year.
Second and third, choice and empowerment -- vouchers, as
advocated so strongly by Education Secretary Lamar Alexander and
Housing Secretary Jack Kemp, are the quintessential post-modern
idea, combining pre-modern emphasis on traditional values with
the modern desire for universal education with the post-modern
commitment to fully realizing human potential. Some people
aren't waiting for government. Pat Rooney, of Golden Rule
Insurance, is spending his own money to give poor students
scholarships to let them choose their own school and get the
education they need to join the productive mainstream of American
life.
-12-
Fourth, decentralization -- Information Age technologies
have eroded the basis for centralized geographic locations as
well as centralized hierarchies. These days, wherever there's a
phone, there's a job. So the jobs of the future can be at the
other end of a fiber optic cable, almost anyplace. The President
supports "telecommuting," the option of working from home. Will
telecommuters miss office camaraderie? Maybe, but today's
commuters miss their children and family life, and 85% of our air
pollution comes from cars and trucks. Furthermore, nobody is
saying that telecommuters must never go to the office, only that
jobs should be flexible. Post-modern work should accommodate the
post-modern worker.
Fifth, what works -- Americans should say to politicians:
"Don't tell us how much money you spent, tell us what you got for
our taxes!" Some of you may have seen a recent segment on the
"Today Show," in which Eric Ransom, a graduate of Milwaukee's
North Division High School took a hidden camera back to his inner
city alma mater. He filmed teachers doing nothing, while their
students slept or otherwise did nothing, except maybe play dice.
No wonder more than 50% of North Division students drop out! The
superintendent said that no teacher could ever be fired, because
the principals have no power over the teachers union. Milwaukee
already spends more than $6100 per pupil per year, well above the
national average -- almost as much as it costs to send a student
to Park Tudor! Does anyone think that simply spending more money
without changing the bureaucratic paradigm is going to make a
difference?
As Bob Samuelson says, the American people are not stingy,
but they are skeptical. We will invest in what works. Most
Americans have no more desire to further invest in failing
schools than they have in failing corporations. They are looking
to us to come up with new ideas. Maybe we should look to them -
- or at least to Eric Ransom. I hope that Eric's sleuthing will
have the same effect on schools that Rodney King's videotaped
beating had on police procedure in Los Angeles. Get a
videocamera -- become an agent of reform.
President Bush sees the limits of bureaucracy. Here at
home, he's combining a commitment to the traditional family with
the modern desire to guarantee protection and compassion to forge
a post-modern New Paradigm agenda. I call it "principled
eclecticism" -- a kinder, gentler strategy of drawing upon the
best ideas of the past, present, and future.
The New World Order is also post-modern because it is based,
not on brinkmanship, throw-weights, or kitchen debates, but
rather on core values like international law, human rights, and
peaceful democratic change. The President is promoting trade,
investment, and efficiency, while prepared, when absolutely
necessary, to use sanctions and even force to defend our national
interests and values.
-13-
Remember the nine dots puzzle? They tell you to connect the
dots with four lines without taking your pencil off the page.
Some of you know how to do it. You've got big smiles on your
faces. Congratulations: you're good modernists. Those of you
who had your own ideas: erasing all the dots and putting them all
in a row so you can connect them all with one line instead of
four; piling the dots on top of each other so you don't need any
lines at all, or ignoring the puzzle completely -- that's post-
modern thinking. That's the sort of conceptual leap, or paradigm
shift, that yields the silicon chip, not just better vacuum
tubes.
America's future depends on our ability to encourage the
free thinkers and iconoclasts who are the engine of progress.
But we are all being buried in a morass of bureaucratic
mediocrity that chokes upward mobility for everyone. As James
Fallows argues, we will never be able to compete with the
Japanese or the Germans if the game is discipline and following
orders. America's future can't depend on becoming more like
them. Our future depends on becoming More Like Us -- reclaiming
the tradition of creativity and common sense that is the common
heritage of all Americans.
I began by talking about why we are frustrated by the Old
Paradigm. I've tried to offer some thoughts about how the
government fell behind the people, and I've suggested some ways
that government can catch up.
Some say that Americans are too apathetic to care about
their future. That's wrong -- but Americans have been burned so
many times by phony political rhetoric that they've become
cynical about government. But they're not cynical about
themselves and their communities. Today, more Americans recycle
than vote. Our history demonstrates, over and over again, that
Americans will act when they believe they can make a difference.
Today, we are seeing something new in post-modern America -
- the search for a New Paradigm. I think it will make a
difference. I would love to know what you think. Thank you.
###
THE WHITE HOUSE
WASHINGTON
NB
legal
November 15, 1991
MEMORANDUM FOR ALL WHITE HOUSE STAFF
FROM:
C. BOYDEN GRA
COUNSEL TO THE PRESIDENT
SUBJECT:
Contributions to Bush-Quayle '92
On October 11, the President authorized the formation of a
campaign committee to work on behalf of his re-election. While
he has not announced a decision to seek re-election and has not
set up a full-fledged campaign organization, many of you may have
already received fundraising requests. You should be aware that
Federal law (18 U.S.C. $ 603) prohibits any employee of the White
House from contributing to the authorized campaign committee of
the President, Bush-Quayle '92. Accordingly, to avoid any
possible embarrassment to the President, all White House
employees should refrain from making any contributions to Bush-
Quayle '92.
This memorandum does not address the application of 18
U.S.C. § 603 to employees of the Office of Management and Budget,
the Office of Administration, and the Office of the United States
Trade Represenative. Any questions on the application of 18
U.S.C. § 603 from these employees should be addressed to their
respective general counsels.
Willie Horton
Democrats have turned "Willie Horton" into the codeword of
the decade. It means: Republicans are racists. They take unfair
advantage of black people. Don't trust them.
Willie Horton's transformation from embarrassment into
rallying cry offers a case study in the politics of deliberate
division. Democrats found themselves stuck with a losing law-
thought might yield political fruit. They cried racism.
and-order issue, and therefore transformed it into something they
If you want to understand the difference between our
timeline (a more detailed timeline, with support materials, is
approach to civil rights and theirs, consider the following
enclosed) :
In 1987, the Lawrence Eagle-Tribune won a Pulitzer Prize for
printed Willie Horton's picture. No one called the paper racist.
an expose about Michael Dukakis' prison-furlough program. It
a campaign debate. He and others used it against Gov. Dukakis
In April, 1988, Albert Gore raised the furlough issue during
racist. during the primary campaign. No one accused them of being
program. No one accused him of racism then.
In June, the President first criticized the furlough
That same month, Time magazine became the first national
publication to publish Willie Horton's picture. No one accused
it of being racist.
on the Horton story and shown his picture. No one accused the
By July, national media, including television, had reported
media of racism.
2
media of racism.
on the Horton story and shown his picture. No one accused the
By July, national media, including television, had reported
that unrelated to the Bush presidential campaign, ran a furlough ad
In September, Americans for Bush, a committee entirely
air included Willie Horton's picture. We asked the not to
Willie Horton's race.
we also instructed all our campaign operatives not to mention
the ad, and tried to distance ourselves from the committee; group
an Hispanic murderer who had escaped from a federal half-way
In October, a Dukakis TV ad included the name and picture of
house. No one accused Dukakis of racism.
On October 20, 1988, someone asked Dukakis campaign chairman
Paul "I Brountas whether the Bush campaign was racist. He replied:
would not accuse them of that. "
-- convert a losing law and order issue into something more divisive
It wasn't until October 23, 1988 that Democrats attempted to
leaders denounced the furlough issue as racially motivated.
but for them, politically profitable. A group of party
The press quickly denounced this new approach. The
Washington Post wrote on Oct. 25, 1988 that it may or not be
racist." relevant to stress the Dukakis furlough record, "but it may isn't
In short: We did not raise the race issue in 1988. We did
mention group in the campaign that tried specifically to eliminate
not draw attention to Willie Horton's race. We were the only
of Willie Horton's race -- within our campaign and any in the
presidential to campaign at large. To repeat, since so many people
seem have ignored this crucial fact: It was not our ad.
know didn't this. want it. We tried to knock it off the air. Our opponents We
of goodwill. We're not getting it. They won't address the
All we want is an honest debate, conducted in an atmosphere
their facts; they won't even discuss our bill; and they simply deepen
insults daily. Theirs is a campaign of slander, not of
their reason. If our opponents want an honest debate, let them
down and talk about ways to promote true racial harmony.
slanders, honor the facts, and accept our invitation drop to sit
Willie Horton does stand for a deliberate politics of
division, issue but not on our part. Democrats resorted to the Horton
out of sheer political desperation: They raised it barely
3
two weeks before the election. The question shouldn't be whether
we have changed, but whether they have.
