Obviously it’s an imperfect analogy. The government should be more businesslike, but it is not a business. It can never be. The nature of democracy – and of politics – does not allow it. Most CEOs wouldn’t make good presidents, and vice versa. And the other candidates don’t easily fit the comparison. By corporate custom, Bob Dole is about a decade too old to be selected to run any major American company except in an emergency. Ross Perot is already a CEO, but his only real chance to lead the country is through a hostile takeover.
Let’s play anyway, and maybe it can take us a little closer to the real Clinton record. Some shareholders see the choice as a no-brainer. The bottom line is good – far better than under the incumbent’s immediate predecessor. Clinton is young, vigorous, improving his discipline and communicating well. Since having his wings clipped in the 1994 midterm elections, he has presided in a moderate to conservative fashion. While untested in a major crisis, he has largely kept the peace.
Other shareholders say fine, but Clinton doesn’t deserve the credit. He raised prices (taxes) instead of slashing them to spur more growth. His downsizing has been inadequate. His notion of the role of government in American life is outdated. And these shareholders whisper about the character of the chief executive. Will he return to the liberal mistakes of his early tenure? Will he have to settle sexual-harassment lawsuits or expose his staff to criminal prosecution? Will he put the company at risk?
Thus divided, the shareholders undertake a performance evaluation. In 1992, candidate Clinton outlined his vision and objectives in a book called ““Putting People First.’’ All told, he made about 175 specific campaign promises, large and small, and kept about two thirds of them. But which ones? And how does his record match his long-term strategy? To find out, let’s assess Clinton’s overall management of Finance, Operations, Human Resources, Sales and Marketing, International Ventures, Plant Security, the troublesome Legal Department and Strategic Planning.
IF THE FINANCIAL PICTURE WERE GRIM, Clinton would be fired. So he deserves credit for the good news. The question is how much credit. The investment strategy he outlined in ‘92 – heavy on education, job training and health insurance – was never implemented, thanks to Congress. But the failure to deliver new spending ironically helped Clinton achieve his other short-term financial objectives. His longer-term goals of productivity increases and reductions in income inequality remain unfulfilled.
The happy totals: 8.6 million new jobs (versus 1.7 million for Bush); a 6 percent increase in real per capita after-tax income (2.5 percent for Bush); a 1996 unemployment rate of 5.4 percent (it was 7.4 percent in 1992); an inflation rate of 2.7 percent (4.2 percent for Bush); a prime interest rate of 7.6 percent (8.9 percent under Bush). Under Clinton, 1.5 million fewer people live in poverty than before.
The key benchmark is growth, which is now averaging 2.5 percent and rising. That is above average for the last 25 years but below average for the postwar period as a whole. Are shareholders conditioned to expect the fantastic 3.5 percent growth of the 1947-72 period? If so, they might find the Clinton recovery underwhelming.
Clinton had the good luck to take office just as a recovery was starting. But the growth was sustained in part because of the reduction of the budget deficit from $290 billion to $121 billion, which more than meets Clinton’s promise to cut it in half. Like any sensible CEO, Clinton played to the capital markets, which were reassured by his first budget. The Republicans were wrong to predict in ‘93 that Clinton’s tax hikes would lead to a recession. But they were right to insist on extending 1990 spending ““caps.’’
These boring ““caps’’ may have saved Clinton’s presidency. They prevented him from fulfilling expensive promises. That, in turn, helped bring about the lowest rate of increase in spending since Harry Truman.
Wasn’t Fed chairman Alan Greenspan really the one who held down inflation and kept the markets confident? Yes, but Clinton helped. Every other Democratic president since Truman demanded easy money policies from the Fed. Clinton, on advice from Lloyd Bentsen and Robert Rubin, resisted the temptation, and it paid off.
As promised, the 1993 income-tax increase fell mostly on the richest 1 percent. Clinton failed conspicuously to deliver on his pledge for a middle-class tax cut, but he did lower taxes for 15 million poor and lower-middle-class workers – a much-ignored accomplishment.
CLINTON PROMISED TO ““CHANGE POLITICS as usual’’ and lead a ““revolution in government.’’ He has done neither, though some operational improvements are evident. While he passed modest lobbying reform, he never delivered on overhauling campaign finance. This cost him a chance to co-opt the Perot vote, but it allowed him to rake in cash for Democrats.
Al Gore has led an effort to downsize and re-engineer the government. He and Clinton like to brag that they have cut 16,000 pages of regulations and shrunk the federal work force by more than 200,000 to under 3 million, the lowest since Richard Nixon. But 64 percent of that shrinkage comes from the Pentagon’s civilian work force, reduced after the cold war, and much of the rest from attrition. There’s been no painful reckoning about the federal payroll.
