OUTLOOK FOR POLITICS
Politics as usual: divided government and investigations
The next 4 years
are set in stone: Clinton remains in office.
Or will he?
The Republicans,
holding Congress for a second term straight, are feeling like a high school
linebacker pumped-up on steroids ... invincible ... and itching for a fight.Forget
all the rhetoric about bipartisan cooperation. After two government shutdowns,
blamed squarely on Gingrich, and approval ratings in the low 30s by the
end of the summer, not only did the Republicans stave off a strong Democratic
onslaught, but they increased their majority in the Senate.
This is bad news
for Clinton and the Democratic party. Republicans have their eyes on the
prize: The Oval Office in the year 2000.
Besides, politicians
never forget when they've been embarrassed. Republicans were called every
name in the book this past election. Moreover, the congressional investigations
led by the Democrats in the Reagan and Bush years left a bad taste in the
GOP.
Newt Gingrich
and Trent Lott say they'll work with Clinton on sensitive issues like Social
Security and Medicare. But that's tongue-in-cheek doublespeak. It's pay-back
time! And the Clinton administration is a glass jaw ready to be smashed.
But the GOP leadership
has learned its lessons on being the majority party in Congress. The public
doesn't like strong-arm tactics, as evidenced by the Republicans' slide
in popularity during the height of the balanced budget battles when Newt
was cast as "The Gingrich Who Stole Christmas," for trying to
curb the growth rate of welfare benefits by a mere 1/2 percentage point.
Don't look for the GOP leadership to make that kind of image blunder again.
The Asian connection
The first order
of business for the 105th Congress will be to address campaign finance reform.
This will serve two purposes:
1) Republicans
will pay lip-service to the voters, who believe campaign finance truly needs
reforming - especially since over US$1 billion was spent on campaigns this
year; and
2) this
will give Republicans a good excuse to investigate Clinton's and the Democratic
National Party's campaign dealings with Indonesian billionaire Mochtar Riady
- head of the multinational conglomerate, the Lippo Group.
The first purpose
will fade into irrelevance as Republicans hammer the Clinton administration's
illegal and unethical connections with Riady.
Get out of Dodge
Many of Clinton's
first-term cabinet staff and appointees are running for the hills, heading
for private employment ... or sanctuary. They don't want any part of the
bloodbath that's about to occur in 1997.
There's always
a portion of any president's staff that resigns after the first term - if
the president is able to win reelection. In fact, most agency heads stay
no more than 2 years. But what's currently happening in the Clinton White
House is nothing short of an exodus. Rough estimates put resignations at
nearly 60%. This has to make you wonder: What do they know that the public
doesn't?
Paula Jones's
sexual harassment case before the Supreme Court. The FBI files scandal.
Whitewater. And now Lippogate ... if it becomes known as that. Regardless
of the controversy, the staff close to the president knows the administration
is headed for a big fall ... and they don't want to take the trip.
Guilt by association
Besides, just
being associated with the President can land you in front of an congressional
committee - which means lawsuits, investigations, and exorbitant legal fees.
(George Stephanopolous - barely out of college when he went to work for
Clinton - is estimated to be $90,000 in debt, just to his D.C. lawyer!)
Democratic leaders
in the DNC have tried to distance themselves from the President. But they
can't. With reports that John Huang - an Indonesian who held a high-level
fundraising post in the DNC - raised over US$1.5 million from illegal Asian
sources, the Democrats are in it nose-deep.
This may prove
a crushing blow to the party. With the Democrats effectively losing control
of Congress, a scandalous president is the last thing they need. They know
if Clinton falls, the Republicans could control both the White House and
Congress in the year 2000.
But Clinton has
proved he's not one to roll over. The one thing he has is charisma. Even
though he garnered only 49% of the popular vote, Clinton can appeal to the
public for support... something he's good at. However, Clinton is now a
lame duck president. And because he's a lame duck, he's a sitting duck for
Republican salvos.
The biggest loser
in a Clinton slide in the polls could be Al Gore. Gore has already began
campaigning for president for the 2000 election, by creating committees
for fundraising. If Clinton gets whacked, Gore will have a tough time separating
himself from the negativity.
The agenda
In between all
the political bickering and investigations, public policy will be made.
High on both
parties' lists is Social Security reform. Republicans and Democrats know
that reform has to happen now to ensure long-term viability and to cope
with the reality of relentless and inexorable demographic changes - namely,
that the fastest-growing age group in the U.S. is the over-85 cohort.