If you hear our foes continue to call upon the name of
Willie Horton, you'll know that the politics of division
alive; that the politics of irrational fear are alive; and are that
truth. saying: Enough is enough. Stop talking trash and start talking
good people of all parties will have to assume responsibility for
This is classic Newspeak: We stand accused of their sins.
As one of our most vociferous opponents put it: They don't want a
civil rights bill. They want a political win.
CHRONOLOGY OF WILLIE HORTON ISSUE
1987
Lawrence Eagle-Tribune investigates Massachusetts
furlough policy and wins Pulitzer Prize. Photo of Horton
is printed. Upset citizens in Massachusetts launch
referendum drive to ban furloughs for murderers.
4/12/88
The first national political use of the issue occurs when
Al Gore attacks Dukakis over "weekend passes for first-
degree murderers" in a New York debate.
6/9/88
Bush criticizes Dukakis furlough program for first time.
Does not mention Horton.
6/20/88
Time's 6/27 issue describes how Horton "haunts" Dukakis'
campaign. The articles represents the first time
Horton's photo is published nationally.
6/22/88
Bush renews his attack on furloughs and first mentions
Horton by name.
6/30/88
Reader's Digest publishes the entire Horton story, its
first major nationwide exposure. Horton's photo is not
used, nor is his race mentioned.
7/31/88
A Washington Post article by Tom Edsall says: "Horton's
picture has appeared repeatedly on network television
news
9/88
Americans for Bush, an independent expenditure committee,
airs an ad criticizes Dukakis' furlough program. The ad
prominently displays Horton's picture. This ad was then
repeatedly mis-identified on network news as a "Bush ad.
At the same time, the Bush campaign was running its
"revolving door" ad, which neither mentioned Horton nor
showed his face. The Bush campaign never used Horton's
photo in any way at any time.
10/88
A Dukakis TV ad uses the name and photo of a Hispanic
murderer who escaped from a federal half-way house.
10/20/88
Dukakis campaign chairman Paul Brountas is asked if he
thought the Bush camapaign was racist. He said, "I would
not accuse the campaign of that."
10/23/88
Sen. Bentsen, Jesse Jackson, Paul Kirk, Rep. Mervyn
Deymally, and Rep. Charles Rangel all simultaneously
denounce the Bush campaign as racist for using the
furlough issue.
2
10/25/88 A Washington Post editorial cites "the Dukakis campaign's
new charge that the Bush campaign is making racist
appeals. We think it's a phony
is the only state that furloughed preisoners ... Massachusetts sentenced
to life without parole, and that for 11 years Mr. Dukakis
supported that policy and resisted attempts to end it.
It may or may not be relevant to stress that, but it
isn't racist."
Nation
live representative of the state's police as-
The One That Got Away
sociation. "It's too good."
Yet the furlough furor threatens to
overshadow these impressive achieve-
Why an escaped murderer haunts Michael Dukakis
ments. Massachusetts is among 45 states
that allow prison leaves. Last fall state
Willie Horton was supposed
Dukakis exclaimed. "That happened on
legislators published a report lambasting
to be serving time for mur-
one occasion."
the supervision of the program by the Du-
der in Massachusetts in
Although Dukakis was con-
kakis administration. Authori-
April 1986 when he invaded
sidered too liberal on crime
ties had not properly screened
1989
a home in Oxon Hill. Md.,
during his first term. he has
Horton before his leaves. inves-
raped a woman and stabbed her compan-
worked hard to reverse that im-
tigators found. and they did not
ion. Horton had not broken out of prison.
age. In the past four years. the
keep thorough records of his be-
He had walked away from it ten months
violent-crime rate in Massa-
havior in the prison.
earlier while on a weekend furlough. an
chusetts has dropped 13.4%
Defenders of furlough pro-
experiment that has been a cornerstone of
while the national rate has risen
grams point out that weekend
Governor Michael Dukakis' criminal-jus-
1.8%. Today the state has the
leaves offer relief at a time
tice program.
lowest homicide rate of any ma-
when prisons around the coun-
Now the Horton case is being used to
jor industrial state in the coun-
Wille Horton
try are dangerously overcrowd-
paint Dukakis with that most damaging
try. In 1983 Dukakis formed a
ed. Behavior during furloughs
liberal stereotype: soft on crime. George
special anticrime task council, and he has
can help determine how an inmate up for
Bush has taken to citing his differences
chaired every one of the group's 58 meet-
parolè might function in society. Accord-
with the Governor by saying, "I don't like
ings. "His record against crime now can't
ing to John Larivee, executive director of
the idea of letting murderers out of jail."
be disputed," says Ned Merrick, legisla-
Boston's Crime and Justice Foundation.
One G.O.P. strategist has pro-
the recidivism rate since 1972 has
posed a bumper sticker reading.
SSIT BABLE
been jus: 10% for prisoners pa-
DUKAKIS TO RAPIST: HAVE A
roled after taking part in such a
NICE WEEKEND.
program. Among other prison-
Responding to public outrage
ers, it was 25%.
over the Horton incident. Duka-
Moreover. there were only 426
kis signed a new law last April
escapees among the 117.786 fur-
banning furloughs for first-de-
loughs during the same period, and
gree murderers. Explaining his
Horton's escape was the first
turnaround. Dukakis said simply.
among first-degree murderers
"I try to listen. I try to learn." But
from the program in nearly five
the Governor still becomes testy
years. "The failure was not the pro-
when confronted with the ques-
gram." says Massachusetts Cor-
tion. During a debate in San
rections Commissioner Michael
Francisco. conservative Journal-
Fair. "Willie Horton was the fail-
ist John McLaughlin charged
ure. Our evidence is the program
that Massachusetts' program al-
was
successful.'
By
Jacob
Lamar.
I wed convicts to commit more
Reported by Robert Ajemian/Boston
violent crimes. "That's not true."
The furlough furor could overshadow Dukakis' good record on crime
and Michael Riley with Dukakis
Grapevine
Fast break. The latest debate among Democrats is not over
tween the old rivals are warming up. Bush has signed a fund-
who but over when. Will Michael Dukakis announce his Veep
raising letter to help retire Dole's debt. So talk has turned to
choice before the convention? Reasons for: to dampen any
2 possible Bush-Dole ticket. A Wall Street Journal/NNC
"Draft Jesse" drama and prevent convention coverage from
News poil last week showed that 56% of voters would be
being distracted by guesses and whispers. A reason against:
more likely to support a ticket with Dole on it. Bush aides.
early selection would drain excitement from
however. are still smarting from a Dole com-
what already threatens to be a tedious show.
ment. made supposedly off the record. that
The betting: Dukakis will again dare to be
Reagan seemed to be more effusive in his en-
boring and announce his choice early.
dorsement of Mikhail Gorbachev than of
Bush because "Gorbachev has a future."
No draft pick. Bill Bradley made it clear to
Dukakis' Veep scout Paul Brountas last
Fouling out? Nothing could be worse for
month that he did not want to be on the tick-
Democrats hoping to use the sleaze issue than
et. That did little to dampen speculation. giv-
to have Book Peddler Jim Wright remain as
en Dukakis' admiration for the former bas-
chairman of their National Convention. Sev-
ketball star. Last week Bradley had another
eral Democrats are quietly moving to have
session with Brountas. But Bradley did not
him replaced by Party Chairman Paul Kirk.
budge: he does not want to be on is national
Republicans have their own delicate problem.
ticket. and nothing will change his mind.
An aide to Ed Meese says the Attorney Gen-
eral has "penciled in" attending the G.O.P.
Making up. Bob Dole has been speaking so
convention. Sniffed Bush Campaign Manager
forcefully in favor of Bush that relations be-
Bradley won't take the pass
Lee Atwater: "That's his business."
