July 23, 2008


What Might Have Been: Bill Clinton and Newt Gingrich were making progress on entitlement reform, until . . .: a review of The Pact: Bill Clinton, Newt Gingrich and the Rivalry That Defined a Generation, by Steven M. Gillon (Fred Siegel, 18 July 2008, City Journal)

[I]t’s easy to forget that the 1990s were, relatively speaking, a decade of government reform. Governors like Tommy Thompson of Wisconsin pioneered welfare reform, while cerebral mayors like Steve Goldsmith of Indianapolis, John Norquist of Milwaukee, and Rudy Giuliani of New York tackled efficiency, urban design, and crime, respectively. Clinton and Gingrich were the comparable figures on the national stage. Unlike most of their fellow politicians on both sides of the aisle, they shared an intellectual interest in how to make government work.

The two men, bitter enemies who seemed to embody the never-ending hostilities of the 1960s, worked together to pass both national welfare reform and the North American Free Trade Agreement—impressive achievements, especially in the aftermath of the political spanking that Clinton had handed Gingrich in 1995, after the speaker tried, in effect, to govern from the House floor. By the end of 1997, their mutual hostilities notwithstanding, they were ready for a new and even greater collaboration. For the first time in 30 years, the federal government enjoyed a surplus. Standing at $70 billion then, the surplus was projected to grow to $4.5 trillion over the next 15 years. Here was a chance to address widely held fears, particularly prevalent among younger voters, that Social Security and Medicare were headed for insolvency. With Clinton’s second-term chief of staff, North Carolina businessman Erskine Bowles, serving as the indispensable intermediary, the two rivals began discussing how to tackle entitlement reform.

But news of cordial policy conversations between the leaders of the warring camps spread consternation among militants in both parties. Republican conservatives, led by Congressman Tom DeLay of Texas, thought Gingrich was going soft on Clinton and considered deposing him as speaker. Similarly, Congressman Dick Gephardt of Missouri, the Democratic minority leader, was suspicious of any compromises with Gingrich; Gephardt, like most liberals, was already alienated from Clinton because of the president’s support for NAFTA. Clinton and Gingrich each had to wonder if the other was leading him into a trap.

When they sat down face to face—appropriately enough, in the Treaty Room in the East Wing of the White House—the outlines of a deal were readily apparent, explained Clinton aide Bruce Reed, one of the many staffers Gillon interviewed. The president agreed that some measure of choice would have to be incorporated into the existing Social Security system in the form of privately managed individual retirement accounts. In return, the speaker agreed to drop his demand for new tax cuts. The two concurred that the retirement age for collecting full Social Security benefits would have to increase. Finally, they decided to form a commission led by Louisiana Democratic senator John Breaux, a man trusted by both sides, which would recommend ways to bring private-sector reforms to Medicare.

Clinton was to unveil the outlines of the plan on January 27, 1998, in his State of the Union speech. But on January 21, the Monica Lewinsky scandal broke, and American politics has never fully recovered from that disaster.

In failing to Reform SS when he had a Congress eager to do so, Bill Clinton lost his shot at being a great president and we've wasted a decade getting around to the inevitable.

Posted by Orrin Judd at July 23, 2008 9:20 AM

"What if there had been no Lewinsky affair and the deal that Clinton and Gingrich were working on had succeeded? Can’t we imagine, with that pact standing as a monument to problem-solving government, not only a healthier Social Security system but a far healthier political culture than the one we’ve been mired in for over a decade?"

Considering what has happened in the financial markets in the following years, there would have been a big clamor from the public to return to the safe old ways of Social Security investment. And OJ wouldn't have tried to step in front of that train, yelling "Stay the course." And Bush would have still received the same carping from the sidelines on his handling of the GWOT, though possibly muted to a certain degree.

Some call Lewinksy disaster. As history goes on, it's looking more and more like serendipity.

Posted by: Brad S at July 23, 2008 10:18 AM

Looking back to the '92 campaign, all the signs of a Lewinsky (or someone like her) happening during his time in office were there. ("Bimbo eruptions") What's remarkable is that the Clinton Machine managed to keep her from appearing for six years.

Posted by: Raoul Ortega at July 23, 2008 11:54 AM

Isn't it more likely it was a cover for the Enron style accounting, that made it appear they had balanced the budget, without cutting anything but the military and the security services?

Posted by: narciso at July 23, 2008 12:07 PM

I have never believed Oj's - 90's, Clinton reform spiel.

The 90's spawned public sector unions, which threaten to eat the country and the people coming off old fashioned welfare were shunted to SS disablity.

Some progress.

Posted by: Perry at July 23, 2008 1:07 PM

Narc, they learned how well off balance sheet scams worked the few billion market cap at Enron and went for the big banana 5 trillion GSE mortgage market. Cheap money, levered way up (the amount would have made Fastow blush), no risk...nice.

Posted by: Perry at July 23, 2008 1:12 PM

Did you have a 401k in the 90s? It isn't down since the dotcom bubble burst. Neither would your ss account be.

Posted by: oj at July 23, 2008 1:55 PM

All we ever need to do to run balanced budgets is cut the military to historical peacetime levels

Posted by: oj at July 23, 2008 1:58 PM
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