Gore tried to consolidate scores of agencies. He was blocked first by the Democratic Congress, where committee chairmen were protecting fiefdoms, then by the GOP Congress, which didn’t want to give Democrats credit for reducing government. One bright spot: HUD is tearing down dilapidated high-rise housing projects, with 100,000 units to be demolished by the year 2000. Clinton wants to replace government housing with vouchers, a sign that he is serious about moving beyond old bureaucratic solutions.
OVERALL, A CEO SHOULD BE JUDGED BY whether he is, in the words of the late Harvard Business School professor Richard Vancil, a ““leader of leaders.’’ Clinton’s appointments have been only fair, with the cabinet a mixed bag and the White House staff below average. Though the president’s two Supreme Court appointments – Ruth Bader Ginsburg and Stephen Breyer – were well received, his secretaries of state and defense will almost certainly be viewed as unmemorable. Some early appointments had to be withdrawn, but a larger problem was that Clinton was not persuasive enough to attract the best talent.
Everyone knows the biggest failure of Clinton’s first two years was the way he tried to fulfill his pledge for universal health-care coverage. But the nature of his error is misunderstood. Often criticized for being too flexible, Clinton’s mistake here was that he failed to compromise with Bob Dole in mid-1994. By holding out for a full loaf, he got nothing until last week, when he signed the bill for portability of benefits from job to job. Putting his unfirable wife in charge would itself have been enough to get him terminated at some firms.
On education, Clinton has pushed through not just the fancy Goals 2000 standards but several little-noticed measures with more direct impact. Students now get their college loans straight from the government, which cuts out the banks and saves hard-pressed families money. Non-college-bound youth can try to get into an apprenticeship program. There’s more money for computers and school safety.
During the campaign, Clinton sometimes promised that ““every’’ young person would be able to pay for college through national service. That was a gross exaggeration. His signature Americorps program involves about 25,000 people out of an eligible age cohort of 2.8 million. But the program, much larger than the Peace Corps, does tap youthful idealism and is running well.
Clinton says the theme of his social-welfare policy is families with children. He points to his 30 percent expansion of Head Start; his crackdown on tobacco sales to kids and on deadbeat dads; his bully-pulpit championing of V-chips, school uniforms and teen curfews; his minimum-wage increase, and his enactment – over GOP objections–of 12 weeks of unpaid family and medical leave.
But the biggest change for poor children – welfare reform did not work out as Clinton originally hoped. Although he finally made good on his big promise to ““end welfare as we know it’’ by signing the landmark bill last week, the package cuts money for food stamps and legal immigrants and turns welfare over to the states, none of which was in ““Putting People First.’’ Clinton’s plan sought to end welfare after two years, but with heavily funded child care and job training. The self-described protector of children may preside over reform that throws more of them into poverty.
CLINTON IS A GOOD SALESMAN, AND that’s an important part of the job. These days, leaders have to be comfortable and persuasive on TV. But sometimes Clinton looks and sounds like a salesman, which of course hurts sales. And stylistically, he sometimes shows too little regard for the dignity of his office. Many shareholders were offended, for instance, when he agreed to discuss his underwear.
More substantively, Clinton has taken an intense interest in international markets. He frequently defines foreign policy in economic terms. U.S. exports reached a record high earlier this year, with particular progress selling in Japan. Two trade deals – NAFTA and GATT – would not have been approved without a major push by Clinton. The Mexican bailout he engineered was unpopular, but it worked.
REMEMBER THE FOOTAGE OF A DEAD American soldier being dragged through the streets of Mogadishu? That symbolized the early chaos of Clinton’s foreign and defense policies. They were feckless and unfocused; he even launched his presidency with a confused attempt to recognize gays in the military. But eventually the inexperienced CEO grew more comfortable with his global portfolio. The United States helped peace break out in the Middle East and Northern Ireland, and it led a quiet but effective effort to denuclearize the non-Russian states of the former Soviet Union.
Most conspicuously, Clinton was willing to buck the polls and launch risky interventions in Haiti and Bosnia. When he took office, foreign leaders quietly expressed skepticism. But at the G-7 meeting in Lyons, France, last June, other heads of state were effusive in their praise.
NORMALLY, THIS SHOULD NOT BE A CEO-level issue. But Clinton has used crime to stake out the political center. Until now, many politicians employed ““crime’’ as a code word for ““black.’’ Clinton has managed to be tough on crime without racial overtones – a greatly underappreciated achievement.
Clinton can’t claim direct credit for the sharp reductions in crime, but he’s trying. In 1992 he promised 100,000 new cops on the streets. So far, 19,000 have been actually hired, with funding ready for 24,000 more, but they are too spread out to do much good. To fight terrorism, Clinton beefed up airport security. Over fierce NRA objections, he pushed through an assault-weapons ban and the Brady bill, whose waiting period has already blocked 60,000 criminals from buying handguns.