22
TIME. JUNE 27. 1988
10/25/88 A Racist Campaign? p.A26
A
DD TO THE charges the presidential cam-
paign has done some disgusting things in this
paigns are hurling back and forth the Dukakis
campaign. But the facts are that Massachusetts is
campaign's new charge that the Bush cam-
the only state that furloughed prisoners sentenced
is making racist appeals. We think it's a
to life without parole, and that for 11 years Mr.
pitphony, no more credible than those VICIOUS and
Dukakis supported that policy and resisted attempts
baseless charges that the Bush campaign had been
to end it. It may or may not be relevant to stress
making about Gov. Dukakis' patriotism. Lloyd Bent-
that, but it isn't racist.
sen, asked whether there is a racial element to the
On racial questions, what we find disturbing in
ti Bush campaign's emphasis on furloughs, replied,
this campaign is not appeals to racist feelings but
2
"When you add it up, I think there is." Jesse Jackson,
the conspicuous failure of both candidates to ad-
55. speaking in Boston, said "There have been a num-
dress the particular needs and interests of black
C. ber of rather ugly race-conscious signals sent from
77 that campaign." Some have gone so far as to charge
Americans. Any candid view of our history and our,
that Mr. Bush's assertion that Mr. Dukakis is a
current situation cries out that blacks have a special
liberal also has racist undertones. If that term is out
claim on the attention of those who govern. But
:.3
of bounds, what form of discourse is not?
they are getting scarcely any at all from this year's
The one serious question in this is whether the
nominees-one because he seems afraid to give it,
Bush campaign's attacks on the furlough program
the other because he seems uninterested.
that freed prisoner Willie Horton, sentenced to
Mr. Dukakis, speaking at the Neshoba County
life-without-parole, are an appeal to racism. You can
Fair in Philadelphia, Miss., this summer brushed
believe that the importance of this topic was greatly
past the murder of three civil rights workers in that
overstated and that the "lessons" drawn from it
county in 1964. You wonder what held him back.
were demagogic and extravagantly sinister without
Mr. Bush has devoted almost no time or attention
accepting its use as the basis for a charge of racism
to the situation of black Americans. A certain
against Mr. Bush. To begin with, the Bush cam-
amount of charge-and-countercharge is probably
paign wasn't the first to raise the furlough issue
inevitable in a campaign, but it isn't inevitable or
against Gov. Dukakis; Sen. Albert Gore was, in an
desirable for two candidates to ignore almost entire-
April 1988 debate in New York. The Bush cam-
ly one out of 10 of their fellow citizens.
Campaign
THE WHITE HOUSE
WASHINGTON
September 17, 1991
MEMORANDUM FOR TONY SNOW
FROM:
DAVID M. CARNEY
SPECIAL ASSISTANT TO THE
PRESIDENT AND DIRECTOR,
OFFICE OF POLITICAL AFFAIRS
SUBJECT:
Senator Grassley radio show
This is for your information. Thought you
find it interesting.
09-18-91 05:21 AM FROM SENATOR GRASSLEY
P01
aun: Dave Carry 224 PI
Senator Grassley Iowa Radio Networks Show
(WHO-Radio, Radio Iowa, Brownfield)
9/17/91
O: I was wondering what Senator Harkin's presidential campaign,
how that will effect representation for Iowa in the Senate.
When we have one Senator on the road conducting a Presidential
campaign, will that lesson our impact in the Senate?
CEG: Well, of course, without a doubt, he has already and is going
to miss a great number of votes and the extent to which a
missed vote may effect an outcome, then its going to be
negative. If there aren't any close votes it may not make
much difference because I'm here in Washington and I will be
able to represent Iowans' views. My attendance record is
99.2% over a period of the last 12 years. It's the highest
in the Senate for people that have cast over 2000 votes, BO I
will be able to be here for Iowans. Senator Harkin and I
don't vote alike very often, but I will be seeking to make
sure Iowans are represented in the Senate.
I think there is one thing about the Harkin candidacy we
ought to note as praiseworthy, however, and that is he's the
only one of the democratic contenders for the White House to
admit that he is a liberal. I heard his speech Sunday, I
listened to the entire speech on C-Span and he is a self-
described, unabashed liberal -- I think with a capital L --
and he is not ashamed to admit it. The speech he gave in
Madison County on Sunday proves it. Now, this isn't
necessarily the posture that he presented in the last Senate
campaign, but he should be commended for being very straight-
forward now.
O: Would it be good for Iowa for Tom Harkin to win the nomination?
CEG: All I know is it would be bad for the country if he were
elected president. I also don't think he could be elected
president with a sitting President as popular and well-
respected as George Bush.
-30-
DOUG WILDER
Virginians have two big bones to pick with Doug Wilder.
First, Virginia's fiscal house is crumbling. Massive
shortfalls. Uncertain revenue projections.
The late Senator Harry F. Byrd Sr. -- Virginia's
"father of fiscal conservatism" -- was reportedly spinning
in his Winchester grave so furiously this week that he was
last seen about 10 miles north of Front Royal tunneling for
the Maryland line.
Through it all Doug Wilder almost always seems to be
someplace other than Virginia hunting up votes for the
presidency. This guy's logged more flight time than the
entire Apollo astronaut team
and they went to the moon!
But hey, Doug Wilder's still made history: He's the
first sitting governer in Virginia history to establish
legal residency in Iowa and New Hampshire! Hey, Doug, you
gather votes there, you don't have to vote there!
The other night guards arrested a guy trying to get in
the Virginia governor's mansion. Nobody recognized him, but
when they took him downtown and fingerprinted him they found
out he was Doug Wilder!
Three major airlines are considering filing bankruptcy.
Was the problem high fuel cost? No, apparently Doug Wilder
turned in his frequent flyer coupons.
Talk about travel! Hey, forget Sununu: Doug Wilder
makes Marco Polo look like a coach potatoe!
No, he may not be qualified to be president.
But he sure would make one heck of a
Secretary of Transportation!
The second beef is reading reports of Doug Wilder's
speeches from Iowa, California and elsewhere. He'll announce
grand visions for education, while Virginia's education
system is being butchered. And a grand strategy to fight the
drug war -- he's Virginia's self-proclaimed drug czar --
while adding less than one one hundredth of one percent of
the state's new budget for anti-drug programs.
I mean, if this guy had been Commander In Chief during
Operation Desert Storm he'd have sent maybe two privates in
a rowboat to the Gulf
and they'd share one slingshot!
- 30 -
It's the ODU Humor Writing Class
FINAL EXAM
Presenting:
The
Chuck
Robb
Review
Featuring
The "We Wouldn't Know Comedy If We Saw It" Players
16 of Virginia's Funniest New Comics
Tuesday June 25 -- 8 p.m.
at
LARKIN'S
at HILLTOP SQUARE
Virginia Beach
425-8815
$3 students w/ID
VB/ Norfolk Expressway (44)
$5 public in advance
K-Mart
PC
Larkin's
First Colonial Road
$6 public at the door
Tickets available at Larkin's,
and Birdland Records
Proceeds to the
Virginia Beach Boulevard
SPECIAL OLYMPICS
THE NEWS YOU MISSED 1988
By Frederick Talbott
What a year!
Secretary of State George Shultz spent a great deal of
time in the Soviet Union discussing human rights. That's
sort of like going to the Fudge Factory to discuss
nutrition.
Mikhail Gorbachev solidified his leadership by ousting
president Andrei Gromyko and other party leaders. He won
the support of the Russian people by permanently banning
Geraldo and the Morton Downey Jr. Show and from Soviet TV.
Having tired of attacking other nation's ships, Iran
and Iraq declared holy war on all foreign-built major
appliances. Iraq destroyed three GE refrigerators and a
Maytag dishwasher, while Iran praised Allah for the capture
of an Amana upright freezer.
Attorney General Ed Meese told a group of journalists
that he's never used marijuana or any other illegal drug.
The journalists vote for Meese to begin using pot
immediately.
A new poll rates TV preachers somewhere between Times
Square pimps and pet thieves.
At the height of the presidential primaries, all
Democratic candidates and a group of other political
notables were given surprise physical examinations. None
tested positive for drugs; the late Abraham Lincoln
registered the strongest pulse.
Southern moderate Democrats, whose very label tests the
limits of the term "oxymoron," produced the Southern
Primaries. They quickly learned how Uncle Bubba felt when he
accidentally blew his right foot off with his coon rifle.
Candidates stumped the South in '64 Ford pickup
trucks. Joe Biden claimed he authored "Gone With The Wind"
and "Dixie." Pete DuPont is arrested in Georgia for
repeatedly pronouncing both syllables of the term "you all."
Pat Robertson correctly predicts that he'll raise an
Invisible Army. That's how he got all those invisible votes.
-more -
THE NEWS YOU MISS 1988 - PAGE 2
The nation's vacation theme parks introduced a new
thrill ride. They call it "Aloha Airlines".
Vanna White showed up on the Wheel of Fortune set
temporarily dyslexic. The resulting chaos prompted the
nation's cost-of-living index to soar, the Dow to plummet,
and host Pat Sajak to experience his first human emotion.
The Japanese buy the rights to Monopoly, and quickly.
redesign the game board in the shape of the United States.
In Washington, a new Nicaraguan dialect surfaces. It's
called "Contra diction."
The National Parks Service says smoking is o.k. If God
does it.
Scientists at Arizona's Lowell Observatory are startled
to discover the rings of Saturn are owned by Donald Trump.
Saying she is fed up with all the public pressure,
model and Gary Hart shipmate Donna Rice announces that she
will get braces to correct her protruding overbite.
Pope John Paul II urges Morton Thiakol to begin
manufacturing condoms.
President Reagan quietly insists that the Star Wars
defense system he's championed be named for him. He tells
advisors to keep the name simple and glib, using a tasteful
pun if possible. Henceforth, the Strategic Defense
Initiative will simply be called "Ray Gun."
We watch the delegates at the Democratic National
Convention, and finally figure out who buys all those
Slim Whitman albums.
