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JAMES GALBRAITH The Third New Deal? NOT TOO MANY people are talking about it, but Bill Clinton may become the first Democratic Presi dent to win reelection to a second term since Franklin Delano. Roosevelt in 1936. Such an event will define him in history. Come November, if he wins, Clinton will have eclipsed all the one-election Democrats to hold office since 1936: Harry S. Truman, John F. Kennedy, Lyndon B. Johnson, and Jimmy Carter. Clinton’s victory won’t match Roosevelt’s triumph over that other Kansan, Alf Landon, who carried only two states. But it might come close. Bob Dole’s abdication was true desperationhis from-the-Senate strategy had collapsed before it started. Desperation will compound Dole’s troubles when it comes to picking a running mate. Colin Powell can decline a ticket to oblivion. Barry Gold water, in similar extremity in 1964, could do no better than a Congressman that no one had ever heard of and no one remembers, from upstate New York. But given the reputation of the House Republicans at the moment, Dole should perhaps look even lower. A small-town mayor might be just the ticket. Meanwhile, the Republican Congress is washed up. In the end, almost nothing in the Contract with America passednot the Balanced Budget Amendment \(though that hardly anything else. Amazingly, Congress these days is preoccupied with raising the minimum wage, providing portable health insurance \(Ted Kennedy and Alf Landon’s and other relatively good works. Newt Gingrich after seventeen months is a has-been. Whitewater has gone flat. And its successor invent-a-scandalIran-Bosnia, wherein Clinton accomplished the rearming of Bosnia that Dole supported at the time it occurredseems to have impressed no one. \(Disclosure: As U.S. Ambassador to Croatia, my brother Peter was the point This state of affairs was barely imaginable a year ago. And some people are truly disoriented by it. It may seem strange, but James K. Galbraith teaches economics in the LBJ School of Public Affairs. the gloomiest folk I know right now are some of President Clinton’s old liberal friends. Deeply disillusioned by the man, they look at the first term as a waste, and they see little hope for the second. Indeed, some liberals seem to fear a big Clinton victory, on the ground that it will be interpreted as a triumph for the “New Democrats,” and another nail in the coffin of progressivism in the Democratic Party. To be sure, liberals have plenty to be disillusioned about. On economics, Clinton has been timid, deferential to Wall Street and Alan Greenspan. He’s forever preempting the Republicans on crime and wet fare. His health care plan was a disaster. His environmental record is unimpressive. But, let us consider the facts as they stand now. There have been two colossal Democratic landslides in this century: 1936 and 1964. \(True, both were accompanied by huge Democratic majorities in Congress, lowed by massive waves of progressive legislationfundamental stuff like Social Security, Voting Rights and Medicare. Can “it” happen again? Sure. And if there is a chance, we need to be ready for itready as progressives were in ’36 and ’64, but were not when Clinton first came . in four years ago. When Roosevelt was returned to office in 1937, he tried and failed to get control of the Supreme Court. Clinton’s “court problem” is the Federal Reserve Board. No per. manent economic progress is possible unless the Fed changes. Clinton didn’t help by renominating Alan Greenspan. But two more seats will open up during Clinton’s second term, even if Greenspan is reconfirmed by the Senate \(which hasn’t hapReserve to make a credible commitment to low and stable interest rates and to steady economic growth and lower unemployment should be the highest priority for progressives next year. Clinton will then need to liberate the budget. The way to do this is to create a capital budget, splitting government spend ing between investment and consumption. This would establish the principle that for public capital projects, taxes need cover only interest and amortization, not the entire cash outlay. If this is done, and if the operating budget is balanced at current revenues, there will be money both for new public investmentsincluding infrastructure, amenities and the artseven while maintaining the cover of “budget balance.” And because currently operating revenues exceed operating costs, there would also be money left over for a serious jobs program. Both are essential. On the social front, a sensible step forward might be parental leave insurance. Such a plan would provide a high rate of replacement income for parents who take time off with new infants or sick children. Funded by a small payroll tax, it would be avail able at a generous rate only to those who work, thus providing strong incentives to work before parenting. At the same time, it would ease the burdens of parenting for people who do work, in a way that the present Family Leave Act cannot do, since most families cannot afford to take the unpaid leave to which that act entitles them. A successful model for this program exists in Sweden. Low interest rates, stronger growth, public capital investment, a jobs program and parental insurance would help reverse the trend toward rising income inequality over the past twenty-five years. A stiff rise in the minimum wage would help too. Wage and salary discipline on the richest Americansand a good progressive tax structurewould help some more. Clinton is wedded for the moment to a different dogma, one that stresses education and training and business competitiveness and that barely focuses on growth or jobs or wages. I don’t expect him to change his deepest views and it doesn’t much matter. Clinton wasn’t a balance-the-budget fetishist either, until he had to become one last year. The important thing is that if 1996 brings Clinton in with a landslide, a Democratic House and a reduced Republican majority in the Senate, then the political currents will move leftward. Circumstances are everything. And Clinton can’t hope to be remembered like FDR if he makes nothing of them. ‘the Republican Congress is wa shed up: in the end, almost noihin g in the Contract with America p as sed. THE TEXAS OBSERVER 11