Economic Visions, Deficit Realities

Tom Peters

Does this election make a difference? Consider the question in two parts, the economy and “other.” Other—including the environment, Pat Buchanan’s Holy War (brace yourself for 1996), and the next several hundred federal judicial appointments—makes a huge difference. I’ve got strong views about other, but they mostly have no place in this column. (They will, however, be the basis for my vote.)

As to the economy, the election, sadly, will probably make little difference. Mr. Reagan gave us almost 20 million new jobs (though no more, per annum, than Mr. Carter); but he also, with the connivance of Congress, saddled us with a monumental budget deficit that leaves the next commander in chief little room to maneuver.

I’m of the school that says there are worse things than a sizable deficit—though we’ve about reached the limit of that view. We obviously need to bump the economy hard and fast, with a significant tax cut or a burst of federal spending. But the deficit says no to both tactics. (Japan’s stock market woes seem to be easing—mainly because Japan had the fiscal breathing room to take quick, decisive action.)

The greater long-term need is to boost business and create jobs via the right sort of investment:

– Infrastructure redevelopment. Bridges and highways are rotting. The fiber-optic age may be at hand (and getting there fast calls for federal involvement), but good roads still count. (Just ask the Russians, who suffer without them!)

– R&D spending. While I’m opposed to most government-supported business consortia (like Sematech), I’m all for research and development incentives, including (1) generous basic research funding for universities and federal labs, such as the National Institutes of Health, and (2) strong, long-term R&D tax incentives for all businesses.

– Universities and colleges. The long-term answer for Vermont and the Dakotas, for Florida and California, is brains, brains, brains. K-12 problems notwithstanding, the heart of brain development is (1) an extensive network of well-supported research universities (see above) and, equally important, (2) healthy two-year and four-year colleges. Institutes of higher learning, paying attention to community needs for job development and business creation, are tomorrow’s economic bedrock.

– Training. It’s the best investment we can make. A long-term commitment to human capital development should (1) give businesses a substantial investment tax credit for all training and (2) offer individuals tax credits and low-cost loans to encourage lifetime training for all. With more and more workers becoming less and less attached to any given payroll, shifting the training focus from the company to the individual is a must.

Franklin Roosevelt gave us a high-priced social revolution that even foes admit saved our system. LBJ overdid it, and inadvertently launched the entitlements society. Now we need a new social revolution to develop brainware for the businesses and jobs of the 21st century—that is, a training and knowledge-development revolution. Bill Clinton understands this. Several of George Bush’s programs address the issue, but, as usual, with little coherence and even less conviction.

Trouble is, thanks to the deficit, we can’t afford such efforts now or in the foreseeable future. (Which gives me real anxiety attacks.)

But if Clinton understands what’s needed for a people- and knowledge-based revolution, would the certain-to-be-Democratic Congress buy it? That may be the rub. Though the Democrats might behave during the first 100 days of a Clinton regime, I suspect they’d soon return to their myopic ways.

There’s also the matter of free trade and entrepreneurship, where Clinton’s marks are equivocal. Clinton broke with the orthodox liberal wing of his party years ago, but his pander potential on trade is troublesome (e.g., lukewarm support for the North American Free Trade Agreement), and he travels with several economic gurus who are thinly disguised protectionists. Of course, Reagan and Bush, who talked a good game on free trade, have blithely overseen the greatest increase in American protectionism since the woeful ’30s—with the help of House Majority Leader Dick Gephardt and friends, to be sure.

On entrepreneurship, Clinton is no Jack Kemp, as Ronald Reagan might say in paraphrasing Lloyd Bentsen. (Neither is Bush, pal to the Fortune 500 in the time-honored, big-business Republican tradition.) Clinton sings from the right page of the hymnal, but he and his advisers, as far as I can tell, accord entrepreneurship a small role in the scheme of things.

Somehow, I wish we could skip directly to 1996 and have a Kemp-Clinton contest right now. Deficit-induced constraints or not, there’d be a real choice between distinct economic visions—and perhaps an election that would save us from presidential pit bull Mary Matalin and the politics of prevarication that seem destined to preoccupy us for the next several weeks.

One can dream.

(C) 1992 TPG Communications.

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