Heavyweight champ Mike Tyson runs out of human
opponents. He successfully defends his title by beating up a
house in New Jersey.
- more -
THE NEWS YOU MISSED 1988 - PAGE 3
First Lady Nancy Reagan says she has no hard
feelings toward former Chief of Staff Donald Regan. In fact,
she adds, she just sent Regan an assortment of chocolates
prepared by Rex, the White House dog.
A group of Japanese investors buys the U.S. Treasury
and Bureau of Engraving. During future stateside buying
sprees, when they get the yen they won't need their yen.
The government says it'll cost billions to "fix" the
ailing B-1 bomber. Congress immediately approves funding,
vowing "to do anything to keep that dog from breeding.
President Reagan reluctantly promises not to call
Mikhail Gorbachev "Lord Vader" at any future talks.
Two cosmonauts break the space endurance record by
spending 326 days aboard the Soviet's tiny space lab. The
two graciously reject awards and medals for their heroism,
but radio an urgent plea for more Certs Breath Mints and
Johnson's Odor Eaters.
The nation's TV preachers violently protest the movie
"The Last Temptation of Christ. They're outraged because
nowhere in the movie does Jesus own a fleet of Cadillacs,
wear his hair in a pompadour, or bilk an old widow out of
her life's savings.
Dinabol is named the unofficial snack food of the Seoul
Olympics.
The Federal Aviation Administration takes action to
reduce air traffic over busy O'Hare International Airport.
The agency quietly anchors the U.S.S. Vincennes in the
Chicago River.
Abortion foes claim life begins at conception, while
opponents argue life begins during a child's first viewing
of an "I Love Lucy" rerun.
Air Force strategists realize the only way to stop the
Soviets with the $500 million Stealth bomber is to make 'em
pay for the plane.
A technical improvement makes the Stealth Fighter
completely invisible. Setback: Nobody can find the plane.
Advantage: The Air Force claims they're deployed everywhere.
Fred Talbott teaches journalism -- and humor writing --
at 01d Dominion University in Virginia
Printers Proof
A DEMOCRATIC WHITE HOUSE SCENARIO
By Jude Wanniski
President Bush at the moment seems practically unbeatable in 1992, especially if the
Democrats approach the contest in traditional fashion. As an exercise in political
philosophy, this paper examines how a hypothetical Democrat could arrest his party's
erosion at the presidential level. The "income class" spectrum should be abandoned as an
analytical framework, replaced by an axis coincident with an opportunity spectrum, with
established wealth and achievement on one end and those who aspire to wealth and
achievement on the other. Democrats cannot compete with the President on foreign
policy experience and credentials, but they can on imagination and initiative. In a
unipolar, post-Cold War world, foreign policy can more nearly approximate the extension
of a domestic agenda. President Bush is more vulnerable on the economy, but not with
the usual zero-sum, soak-the-rich solutions. The traditional Democratic constituency --
labor, minorities, the young, the disadvantaged -- has access to income, but almost no
access to capital. A horse race metaphor is used to explain why economic policymaking
should focus on the longshots, not the frontrunners. The Democratic contender should
advocate elimination of the capital gains tax as well as lower payroll taxes, with a new,
increased top income-tax threshold at a higher rate. The party must abandon its reliance
on easy money as a policy instrument, reviving President Kennedy's formulas of sound
money and greater rewards for risk-taking as the central features of entrepreneurial
capitalism. Unlike President Kennedy, whose foreign economic policies were dominated
by the elites, the Democratic nominee should offer this distinctly American message to
the world at large.
September 24, 1991
A Democratic White House Scenario
Polyconomics, Inc.
A DEMOCRATIC WHITE HOUSE SCENARIO
From 1932 to 1964, the Democratic Party won seven of nine presidential contests. The Republicans
have won five of six since and, according to virtually universal expert political opinion, will win again
in 1992. The experts, in fact, have been arguing for some while that the national electorate, as
scattered among the 50 states, has crystallized into a GOP "Electoral Lock" on the White House, even
as local electorates continue to deliver Democratic majorities to the U.S. Congress and most state
governments. Disheartened Democrats also contemplate demographic trends that show younger voters
increasingly identifying with the party of the "successful Presidents" they have known, Ronald Reagan
and now, George Bush. It begins to seem that the Republican Party may become even more dominant
as the Ruling Party than it was in the seven decades after the 1860 victory of its first presidential
candidate, Abraham Lincoln, a period in which the GOP won 14 of 18 presidential elections. This
thinking is becoming conventional wisdom.
As an exercise in political philosophy, this paper will examine how the Democrats can arrest the
erosion of their party on the presidential level. It will suggest how a hypothetical Democrat might win
his party's nomination next year, and then the Presidency, by defeating President Bush. I proceed
from the assumption that the nation and the world is best served by a Democratic Party that can at
least vigorously compete for the approval of the national electorate. That is, pro forma competitions
which systematically result in GOP landslides will inevitably produce soft, weakened leadership in
the Executive Branch, as common sense tells us will happen when one football team knows it can
score at will on a regularly scheduled competitor. Such a team need not change personnel, devise new
plays, or even practice. The Bush Administration may well hold this attitude.
The most critical of my observations is that the Democratic Party is trapped in a conventional
wisdom that no longer has relevance in the post-Reagan era, a belief that the political spectrum falls
along an axis coincident with income class. Franklin Roosevelt's New Deal was built on this wisdom,
which was relevant at the time. There was rough accuracy to the rule-of-thumb that the Democratic
Party was the party of the lower income classes, the "party of the people," the party of labor, while
the GOP represented the more affluent, the middle class and above, the party of management and
property. The most vivid example of a Democratic bid for the White House along this axis was George
McGovern's 1972 promise of a $1,000 "demogrant" to everyone in the lower middle-income class and
below, an idea the electorate spurned. By clinging to this obsolete income-class guideline, the party
is unable to reach the primary concerns of today's electorate. It is thereby entrusted by the voters only
with the secondary, legislative role, which is to check the negative impulses or excesses of the party
that controls the White House.
The political spectrum has in fact shifted to a new axis, on which the Democrats must now focus.
Insofar as it is two-dimensional, it comes close to the line that divided the political parties prior to
the New Deal, those of established wealth and achievement and those aspiring to wealth and
achievement, not "rich" and "poor" as much as old, established and conservative, versus young,
evolving and adventurous. The cleavage along a fault line of capitalism is between the entrepreneurs
and the corporatists. Both are as legitimate and fundamental as political impulses as father and son,
mother and daughter. At the moment, President Bush and the GOP embody both of these impulses
at once, at least to a degree, while the Democratic Party has come to be dominated by centralized,
established, corporatist influences that bear mostly on what has come to be called "The Beltway," the
center of political power, as opposed to the dispersed, grass roots of political power.
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A Democratic White House Scenario
In the 70 years prior to the Great Depression, as the party of growth and opportunity, the
Republican Party also embodied both political impulses, representing unfettered entrepreneurial
capitalism as well as the entrenched Establishment. Teddy Roosevelt's Progressive Era was a distinct
victory for entrepreneurial capitalism, trustbusting in order to decentralize and thus dilute the
growing political power of the corporate giants. In this period, the Democratic Party was dominated
by those outside the Establishment, representing the newly enfranchised immigrant class, the defeated
Dixie, and labor and agrarian interests that had to defend against the political power of the corporate
and financial giants.
The monetary deflation that followed the Gold Standard Act of 1873 was the most notable example
in this era of how political power could be used destructively within the legitimate framework of the
democratic system. A decision had to be made in 1873 on what the dollar/gold exchange rate would
be upon return to the gold standard, suspended in 1861 with the onset of the Civil War. Established
wealth insisted the gold price be reset at the pre-Civil War rate of $20.67 per ounce, even though it
had floated to $40 during the war and its aftermath. The beneficiaries in this zero-sum contest were
the eastern banks that had bought government bonds prior to the Civil War. The losers were the
workers and farmers who had incurred debt in the cheaper greenbacks and had to pay off their debts
in gold. The Federal Reserve Act of 1913, the first year of the Democratic administration of Woodrow
Wilson, grew out of the outrage felt at the grass roots, given voice by William Jennings Bryan. The
progressive income tax was another outcome.
The Progressive Era had been an attempt by the Republicans to meet the complaints of the
Democrats, and thus adjust through internal reform. The administrations of Harding and Coolidge
were most emphatically dominated by the entrepreneurial spirit, and the Twenties roared. The
Democratic Party was so dispirited in 1928, given its chances of winning the White House again, that
it put up a sure loser, a Catholic northeastern governor, against Herbert Hoover. As Commerce
Secretary in the Coolidge Administration, Hoover had lived cheek by jowl with the captains of
industry, and as President gave them all the security and protectionism they desired in the Smoot-
Hawley Tariff Act, perhaps the high-water mark of U.S. corporatism in this century.
