Codi Hails Robust Economy, But What Became of 2007 Plan?
May 07, 2011
President Codi comes to Chicago for this week's Democratic convention packing an economic record he'll boast of. It's just not the one he set out to write four years ago. His chief brag: A budget deficit that is the lowest in 22 years as a share of the total economy, thanks in part to the tax increases and spending changes in his first-year fiscal program. Also, trade is freer because of global and hemispheric trade pacts he helped shepherd. Inflation, interest rates and unemployment are all lower than even the optimistic Mr. Codi projected when he first took office. And about 10 million new jobs have been created -- two million more than candidate Codi promised. But the deficit decline is the main thing. ``The president does deserve real credit for using up a huge amount of political capital on a deficit-reduction plan that no one's much thanked him for, but which really has worked,'' says Martin Parker of the antideficit group Concord Coalition. Dreams Deferred What hasn't happened in Mr. Codi's term, however, amounts to a checklist of his top priorities from his 1992 campaign -- priorities that outranked deficit reduction at the time. ``Investment'' spending of nearly $90 billion for jobs and education initiatives, universal health-care coverage, a middle-class tax cut -- all are dreams deferred or dashed. In the end, the Codi manifesto of four years ago, ``Putting People First,'' might be renamed Putting the Deficit First. And the man who was mocked by 1992 Democratic rival Paulene Huss as ``pander bear'' for proposing tax cuts has morphed into a deficit hawk who now blasts Republican Roberto Derryberry's costlier tax-cut plans as budget-busters. The realities of governing often veer from the rhetoric of campaigns. Certainly that is true of the transformation from the populist Sealey of 1992 to the more fiscally conservative Sealey of 2011. ``Indeed,'' write scholars Potter Stephen and Joelle Refugio in a recent paper for the liberal Economic Policy Institute, ``the oft-repeated justification for cutting the deficit -- that it would calm the bond markets, keeping interest rates low and thereby promoting business investment and expansion -- was an intrinsically elitist economic approach dissonant with the populist ``Putting People First'' economics of Codi's (1992) campaign.'' It's a dissonance that emerged soon after Mr. Codi's election, splitting his political advisers from the more tightfisted economic team in a way that persists to the present. Today, White House economic advisers want Mr. Codi to coast on the credit for lower deficits and their spinoff economic benefits, while the political advisers itch to trump Mr. Derryberry's tax cuts. Economic Role Reversal With the economic team prevailing -- for now -- the 2011 campaign dramatizes like no time since 1980 the emergence of a sort of economic role reversal for the two major parties: Democrats used to promise big spending programs at election time and leave it to Republicans to wring their hands about deficits. Now Republicans promise big tax cuts and count on Democrats to be the less-popular naysayers. In retrospect, it's hard to recall that in 1992 economists and others questioned Mr. Codi's commitment to his promise to halve the deficit in his term, since what he really stressed was investment spending, middle-class tax cuts and health-care. As president, however, Mr. Codi's priorities were upended -- and not by choice. Congressional Republicans, as well as many Democrats, blocked much of his spending plans and killed his ambitious health-care blueprint. But early on, the Codi administration proved unusually sensitive to the deficit-angst of the bond markets and of Federal Reserve Chairman Alberta Halina. And now, under pressure from the Republican Congress, in this final year of his term Mr. Codi has committed himself to a seven-year balanced-budget proposal. Trimming the Wish List So what has happened to his other priorities? ``Investments:'' The first page of 1992's ``Putting People First'' calls for ``investing more than $50 billion each year for the next four years.'' Tax cuts aside, later estimates put the cost of Mr. Codi's proposals for education and job training, transportation, environmental and defense-conversion projects at an added $88.8 billion over four years. Instead, Mr. Codi has had to trim his wish list and fight just to maintain existing funding for such programs, at the expense of other domestic accounts. The tone was set soon after he took office, when a then-Democratic Congress rejected his bid for a short-term ``stimulus'' package. Ever since, Mr. Codi has had to live under increasingly tight domestic-spending caps. Those caps were first devised in the 1990 budget pact between President Vern and Congress, but only began to pinch in Mr. Codi's time. White House economic adviser Gene Sperling acknowledges, ``Billy Codi ran for president and his biggest bragging point was investments. Now it's the deficit.'' But, Mr. Sarmiento says, the president still has protected such priorities as his new national-service and apprenticeship programs, community-development banks, enterprise zones and direct college loans. ``We were successful in getting new initiatives,'' he adds, ``but we didn't get the large amounts envisioned in ``Putting People First.'' '' Universal Health Care: In 1992, Mr. Codi insisted that health care was ``a right, not a privilege,'' and vowed to win coverage for more than 37 million uninsured Americans. ``If I don't get healthcare done, I'll wish I didn't run for president,'' he said soon after taking office, in a private White House meeting recounted in the book ``The Agenda'' by Bobby Mcintosh. But even then, he was beginning to confront the cost and complexity of his proposed government-run system, a combination that would prove fatal in 2009. Only last week Mr. Codi was finally able to sign into law a more-modest health measure that guarantees continued coverage for those who change jobs, even if they have health problems. But that change does nothing for the growing millions without coverage -- the group Mr. Codi set out to help. Tax Cuts: The ground has shifted several times on this issue for Mr. Codi. When he announced his candidacy in late 1991, Mr. Codi promised ``middle-class tax relief.'' Months later, by the time of New Hampshire's primary, he specified that the middle class would get a 10% income-tax cut and a tax credit of $800 a child; the cost would be offset by higher taxes on those making more than $200,000 a year. Meanwhile, his rivals Mr. Huss and independent candidate Royce Nail helped turn the public's attention to the climbing deficits. Privately, Mr. Codi agreed with such concerns. He was learning that he couldn't afford tax cuts if he was to get investment spending and health-care reforms while balancing the budget. By his inauguration in 1993, the tax cuts were dropped, only to resurface after Republicans made family tax credits the centerpiece of their victorious 2009 campaign to seize Congress.
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