But many Republicans,
bitter over the way Democrats hammered them on Medicare in the campaign,
are resisting the notion of a bipartisan action-forcing commission.
If Republicans
remain stubborn on this issue, they'll get killed. It is in their interest
to take Medicare and Social Security off the table as partisan political
issues, since they can't win on them. Republicans can't force Clinton and
congressional Democrats to grovel and apologize.
If pushed to
emerge with a larger Medicare plan on their own, Democrats will come up
with one that hits providers, not elderly recipients, leaving the political
onus on Republicans for trying to balance the budget and finance a tax cut
for the rich on the backs of the elderly.
Taipan's 1997 Forecast:
Social Security
and Medicare will not change much. The wheels of the federal government
machine work slow. That's the way it was intended.
Quantum change
comes from emergency and crisis - like the New Deal programs. Social Security
and Medicare are not at emergency status yet. Politicians will not bother
revamping the process until the systems come crashing down.
Don't expect
major changes any time soon.
Balancing the budget
Clinton rode
into office in 1992 on a tidal wave of debt reduction support. He hasn't
done exactly that, but he's done the next best thing - cut spending. From
a policy standpoint, Clinton gets an A+ for cutting spending and reducing
the annual deficit. He's cut spending and reduced the deficit 4 straight
years ... something that hasn't been done since the 1840s!
But a problem
is emerging. Although on a superficial level Clinton looks like he's cut
spending dramatically, the federal government is masking the true debt by
borrowing money from the Social Security trust funds. This shouldn't surprise
anybody. The government has been doing it for years. But time is running
out.
The real nitty-gritty
of spending cuts will occur in the next four years, not in '97. In Clinton's
first term, there was excess fat to be cut. Those cuts were largely benign
and didn't hurt anybody. The cuts that will occur over the next 4 years
will dig deep into entitlements... and Clinton and Congress will have to
demonstrate courage if they have any hope of pulling it off.
Taipan's 1997 Forecast:
Incremental policy
making will be the norm. Arriving at a balanced budget will be difficult,
because these cuts will affect special interest groups.
Furthermore,
the Republicans are gearing for the 1998 election, which - if they maintain
control of Congress - will put them in good position for a run at the White
House. Each party will position itself to take credit for good laws while
at the same time slamming each other for partisan bickering.
Havana daydreaming
In a bizarre
twist, Fidel Castro may turn out to be Clinton's savior.
American businesses
have been salivating to get a piece of Cuba's cheap resources and economy.
Although Cuba's economy is in a shambles as a result of the United States'
economic embargo, foreign investment is flooding the market.
Cumulative investment
commitments rose to US$1.5 billion at the end of 1995 from about US$400
million a year earlier.
Castro has been
very happy with capitalism. In 1991, when he realized the party was truly
over and Mother Russia ended all financial aid to his island, Castro decided
to attract foreign businesses with cheap labor and the promise of paradise
with renewed tourism. Since 1993, Castro has been actively seeking capital
from European firms.
But Castro's
ability to sparkplug his economy with foreign investments has angered American
hawks, who still view the communist leader as a potential threat just 90
miles off the coast.
The 104th Congress
passed a law known as the Helms-Burton Act, which penalizes any U.S. company
conducting business in Cuba.
But not only
does it penalize American firms, it punishes any foreign firm doing business
in both the U.S. and Cuba. This has enraged Canada and the European Union,
which have extensive ventures in Cuba.
According to
the law's stipulation, the U.S. courts are forced to levy heavy fines against
any foreign corporation doing business in Cuba. But the EU flexed its collective
muscle. All 15 governments in the EU agreed on a law that neutralizes the
effect of the Helms-Burton Act - by enabling firms that are fined in American
courts to reclaim the cash in European courts.
So in essence,
the American law only deters American businesses.
Bill Clinton
isn't stupid. He's a very astute politician who knows how to conduct effective
damage control. In 1996, when foreign nations were blasting the U.S. about
pseudo-imperialism, Clinton took quick action and signed a 6-month moratorium
on the law to "examine the law's effects a bit more."
Taipan's 1997 Forecast:
Clinton needs
the support of the public if he's going to survive future criminal investigations.
But if he can garner the support of big business, much heat will be lifted
off his back.
If big business
becomes a friend to Clinton - because he opened the way for American investment
in Cuba - it will cut into the heart of congressional Republicans.
For up-to-date information about politicians and their shenanigans, check
out Taipan Politics
on this website. Taipan editor Brian
Hicks writes a weekly column on the state of politics both at home and
abroad.