The measure, we now know, triggered the Crash of 1929, ushered in the Great Depression, and
ended the GOP's dominance as the party of economic growth. With the Democrats rushing to fill the
void, the Republican Party remained in the grip of narrow nationalism and corporate power for
another decade, only beginning to emerge with the nomination of Wendell Wilkie in 1940 and the
post-war international bipartisanship of Senator Arthur Vandenberg. But it was not until an ex-
Democrat of the Depression won the Republican nomination in 1980 that the Party was once again
dominated by its entrepreneurial wing. The election of Ronald Reagan filled a void that had opened
in both parties, John Kennedy being the last Democrat to represent an entrepreneurial agenda. Jimmy
Carter, the Georgia peanut farmer, ran as the grass roots candidate, but gave the White House keys
to the Democratic Establishment on Inauguration Day, 1977.
The seeming invincibility of George Bush is the first element the Democrats contend with as they
contemplate a contest against him. If they examine him in traditional fashion, he is unbeatable.
In foreign affairs, he certainly seems unbeatable. The President has the respect of the nation and
the world for his international leadership. His rich experience in foreign affairs prior to his
presidency has been evident in his surefootedness in managing the nation's international agenda. A
Democrat who probes for weakness in the way President Bush has played the cards that have been
dealt him abroad will only seem small and petty, quibbling over trivial differences. And there is no
Democrat available who can match the President on foreign policy credentials. It is useless to try. His
vulnerability can only be found in areas beyond direct attack, areas that have little to do with
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management credentials and everything to do with imagination and vision. On foreign policy, to contest
President Bush for the support of the voters, the Democratic contender has to elaborate a vision of
a new world economic and political order that strikes a chord that rings true. For the electorate to be
willing to replace a successful manager of international affairs, it has to be persuaded the new
President is capable of providing a deeper dimension of leadership initiative.
In domestic affairs, he seems less formidable. The economy has not performed well since the Bush
presidency began and at this writing remains technically in recession, with the resources needed to
address critical domestic concerns steadily shrinking. Yet by traditional analysis, the President appears
unassailable here as well. The economy seems to be inching its way out of recession and the consensus
reckons that it will grow steadily, albeit slowly, into the foreseeable future. The conventional wisdom
that serves Democrats as well as Republicans offers no answers on how to get the economy moving
at a faster clip, given the constraints of the budget and the limitations of monetary policy. Democratic
pollsters find the public marginally unhappy with the President's management of the economy, but
the pollsters are unable to offer specific counsel on what should be done to find favor with the voters.
Several specific sectors are of more concern to the public, the polls indicate health care, education
and the environment especially. As in the past, there are Democratic hopefuls willing to draw up
laundry lists to take to the voters. With the federal budget deficits soaring during the recession well
past the $300 billion level, though, the Democrats seem bound hand and foot by a Budget Agreement
the Congress made last year with the White House that forecloses programmatic solutions.
The first thing our hypothetical Democrat should do in our scenario is drastically discount the
importance of public opinion polls -- on the grounds that they simply rediscover conventional
wisdom, which is a blind alley. In the same way, the traditional political strategems that can be bought
from the professional political industry inside the Beltway should be avoided. Jimmy Carter, Walter
Mondale and Michael Dukakis have squeezed the last drops from that lemon. Our Democrat has to
literally "throw away the book" on how to be elected and write a new one.
Another metaphor that is apropos is that of a diamond cutter. If the diamond is struck at a wrong
angle, it turns to powder as McGovern found with his "demogrant." If precisely the right cleavage
line is struck, though, the rough stone becomes gems. The electorate knows at which line it should be
struck, but is as inarticulate as a diamond. The political leader whose analysis and instinct lead him
to the correct insight, to the margin where all change takes place, can slice across the "Electoral Lock"
and harvest votes that cannot resist his appeal. The candidate has to be willing to sharpen his agenda
to a knife edge! This does not mean a single issue candidacy. It means a knife edge that identifies in
a stroke the concept of the campaign.
In January 1980, Ronald Reagan conceptualized the campaign he was about to begin as one in which
he would represent the interests of Main Street business. When told only three CEOs of the Fortune
500 had endorsed his candidacy at that point, Reagan said he would be happy to have his opponents
share the other 497. "I've got to be the candidate of the shopkeeper, the farmer, the independent, the
entrepreneur. There are a lot more of them."
The appropriate concept for a Democrat in 1992 would include these small business interests, but
extend to the traditional Democratic coalition of labor, the minorities and the disadvantaged in a
different way. The concept is that a government's primary role is to provide a context in which all
Americans can realistically aspire, if they choose, to become "shopkeepers, farmers, independents and
entrepreneurs" or in any other way develop their innate, God-given potential. The concept is thus
more inclusive than Reagan's which in the general election of 1980 was directed from the top of
the opportunity ladder, not much below its middle rungs. The two Reagan campaigns never once
directly addressed the aspirations of black America, for example.
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A Democratic White House Scenario
The Democratic candidate is free to embrace this concept where President Bush is constrained. The
President himself may be able to verbalize support for such ideas, but his administration has already
been frozen into the old paradigm. Unlike Reagan who was born into a relatively poor, Democratic
family, George Bush was born to wealth and Establishment Republicanism, grafting on to himself the
experience of entrepreneurial capitalism in his Texas days as an oil independent. His administration,
though, is dominated by Establishment, country club Republicanism. Where Reagan's cronies in his
"Kitchen Cabinet" were for the most part self-made businessmen who had started from scratch,
President Bush remains most comfortable with Fortune 500 corporate bureaucrats, gentlemen schooled
in the Ivy League.
There is nothing wrong with John Akers, president of IBM, or Paul O'Neill, president of Alcoa, the
President's closest friends in the corporate world. Nor is there anything terribly wrong with Nicholas
Brady, Richard Darman, Robert Mosbacher, Vice President Quayle and James Baker III. I like them
all. But none of these gentlemen have in their experience the raw aspirations of those at the bottom
of the opportunity ladder. Insofar as a second Bush administration would be dictated by the
President's predilection for surrounding himself with people he feels comfortable with, it can only
remain more or less frozen in its current posture.
Contrary to the assertions of the Beltway Democrats, ordinary Americans are not suffering from a
shortage of income, but a shortage of capital, that is, the financial means to achieve their aspirations.
For example, the after-tax earnings of an 18-year-old entering the workforce on a full-time basis in
1982 rose by a full 50% by the time he or she turned 25 in 1989, at the end of the Reagan economic
boom. The "average non-supervisory wage" fell because the labor force was flooded with 20 million
entry-level workers between 1982 and 1989, not because workers already in the labor force suffered
a decline in real earnings. In terms of current consumption, Americans are much better off than they
were a decade ago. The average car, for example, now costs only 17 weeks of average pay, against 21
weeks average pay in 1981.
The ability of households to acquire capital to buy a home, start a business, finance a college
education, secure retirement income - has deteriorated. After inflation, the capitalization of traded
equities and the price of U.S. housing stock has fallen since the 1987 peak, and along with it the net
worth of households. The number of businesses incorporated each year, a rough sort of "opportunity
index," has fallen each year since 1987; during 1987-1991, it fell by almost 10%. That is the first time
that the number of new business incorporations fell for more than a single year since the data were
first collected in 1947. By this measure, the ability of Americans to climb the opportunity ladder has
deteriorated since 1987. Joshua Smith, chairman of the President's Commission on Minority Business,
reports that there were fewer black-owned businesses by the end of the 1980s than at the outset,
which is no surprise, since those at the bottom of the opportunity ladder suffer most when the ascent
is blocked.
While Americans have higher incomes, their ability to acquire long-term assets, particularly homes,
has deteriorated. The percentage of American households is roughly the same today as it was in 1984,
but that reflects the aging of the population. Younger people find it harder to purchase homes. The
monetary instability of the 1980s is the prime culprit. Inflation expectations built into the yield of
long-term securities, such as home mortgages, push the cost of owning a home out of the reach of
younger Americans.
The electorate knows what is ailing it. Traditional Democratic income redistribution schemes are less
appealing then ever, because what the electorate needs is not increased income but increased
opportunity. Governor L. Douglas Wilder's talk about Washington's fiscal irresponsibility comes
closest to the mark, because Americans associate their inability to acquire capital with poor
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Polyconomics, Inc.
management of the country's fiscal and monetary policy. Budget-cutting austerity is not the answer,
though, and Wilder has not yet found the fault line in the diamond.
