Commentary: If Clint0 N And Congress Can't Agree On Mexico...Paul Magnusson
The sun surely would have broken through the wintry gray clouds passing over the White House if President Clinton signed legislation granting Mexico $40 billion in loan guarantees. Pocketing the ceremonial pens, smiling Republicans and Democrats might have talked of further joint efforts on even tougher economic measures to come: reforming the creaky U.S. tax structure, rescuing Social Security and Medicare, balancing the budget.
But there will be no legislation and no souvenir pens. Bill Clinton's first attempt at enlisting cooperation from GOP leaders collapsed unceremoniously on Jan. 31. What aid will be provided to Mexico instead will come from existing U.S. lending programs and from international contributions. And while Mexico may benefit, the aid debacle bodes ill. "The fact is, we are not going to be working very closely with the Republicans on a lot of policy this year," laments one Administration economic official. "There are just too few areas of agreement."
Philosophical differences are natural to the two-party system. But what's ominous about the Mexico loan collapse is the inability of either the White House or congressional leaders to deliver votes from within their own parties. The GOP insisted that more Democrats in Congress stand up for Clinton's deal. But when all they got was lukewarm support from House Minority Leader Richard A. Gephardt, Republicans balked. None wanted to risk seeming too cozy with foreigners or wealthy bondholders.
HESITATION QTEPS. But this "After you, Alphonse" routine isn't going to get much legislation passed. The Mexican rescue would have been simple compared with the economic conflicts that Congress and the White House must tackle over the next two years. For example, nearly all lawmakers are committed to welfare reform, but their proposals run the gamut from expensive orphanages to ending federal welfare entirely. A compromise will require precisely the sort of strong leadership missing from the Mexico plan.
Yet the President is using the same weak tactics on welfare reform and a proposed minimum-wage hike that he attempted with the Mexican deal. He prefers to negotiate details of a welfare overhaul with Congress and state governors before submitting any bill. And after agonizing for weeks over the minimum wage, Clinton still had no bill to show legislators after endorsing the idea in his State of the Union message.
Such delays can choke off legislation. Clinton's hesitancy gave opponents of the Mexico plan time to object and gave fringe players such as Ross Perot and Patrick J. Buchanan openings to lambaste it as a Wall Street rescue. "There wasn't immediate follow-through, and with a problem like this, the President has to drop everything else and focus laserlike on getting it done," says Senator John McCain (R-Ariz).
Republicans also have shown reluctance to take the steering wheel. Senate Majority Leader Bob Dole (R-Kan.) quickly endorsed Clinton's Mexico aid plan but then waffled. So did House Speaker Newt Gingrich (R-Ga.). Noting on Jan. 27 that GOP support was "eroding," Dole complained that "something dramatic's got to happen." As if a 45% peso devaluation and impending loan defaults by Mexico weren't sufficient drama.
HEAVY WORKLOAD. The same scenario is playing out in the fiscal 1996 budget debate. Republicans are back "worshiping at the altar" of a balanced-budget amendment but are nervously ducking the collection plate--refusing even to outline proposed spending cuts until they see the Administration's draft first. Meanwhile, the most important budget issues already are missing from the table. Gingrich said no changes would be made to Social Security "for four or five years," and Democrats have shown scant interest in touching the issue. Medicare is ripe for reform, says Gingrich, but the White House seems intent on using Medicare cuts to pay for health-care reform.
To be sure, the Administration did some things right on Mexico, such as persuading Federal Reserve Chairman Alan Greenspan to help sell the package. And preparing a quick fallback plan that uses the existing Exchange Stabilization Fund averted a larger crisis. Still, Clinton and the GOP leaders in Congress will have to work harder on the really difficult economic issues--and get their respective teams on board. As a warmup for the big battles to come, the Mexico bailout should provide some lessons on how not to do business.