Clinton is more vulnerable politically on drugs. Only recently has the ““I didn’t inhale’’ candidate appointed an aggressive drug czar. In ‘92, Clinton pledged ““drug treatment on demand,’’ which would have required billions. As president, he has done little to expand treatment. Meanwhile, drug use among teens has doubled.
CEOS DON’T USUALLY WORRY much about their legal exposure. But Clinton, who promised ““the strongest, toughest ethics rules ever put forward,’’ has watched nine associates resign in flames. That’s far more than under Bush, though far fewer than under Reagan.
While there is still no evidence of wrongdoing by the president, many shareholders suspect that Clinton, his wife, Hillary, and top aides have been less than candid. Although the president is unlikely to be indicted in a second term, Hillary Clinton – a target of grand-jury probes in both Washington and Little Rock – could be. Meanwhile, there’s Paula Jones. After the election, will Clinton win immunity from her suit, settle or face an embarrassing trial?
FOR ALL THEIR CLAIMS OF VISION, CEOS and presidents both think short term. Their real legacy should rest on how they plan for the distant future. Two issues are most relevant here. On the environment, Clinton is playing strong defense. He vetoed GOP bills that would have allowed drilling in the Arctic National Wildlife Refuge, opened the way to clear-cutting in America’s last rain forest and slashed enforcement against polluters. And he has hammered out difficult compromises on logging and wetlands.
The other true posterity issue is entitlements – Medicare, Medicaid, Social Security, veterans’ and civil-service benefits. These are unsustainable at current levels. If they are not rethought and cut, the United States will drown in red ink when the baby boom starts to retire in 2011. Clinton has not yet begun to make the tough choices.
This evaluation is incomplete. The shareholders need to keep expanding their information base as they search for the true bottom line. Where is it? With all the intangibles, we’ll never know how the biggest personnel decision on earth gets made. But performance is a good place to start.
In the beginning, everyone’s prospects seemed so bright. Bill and Hillary Clinton would combine their two networks-the New South and the Ivy League-and remake Washington. It hasn’t turned out that way. Early nominees got tossed overboard; Vincent Foster killed himself; special prosecutor Kenneth Starr presses on, and the First Lady is still in his cross hairs. A review:
The president on taxes, entitlements, another term – and why so many voters don’t trust him
AS DEMOCRATS GATHered in Chicago, President Clinton spoke with NEWSWEEK’S Jonathan Alter and Bill Turque. Excerpts:
Nothing could be more obvious. My opponents have worked hard ever since I declared. This is a five and a half year effort. They’ve invested millions of dollars in it. They worked on it in ‘91 and ‘92. They continued to work on it throughout my presidency. The politics of personal destruction has been a big part of their strategy. It’s gotten a lot of play in the press, and then when I’ve been exonerated time after time, that hasn’t gotten as much play.
But the interesting thing is I think most people would say, “You know, that fella, he’s worked very hard. He’s gotten a lot done. We’re better off than we were four years ago. He sure has been criticized a lot. And I’m so cynical about politics and politicians that maybe some of it’s true. But he’s got my best interests at heart and he’s got a good plan for the future and I think I’ll stay with him.’ I think that’s what’s going to happen.
While the economy is clearly on the right track, we’ve got to make opportunity available to more Americans. There are still too many who have either been downsized or haven’t gotten a raise, who don’t have the capacity to make the most of their lives. And that means there has to be a huge effort in the second term on education-education for a lifetime. And we have to create opportunities for jobs to move people from welfare to work.
If you get a big tax cut, that blows up the deficit. And people are now smart enough to know that if you blow up the deficit, you’re going to have a big increase in interest rates. The Republicans themselves said last year that it would add 2 percent to interest rates if you let the deficit increase. So middle-class families are going to end up giving back almost all of that tax [cut] in home mortgages, car payments, credit-card payments. And there will be fewer jobs. We tried this before. It did not work. No business would abandon the strategy that’s working and take a U-turn and go back to something that failed the last time it was tried. We’re offering the people a tax cut, it’s just that we’re not going to borrow money for it. It’s going to be focused on child rearing, education, families, jobs.
A very serious problem if nothing is done, especially if we don’t have faster economic growth. It’s just that I don’t think it will be the cataclysmic event that everybody else assumes it will be. We’ll put together a bipartisan group. The changes won’t be particularly radical if we start now. I think the about-to-be-seniors – that is, the people like me, the oldest of the baby boomers – will demand that we do it for our children. So I’m just not worried about it.
The federal government is putting up half the money here, and we have a very definite interest in seeing that the money is good for work, good for family, good for children. We will make sure we don’t walk away from that money, and see that the objectives of the bill are fulfilled. If it all fails, we’ll take another look.