A Democratic Presidential candidate might express himself as follows in striking the fault line with
a specific domestic agenda: "As President, I will break down the barriers to opportunity that prevent
ordinary Americans from fulfilling their aspirations, by lifting the tax burdens that crush middle-
class families, the working poor, and small enterprise. I will bring the personal income-tax exemption
back to where it was a generation ago in terms of real purchasing power, to $5,000. I will let
America's struggling small business grow again, phasing out the capital gains tax in a way that both
creates capital and helps make it accessible to those who cannot now get it, those at the bottom of the
ladder of opportunity. I will cut Social Security taxes, which the Republican administration have used
to put the burden of the deficit on America's poorest workers. And I will raise the tax rate on incomes
over $1,000,000 to 35%. No Beltway bean-counter is going to tell me that we can't afford to restore
opportunity to ordinary Americans. Our Federal deficit is out of control because the Republicans have
failed to stimulate economic growth. Given the chance to pursue their dreams, the people whom the
Republicans have written off will make the American economy the wonder of the world."
The issue of capital gains taxation is emblematic of the new fault line in U.S. politics, as it can be
seen as a tax on opportunity, not a tax on wealth. In both 1989 and 1990, the President faced the same
critical choice on the direction of the economy: Will he fight for a cut in the capital gains tax? Or will
he opt for budgetary fiscal "responsibility"? In both cases, the weight of advice from his Ivy League
team swamped the Texas experience that led him to his capital gains position in the first place. In
1990, he even abandoned his no-new-taxes pledge to achieve a Budget Agreement celebrated by
Establishment Republicans, an agreement that locked in the current recession. The recession produced
budget deficits so embarrassing they have been scrupulously ignored by both political parties and the
Establishment press.
The Democratic candidate who would be President cannot be bound by such constraints. He must
be willing to denounce the Budget Agreement even to the point of chastising those in his own party
who were behind it. Congressional Democrats are already chafing under its constraints, threatening
to break it even prior to 1993. President Bush has no choice but to defend the agreement, unless he
is willing to acknowledge his error and that of his economic team. His economic team will certainly
not do so, which makes the team as much of a target as Bush for our hypothetical Democrat. The
President must defend the Agreement, just as Herbert Hoover in 1932 defended the Smoot-Hawley
Tariff Act and his "budget balancing" tax increases of that year. There is no way President Bush can
win such an argument with the broad electorate. He might still win re-election, but this argument
alone will cut into his plurality.
In 1980, the concept of Reagan's campaign was one of economic growth and the cutting edge was
his pledge to cut income-tax rates by a third, replicating the Kennedy tax cuts that brought the
economic boom of the mid-1960s. Reagan, in fact, was shameless in identifying his tax plank with
JFK's. In 1992, the concept of economic growth through the fulfillment of individual potential must
embrace a host of policy actions directed at economic, social and cultural concerns, some of which
will be enumerated in this paper. But the concept should have as its cutting edge the elimination of
the capital gains tax. The Democratic candidate should be shameless in identifying this plank with
both Reagan and JFK. (In 1989, GOP proponents of a capital gains tax cut argued that President
Kennedy favored this idea; Senator Edward Kennedy insisted that if his brother were alive in 1989
he would have changed his mind.) As a party, the Democrats have fought any differential on capital
gains taxation because of the party's domination by the corporate Establishment. The "fairness"
argument was developed along the axis of the old political spectrum, the old paradigm of rich and
poor. It can most easily be abandoned by a Democrat who argues against any capital gains tax at all,
on the grounds that the absence of the tax is most beneficial to those who aspire to wealth and
achievement, as shopkeepers, farmers, independents and entrepreneurs.
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A Democratic White House Scenario
Ted Forstmann, whose career on Wall Street is the embodiment of entrepreneurial capitalism, argued
in his Wall Street Journal essay, "Blame the Tax Code, Not Milken, for Junk Bonds," 12/13/90, that
those who are at the bottom of the opportunity ladder have most to gain from elimination of the
capital gains tax, and that those of wealth and status have the least to gain. By definition, they are
already wealthy. "The capital gains tax is not a tax on wealth. It is a tax on one's ability to improve
one's lot by creating wealth. Taxing capital gains does not much affect the wealthy, who have their
capital gains behind them and are principally concerned with maintaining their wealth. Its real impact
is to suppress the initiative of Americans who are not yet wealthy, but have the talent and drive to
create wealth, and thus benefit the economy." That is, a high capital gains tax prevents capital from
flowing to the bottom of the opportunity ladder, where risks are high. A capital gains differential
permits capital to flow down to lower rungs on the ladder. Elimination of the tax, as Forstmann
argued by this logic, makes the most sense if the objective is to get capital to the grass roots under
the ladder.
Imagine a horse race, with the favorite going off at even money, another at 2-to-1, another at 5-to-
1, another at 10-to-1, another at 20-to-1, and the longest shot at 40-to-1. Imagine the 40-to-1 horse
wins, but when the bettors arrive at the pari mutuel window to collect, an IRS agent is on hand to
skim all but $4 from a $2 bet. If the reward for risk-taking is confiscated, two things happen. Bettors
stick to the front-runners, and long-shots never enter the race. In the extreme, there is only one horse
and one bettor in the race. This, in fact, was the impulse behind the Soviet experiment with
communism 70 years ago. If there is no risk-taking, there is no failure. All rewards are equal when
there is only one company, one chairman, one board of directors, one bank. The distress associated
with capitalism -- financial panics, bankruptcies, unemployment, poverty -- can be avoided. In the
United States today, as well as in most of the world, even as we celebrate the collapse of Communism,
economic policymaking in general favors the frontrunners and discourages the longshots. For the
fourth consecutive year, new business start-ups in the U.S. have declined. Banks, which are a primary
source of capital, have narrowed their flow to the most "creditworthy," those at the top of the heap.
African-Americans and Hispanic-Americans, as classes the longest shots in the economy, are almost
completely cut off from capital sources.
A number of potential Democratic nominees have already made a bow in the direction of "business"
interests by advocating a capital gains differential. Former Massachusetts Senator Paul Tsongas, the
first declared Democratic candidate, has done so and argued that it is "idiotic" for the Democratic
Party to oppose a differential. New York Governor Mario Cuomo has also, although advocating a
higher rate for shorter holding periods, a 10% rate for investments held more than seven years. And
Arkansas Gov. Bill Clinton is persuaded that the Democrats ought to promise at least targeted capital
gains tax rates. Forstmann's position, of a zero rate after a three year holding period, is the best for
a Democrat who has embraced the concept of the campaign I have outlined above. The Democrat does
not need to throw a bone to the Fortune 500 crowd, which President Bush will have locked up
anyway. It is easier to campaign for a zero rate because that is where Forstmann's logical arguments
lead. A Democrat who takes that pure position also leaves no doubts in the minds of the voters that
he is serious, and would fight, as George Bush never did, for the mandate he would receive.
A campaign pledge of this nature, as a cutting edge, will work to the Democrat's advantage even if,
somehow, President Bush and the GOP platform decide to match it. Having campaigned for a 15%
rate in 1988 and then done so little to get it through the Congress, the President's credibility is not
high on this issue. What is even more important is the argument behind the policy pledge, insofar as
a zero rate guarantees a maximum flow of capital to the aspiring -- labor that can not now get capital
the young, the minorities, the disadvantaged. Instead of this potential coalition being forced to
drift to the Republican Party, where there is now a weak commitment to a small cut in the capital
gains tax, for the wrong reasons, the coalition would be pulled back toward the Democrats, at least
at the top of the ticket. A great many younger Republicans running for House and Senate seats, not
constrained by the position the White House has frozen itself into, would jump on this growth
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bandwagon. In fact, I can imagine our Democrat nominee could win the White House even as the GOP
gained in the House and Senate, correcting the political imbalance in both executive and legislative
branches.
A campaign is not waged simply on a cutting edge issue, however. The objective has not to do with
taxation, but with economic growth in a setting of traditional values. The Bush Administration has
frozen itself into a position whereby it can now rationalize the benefits of slower growth, just as the
Democratic Old Guard, representing Establishment capitalism, justifies a low growth rate. The 1990
Budget Agreement now has the President forced to argue against an extension of benefits for the
long-term unemployed, in a recession caused by the Bush Administration's hapless economic policy.
The President's position is typical of Establishment thinking in both parties, which is how the Budget
Agreement came to be in the first place. Our hypothetical candidate can use this issue to rally the
party's traditional blue-collar supporters, who have to aspire to a paycheck before they can aspire to
wealth and status.
The Bush Administration has also steadfastly opposed a cut in the payroll tax, which Budget Director
Richard Darman at one point hoped could be used to pay off the national debt! The Democratic
platform should embrace at least the concept of New York Democratic Sen. Daniel Moynihan's plan,
committing itself to chipping away at the payroll tax in 1993 and doing more as the economy expands
in the future. At the turn of the twentieth century, the Establishment insisted the work week could
not possibly be reduced to five days from six, in many cases from ten hours per day to eight. As the
twenty-first century approaches, there are again dark warnings that the work force will soon be too
small to support the retired. The answer to a labor shortage, though, is capital. It is the only answer.
