The Magazine

WHEN THE ECONOMY TURNS

Feb 1, 1999, Vol. 4, No. 19 • By DAVID FRUM
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Everything will be different eighteen months from now. It's one of the oldest rules of politics, and also one of the hardest to remember. The present is so real, so glaring; the future so murky, so contingent. Who could believe in 1991 that the triumph in the Gulf would immediately fade? Or that the recession would end before Clinton's inauguration? And as Clinton ascended the rostrum of the House on Tuesday to boast of the country's wealth, take the cheers of his party, and bask in his skyscraping poll numbers, it seemed equally far-fetched to imagine that anything could tarnish his amazing political success.


Certainly the Republicans who replied to the State of the Union seemed unable to imagine it. Jennifer Dunn and Steve Largent delivered two of the most abject speeches ever to make a late-night viewer wince -- first denying that the impeachment of a president for multiple felonies ought to concern the American people very much and then implicitly apologizing for having impeached him.


The Dunn and Largent speeches seemed to take for granted that the salient political fact of the next election cycle will be the continuing overwhelming popularity of Bill Clinton. And of course it is possible that in 2000 the president will be as popular as Ronald Reagan was in 1988. But is it not equally possible that the Republicans are once again getting ready to fight the last war?


The Republicans were hammered in 1996 because they had started and lost a budget fight with President Clinton. So they entered the 1998 election cycle determined never to wage another budget fight -- only to get hammered again in 1998, as the federal surplus piled up and high-income voters revolted against the Republicans' unwillingness to press for broad tax relief.


In the aftermath of 1998 and with the acquittal of the president looming, the GOP is buzzing with advice from friends and foes alike as to how to reposition the party for the 2000 election. That advice tends to build on the premise that the country's condition in eighteen months will be essentially what it is now. Yes, many economists are predicting something of a slowdown in 1999. But with the stock market roaring, interest rates plunging, and the Asian, Russian, and Latin American financial crises a faraway and confusing menace, those same economists have decided that the 1999 slowdown will probably be only a prelude to the recovery of 2000.


And maybe that's right too. But here's something to contemplate: The U.S. economy has been growing for more than six years, since the middle of 1992. It's sixteen years since the end of the last severe recession. Question: What happens to American politics if the economy turns?


The cynical answer is: oh, nothing much. The Clinton administration's critics have so often predicted its imminent destruction -- from the recession that was supposed to follow the 1993 tax hike, from the White-water and campaign-finance scandals, from public reaction against a humiliating foreign policy -- that by now we tend to assume nothing short of the finger of God pointing to Clinton himself as the cause of tidal waves, typhoons, and locusts could do much to damage him.


But just for a moment, let's try the crazy experiment of imagining that Clinton is vulnerable -- if not to proven charges of criminality, then to economic disappointment. What happens to him and to American politics if, despite the stock-market euphoria, the East Asian, Russian, and Latin American depressions do crimp the American economy this year or the next? U.S. exports, especially high-tech and agricultural exports, are already tumbling -- by some 20 percent to the worst-hit market, East Asia. Meanwhile imports are rising, as the collapse of currencies from the Thai baht to the Canadian dollar slashes the price of goods made in those countries. This puts pressure on American manufacturers to reduce their own costs, by, for example, laying off workers. The United Steelworkers and the big steelmakers have already formed a coalition, "Stand Up for Steel," to lobby for even thicker barriers to Japanese and South Korean metal. Clinton (naturally) pandered to them in his State of the Union address. Subsidizing U.S. jobs, however, aside from its other demerits, will prolong and aggravate the slump overseas and enlarge the threat that slump poses to the U.S. economy.