"I am long on ideas but short on time. I expect to live to be only about 100."
--Thomas Edison, in 1931, the year he died at 84EDITED BY LARRY LIGHT & ROBERT McNATTReturn to top
RATES UP, TAXES DOWN, GATES COWED
BRAVADO IS A VALUABLE commodity when predicting the future. Once again, riding the best informed analysis we can find, Up Front gives prognosticating a try.
TOBACCO DEAL. All the combatants--lawmakers, state attorneys general, health groups, and Big Tobacco--want a universal settlement that will end the legal skirmishing over the industry's culpability. But no deal will get done, at least not in 1998. Trouble is, as the public learns more about the plans to settle, the notion will become unpopular. People won't like that the proposed deals give tobacco companies immunity and countenance huge lawyers' fees. In an election year, Congress will come to agree.
TAX CUT. Amid talk of possible federal budget surpluses ahead, Congress, led by Republicans, won't be able to resist a tax cut. Watch for them to end the marriage penalty, which taxes joint-filers more than singles. Balanced-budget-conscious Bill Clinton will grumble, but go along. It's not the mellowing influence of his new pooch. The political appeal to the President is that such a cut benefits the middle class (as opposed to, say, lowering the inheritance levy).
'98 ELECTIONS. The traditional six-year itch won't be much of a factor. Usually, six years into an Administration, the party out of power in the White House wins big in congressional elections. In 1998, though, Newt Gingrich's unpopularity and general questions about his party's leadership will hold down its gains to just 5 seats in the House, where their edge now is just 11. In the Senate (55-45 Republican today), the GOP will add 2 more--falling short of the 60 needed to end a filibuster.
THE FED. With the domestic economy slowing for much of 1998, the Federal Reserve will stay on the sidelines. There will be too much underlying economic strength to justify a cut in interest rates. By yearend, however, the economy should pick up enough for one of Alan Greenspan's anti-inflation "insurance" hikes of a quarter-point.
ASIA. Look for America's $164 billion trade deficit to balloon to $300 billion in 1998. Asia's meltdown will produce a flood of cheap imports. Prices will plunge further as China devalues the renminbi.
MICROSOFT. The software giant will knuckle under and offer PC makers a current version of Windows 95 and its upcoming Windows 98 operating system without browser software. Microsoft denies that it is unfairly pushing Internet Explorer, its browser, onto PC makers, and Microsoft will keep fighting the Justice Dept. in court to establish its right to integrate the browser into the operating system.
TELEVISION. Some prize. NBC will win an expensive bidding war with CBS to retain the hit show ER. But next fall will mark the drama's fifth season, and already the series appears to be growing tired. Expect the show to tumble from its perch atop the ratings.EDITED BY LARRY LIGHT & ROBERT McNATTReturn to top
SMARTEST MOVES OF 1997
1. Despite inflation jitters amid dropping unemployment, Alan Greenspan resisted calls to boost rates beyond last spring's quarter-point hike. Result: a nicely humming economy.
2. Mixing stonewalling and spin control, Bill Clinton managed to keep scandal-hungry Republicans off balance. The President, playing the boyish rogue, maintained a towering approval rating from a public tired of partisanship.
3. Barry Sternlicht waited until ITT had exhausted its defenses against Hilton Hotels, then moved in as its white knight. After adding ITT, his Starwood Lodging will be the world's largest hotel operator.
4. Capping a string of savvy acquisitions, Sanford Weill's Travelers joined Wall Street's elite by buying Salomon Brothers for a relatively cheap two times book value.
5. Coca-Cola avoided the succession turmoil plaguing other corporate titans, such as AT&T. When CEO Roberto Goizueta died, the leadership transition to Douglas Ivester was seamless.EDITED BY LARRY LIGHT & ROBERT McNATTReturn to top