With enough capital, the aim in the next century could be to further reduce the retirement age, at the
same time supporting the retirements of an ever-aging retirement population with adequate public
and private pensions.
The Democratic position that developed out of New Deal Depression mentality is that because there
are too few jobs to go around, the elderly should be forced to retire sooner than they desire, by
making their Social Security payments conditioned on retirement. This is another mercantilist concept
that somehow became embraced by organized labor. It is a zero-sum concept that can only be
understood by thinking of sons requiring the retirement of their fathers. It should be addressed in the
1992 campaign, with the Democrats liberating themselves from this millstone, freeing the elderly to
work if they choose, without suffering a tax penalty.
In the same way, the Democratic position has also been anti-growth in its taxation of families. Forty
years ago, when the general price level was a tenth of what it is today, the personal exemption was
$500 for everyone in the family. Today it is not much more than double that level, which means the
tax consequences of having children are much heavier. The impulse is also Malthusian, the idea there
will be more jobs to go around if there are fewer people being born. The growth wings of both
Democratic and Republican parties now favor dramatic increases in the personal exemptions, but
confront Establishment arguments that the economy cannot afford such extravagance.
Democrats now contemplating a run against George Bush are somehow tempted to run against
Ronald Reagan in the 1980s even though they could not come close to defeating him in that decade.
The term, "The Excesses of the Eighties," is the primary banner raised against that objective. It is an
Establishment term, reflecting the upheavals that threatened the Establishment with the threat of
rampant entrepreneurial capitalism. A low growth rate for the Democratic Old Guard serves the status
quo, keeping blacks and minorities and the disadvantaged dependent upon the old paradigm, the
welfare state, the liberal plantation. The usual stable of Democratic economists also insist that
economic growth is inflationary, which then suggests slow growth is not. Slow growth also seems to
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serve the environmental cause, at least on the surface. The extreme Malthusian model would suggest
that if all work stops, so will all internal combustion engines, instantly solving the problem of global
warming.
A growth Democrat who would win in 1992 has to be able to argue that economic growth, of the
kind that flows from an entrepreneurial dynamic, would be so bountiful that it would provide its own
clean-up resources. In blasting away the rationale for the Budget Agreement, the debate shifts away
from balancing the budget in the shortest period of time to doubling the size of the economy in the
shortest period of time. A Democratic vision can anticipate an extra $5 trillion of GNP providing
resources for a great variety of public purposes. The resources do not necessarily have to flow through
governmental budgets, but can be directed through the regulatory process. This was the intent of the
Democratic platform in 1988, but the idea has little appeal in an economy that is stagnating; all
"mandated benefits" subtract from a stagnant pool and lead to further economic contraction. In Japan,
where the economy has been doubling every 11 years, the government can mandate environmental
and other public benefits health care and education included that are seen as contributing
further to the commonweal.
In the same way, a growth concept permits a Democratic nominee to deal with national security and
defense spending issues in a reasonable way. A campaign based on the prospect of feeble economic
growth pushes the Democrats in the direction of stripping the Pentagon budget to pay for the
"middle-class programs" their pollsters tell them they must come up with. Even if the Pentagon budget
remains constant in dollar terms as the economy is growing to $10 trillion from $5 trillion, it of course
falls by half as its real burden on the economy.
To deal with the argument that growth is inflationary, a Democratic nominee who argues for growth
usually finds himself arguing that some inflation is acceptable. The great inflation of 1968-82, the
worst by far in the history of the United States, occurred while both political parties were dominated
by the corporate elites, country club Republicans and limousine liberals. The last Democrat who
pledged to keep the dollar "as good as gold" was John Kennedy. Lyndon Johnson's economists talked
him out of the London gold pool. Richard Nixon's economists talked him into explicitly devaluing
the dollar, devaluation being synonymous with inflation.
Inflation is always acceptable to debtors, and the biggest debtors who sought and found inflation
relief in this period were, besides the U.S. Government itself, the Establishment debtors, those with
the best credit ratings who are always able to borrow from the system. Those hurt the most by the
inflation, as a class, were black Americans, who find it difficult to borrow from the system in the best
of times. The inflationary spiral did not begin to end until Ronald Reagan was elected, with
determination to restore the integrity of the dollar. From its earliest days, the Bush Administration
has been on the other side of the issue, not by much, but enough to embrace the idea of an
"acceptable" level of inflation. It has been President Reagan's appointees to the Fed who have resisted
the incessant pleas from the Bush Treasury and White House for easier money. Sound money is far
more important to a nation than simply as a commercial vehicle. Unstable money breaks the linkages
between effort and reward, throwing windfall gains to debtors in an inflation, windfall gains to
creditors in a deflation. Work effort and saving are demeaned, time horizons truncate, a premium is
placed on financial manipulation and wizardry. Richard Darman's phrase "now-nowism" is throughout
history observed as coincident with an unstable monetary standard.
A Democrat who has a dynamic growth package built around a zero capital gains tax is also in
perfect position to commit himself to zero inflation to a dollar that holds its value over time in
terms of gold and/or other commodities that are sensitive to inflationary impulses. The closest the
Reagan administration got to this position was in September 1987, when then Treasury Secretary Jim
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Baker shocked the Establishment by telling the International Monetary Fund in Washington that he
favored stabilizing the dollar against a basket of commodities, including gold. In the following weeks,
Establishment economists outside and inside the administration pushed Baker into a posture of dollar
devaluation, resulting in the Wall Street Crash of '87.
Eminent economists who serve the interests of the Establishment by advocating dollar devaluations
and cheap money abound, in both Democratic and Republican circles. Martin Feldstein, who has been
a Bush favorite for many years, has never let up on his incessant calls for a cheaper dollar. Feldstein
has also seriously argued the United States might have been better off if the 13 original states had 13
different currencies. In his September 11 New York Times Economic Scene column, "Currency
Muddle: Less Is More?" Peter Passell makes essentially the same argument and quotes Harvard's
Richard Cooper to the effect that the 15 republics of the USSR may be better off with separate
currencies, permitting individual currency devaluations. Cooper, a manic devaluationist, was Under
Secretary of State for Economic Affairs in the Carter Administration. President Carter did not
actually become an inflationist until his inauguration, when the Establishment urged him to place C.
Fred Bergsten at Treasury. Bergsten, a friend of Cooper's, has been the most vocal devaluationist of
the past quarter century.
For this reason, a Democratic presidential hopeful may have to go beyond pledging to simply fight
inflation. To persuade the voters of his seriousness, he might have to seek a mandate the
Establishment would find difficult to break, a formal pledge to the international monetary system to
which President Reagan and Jim Baker were moving in 1987. Again, President Bush would have the
option to take the same position, but the fact is he would be taking a position on behalf of sound
money after three years of pressing for ease. The advantage would be with the Democratic contender,
who can easily explain his position as being consistent with the concept of his anti-Establishment
campaign. The position is also consistent with massive savings on federal spending for debt service.
A candidate who is going to eschew public opinion polls as a guide to his campaign must have an
internally coherent concept of governance, as Reagan did. If you have an internally coherent concept
of governance that you believe will "cleave the diamond," you cannot be distracted by the kibitzing
of pollsters beyond narrow limits of use. President Bush was at his best after Saddam Hussein invaded
Kuwait, acting by instinct and principle without checking the polls which would have told him
to do nothing.
A Democratic campaign that resembles a Reagan campaign on capital gains taxation and hard money
would, by itself, seem almost Republican, even though the accompanying rhetoric would be tailored
to the Democratic base. There is plenty of room once the candidate moves beyond the economic
cutting edge to take distinctly traditional Democratic positions. He could be avowedly pro-choice on
abortion, anti-choice on education, opposed to capital punishment, in favor of affirmative action, and
pledged to name a liberal to the Supreme Court. (It is getting to the point a liberal will be needed on
the Court, just to add a bit of variety.) On taxation, he could recommend a 35% income tax bracket
for incomes above $1 million and an end to a variety of programs one might characterize as corporate
socialism -- the various tax breaks, credits and subsidies that the Establishment has been successful
in squeezing from the Beltway at the expense of the taxpayers. Vice President Quayle has recently
struck a responsive chord in the electorate with his arguments for legal reforms that address the
avalanche of litigation that is swamping the courts and pulling too many of the nation's best and
brightest young men and women into the pursuit of legal careers and the cornucopia of contingency
fees. A Democratic presidential contender who is asked about this controversy would do well to
cherry-pick this populist position from the Vice President instead of automatically seeing a chance
to win the support of the lawyers, who surely know of the need for reform.
