President Clinton's Next 100 Days

The second 100 days of the Clinton Administration has begun. Despite the early highs and recent lows of the first period, the defining moment is yet to come. The past weeks have not been encouraging. The financial markets, which rallied in the early weeks of the Administration, are signaling uncertainty. And the real economy appears to be weakening, as concerns rise about what comes next out of Washington.

For the Clinton Administration, it's time to regroup and refocus. The White House seems to have dissipated the good will and political capital built up with the unveiling of Clinton's long-term economic program. Initially, the President's courage in looking the deficit monster in the eye, after years of Washington denial, was refreshing. His promise to pare government spending, however modest, was welcomed. An inspired State of the Union address helped boost the President's poll standings and win congressional passage of his budget resolution in record time.

But now, Clinton's economic strategy is in serious trouble. The stunning Republican defeat of his stimulus package calls into question the President's leadership. Health-care reform, wrapped in secrecy, appears to be growing in size and expense. Early business supporters now cower under the drumbeat of new taxes, regulations, and mandates that emanate from every corner of the Administration, from Health & Human Services to the Labor Dept.

What's wrong? The President has lost his focus. In his first 100 days, Clinton unveiled proposals on gays in the military, abortion rights, the environment, national service, school and labor-law reforms. All the while, his health-care planners were cobbling together a sweeping package that could cost up to $150 billion and require a broad new array of taxes.

In his first 100 days, Clinton also lost touch with voters. Some 43% of them put him in office largely out of economic anxiety. Corporate layoffs and the loss of health benefits were particular worries. The election provided no mandate for massive social engineering or huge tax increases--only one for spending cuts. That's why the Republicans had public opinion behind them when they outmaneuvered Clinton.

So what should be done? Here are four suggestions to regain the momentum:

-- Reread the Reagan script. Ronald Reagan swept the right's social agenda off the calendar in his first year to focus on his tax cuts and defense buildup. Clinton has forgotten this lesson. He must reorder his priorities and limit his legislative goals. The first year should concentrate on cutting the deficit and boosting long-term economic growth.

-- Scale back the health-reform package. As Senator Daniel P. Moynihan (D-N.Y.) recently told BUSINESS WEEK, the overriding principle of health-care reform should be: "First, do no harm." More than 180 million Americans have good health benefits. They don't want to lose them or the ability to choose their own doctors. Some 37 million others go uncovered, many because they are temporarily unemployed. The goal in reform is to get a grip on cost, extend coverage, and provide incentives for savings. That does not translate into a popular mandate to radically redo the health system. Because of its complexity, reform should be submitted to Congress well after the budget is buttoned up.

-- Watch out for special interests. Despite his talk about being a "New Democrat," the President has doled out plum jobs to interest-group partisans and, intentionally or not, appears to embrace much of the left's cultural agenda. Unless he demonstrates his independence from these groups, his hold on moderates and independents could be fatally weakened.

-- Treat the market with respect. New Democrats supposedly believe that markets deliver services far more efficiently than government bureaucracies do. Clintonites have yet to show that they understand how regulatory mandates can undermine their goal of spurring investment.

Bill Clinton's encyclopedic interests and questing intelligence are leading him to try to do too much too soon. With timely adjustments and a return to basics, he still can deliver the shining promise of his Presidency. Supporters say he's incapable of sustained error. Now is the time for the President to prove them right.

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