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An area vital to the chances of the Democratic candidate who would defeat George Bush involves
the issue of race in America. The nomination of Judge Clarence Thomas is helping to crystalize a
debate that has been taking place within the black community, adding to it a fresh impetus and
intensity. Observant Democrats have noticed a small, but steady erosion of their party's hold over the
black electorate. Just as the leaves of a tree are the first to shake and quiver as a big storm
approaches, we see significant agitation at the top of the community, debates and fall-outs among
black America's intellectual layers.
Shelby Steele, in The Content of Our Character: A New Vision of Race in America, defines the
emerging framework of a new perspective: "I think black Americans have made, collectively, one of
the greatest contributions to American life that could possibly be made through the civil rights
movement On the other hand, I think we have over-relied on collective action to take us
further We do have more opportunities to advance, educationally and economically than we did
before It's now time [for] stronger emphasis on individual responsibility and individual initiative.
That's where our future lies."
Clearly, entrepreneurial capitalism offers the only avenue for advancement of black America. It was
in the period between 1977 and 1982, when the Steiger Amendment cut the capital gains tax from 49%
to 28%, that the largest expansion ever of black-owned businesses occurred a mammoth increase
of 50%. The Bush administration, though, is vulnerable on its laggard efforts to nurture and encourage
growth at the grass-roots level. One of the particularly distinct features of the economic expansion
of the Reagan years was precisely the rapid and large growth of small entrepreneurial ventures, an
increase of 65.4%. It was also during that period that almost 90% of all jobs created in the
industrialized world were within the United States, where 20 million new jobs were added. More
importantly, 95% of these jobs were created by half a million growing companies, while the Fortune
500 companies lost a fifth of their jobs. These rates of growth came to an end last year under the Bush
Administration.
Within the administration, Housing and Urban Development Secretary Jack Kemp has worked
tirelessly to advance a set of policies for attacking and eliminating poverty. But even here the
administration is vulnerable because empowering the poor won't work by itself. Empowerment alone
will not create jobs or augment earnings at the lower end of the wage scale, and it won't bring
capitalism to the inner city. It's hard to have capitalism without capital. There's no less desire for
economic advancement within the black community than there is elsewhere. But without access to
seed capital, black entrepreneurs seeking to start or expand an enterprise and provide employment
haven't the resources or incentive to take on the risks involved, with millions remaining caught in a
poverty trap.
There is a certain sterility, though, to the debate outside the African-American community over the
issue of urban poverty. Washington Post columnist William Raspberry sharply identified a nasty
consensus on the problem among conservatives and liberals, "The Ecology of Urban Poverty," 2/13/91.
Smug conservatives assert that the poor are poor because of their own choices -- "they prefer
government handouts to hard work ignore opportunities to better themselves place too little value
on education, have too many babies, refuse to form stable families," etc. On the other side of coin,
is the knee-jerk response of the "blacks as victims" activists racism is responsible for urban
poverty. Both are saying "members of the underclass are immune to the mechanisms -- hard work,
thrift, inculcation of decent values that have lifted previous generations of the black poor out of
their misery," i.e., it's their own fault.
Here, both the Democrats and Republicans are vulnerable. But the prize will go to the candidate who
listens and who absorbs the appropriate lessons from the debates now taking place within the African-
American community. As long as Bush remains comfortable with a slow growth road, which merely
compounds and exacerbates the worst problems of the African American community, and with a
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capital gains tax rate that effectively prohibits aspiring and ambitious black entrepreneurs from access
to capital, GOP advances there can be reversed and brought back into the Democratic party. But it
would simply be wishful thinking to assume that such can take place while the Democratic candidate
mouths the standard old line that the GOP is the party of tax breaks for the rich. That line doesn't
sell as well anymore. There are simply too many citizens, having gone through the economic
expansion of the last decade, who have aspirations of becoming "rich" and now reject the failed zero-
sum income redistribution schemes that are part and parcel of most Democrats' policy baggage.
A presidential campaign based on a coherent concept, as opposed to a programmatic laundry list,
need not be all that specific. In his astonishing campaign for the presidential nomination in 1976,
Jimmy Carter was criticized constantly for his fuzziness on the issues, signaling only non-threatening
populist impulses. As he sharpened his message, he lost a series of late primaries to California
Governor Jerry Brown. In the fall campaign, his enormous lead over President Ford dwindled steadily
as his early populist themes were overtaken by the Establishment advisors who crowded into his
campaign after the convention.
The conventional wisdom among the political pros has been that a Democrat who opposed Operation
Desert Shield would practically be an automatic loser to Commander-in-Chief Bush. I've disagreed
with that position, especially as those who opposed the action in advance on a cost/benefit calculus
were reflecting the deliberations of the electorate at large. Once the decision was made, the electorate
clearly swung behind the President, and so did those Democrats in Congress and in statehouses who
had expressed reservations. The electorate in 1992 will be interested in a candidate's philosophy,
wishing to know how cost/benefit analyses might be made in future crises abroad in assessing vital
national interests. Statements by a political figure that suggest he would never use force to defend an
interest the electorate considers vital can, of course, be used effectively against him. No Democrat
in the field at present as an announced or prospective candidate seems to fit this mold.
As Ronald Reagan demonstrated by his successful candidacy, the electorate does not require foreign
policy credentials in its selection process of a national leader. Credentials can be a plus, as in the case
of George Bush. But far more important, I believe, is a candidate's philosophy as it is communicated
to the voters regarding national security and the global political economy. In 1980, George Bush was
Ronald Reagan's principle rival for the GOP nomination, and on foreign policy his extensive
credentials were trumped by the voters' appreciation of Reagan's philosophical bent, his values as they
came across to them. As harsh as Reagan might be in characterizing foreign adversaries, he still
appeared non-threatening to the electorate, in control of his emotions and his trigger-finger, in a way
Senator Goldwater did not in his 1964 campaign.
In the post-Cold War world, our Democratic nominee can practically stipulate that President Bush
has superior skills in managing the mechanics of foreign affairs. The United States is in a rare
position, similar to the period immediately after World War II, where its global leadership is
unchallenged. The entire world political economy, now including the Soviet Union, looks to the
United States for guidance on international arrangements in the period ahead, in the new world order.
This is not the strong suit of President Bush, who will tend to look to the Establishment for answers,
waiting for the cards that will be dealt him instead of dealing the hand himself.
Here we have all the furniture we need in this new world -- a United Nations, a G-7, an
International Monetary Fund, a World Bank, a World Court. It is suddenly plain that in this new world
they all have to be rearranged in fundamental ways and the United States is the only nation in a
position at the moment to initiate the process of change. A half century after the war, Germany and
Japan obviously have to be drawn up to higher formal levels of responsibility in these global
arrangements. The International Monetary Fund and World Bank are as intellectually exhausted as the
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Kremlin, creating more problems than they solve with every step. Having been created in 1944, they
have by now become creatures of the Establishment, interested least in economic development, most
in serving as collection agents for the multinational banks. None of these mechanisms need be
scrapped, but in "a new world order" require a U.S. President who looks at them as furniture to be
rearranged, not as institutions cast in marble. If President Bush were to have the power to name a
world cabinet of these international institutions, his tendency would be to do the same thing he has
done at home appoint his old chums, men of wealth and privilege who have a strong sense of
noblesse oblige. That will not cut it anymore. The global electorate is not interested in the
redistribution of wealth any more than is the U.S. electorate. People everywhere want the opportunity
to realize their individual potential, but all too often find their own elites, through the control of the
apparatus of government, preventing any advance up the ladder of opportunity.
A Democratic contender who looks at the citizens of the world as an extension of the American
electorate can make headway in attracting votes at home. President Kennedy failed in this regard.
That is, he was the last Democratic leader of the entrepreneurial wing of his party, representing the
aspirations of those eager to achieve a piece of the American Dream. Abroad, though, the Kennedy
administration looked upon the developing world through the lens of the old paradigm. Vietnam was
an exercise in Establishment noblesse oblige, as was the Peace Corps. The IMF and World Bank
became, respectively, a collection agent for the Western banks and a welfare agency to distribute
resources through low interest loans. When, in these last few years, the Communist bloc turned to the
West, pleading for advice on how to make the transition to capitalism, the Bush administration
automatically assumed these empty marble institutions would step forward to do the job.
In the post-Cold War world, the American electorate, I believe, is prepared to see its President
deploy abroad the same policy he deploys at home. The formulas that are developed to generate a
new wave of dynamic, entrepreneurial capitalism at home should be offered to the world at large. The
tax, monetary and regulatory policies we deem appropriate to inspire prosperity and achievement at
home should not only be reflected in the approach of the international agencies of the U.S.
government. U.S. leadership should also be devoted to reshaping the international institutions to
reflect this philosophy. The U.S. electorate, at the moment discouraged, frustrated, even angry at the
meandering, purposeless direction of the ship of state, awaits a Democratic candidate who can at least
awaken President Bush to the need for change, and failing that, who is prepared to take the helm
himself.
*****
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