Clinton's Second Phase

...Treasury Secretary Lloyd Bentsen...

...In the current round, what few loopholes remained were duly excised...

...While the White House will no doubt herald its commitment to "change," any actual changes are likely to be slow in arriving and glacial in their impact...

...The President is on strong moral ground when he argues that the 37 million Americans without medical insurance should be covered by a basic benefits package...

...As matters stand, many fully covered Americans fail to see any real link between their own use of the health delivery system and its broad economic impact...

...They already have slashed their aggregate payrolls by 37 per cent since 1990...

...The major "achievement" of Phase 1 was the $496 billion deficit-cutting package, signed into law before the legislators left for their long summer break...

...Hence the newly opened Clinton hand to those Republicans who also want to Get Things Done??and who...

...The Perot voters are deeply alienated and cynical about nearly all leaders and institutions, political and economic," says Stan Greenberg, the President's pollster...

...The Democrats who banded behind the final plan did so despite the fact that the Administration could make only a tenuous link between inputs (spending cuts and tax hikes) and promised outputs (rapid economic growth and more wellpaying jobs...

...Few legislators on either side of the aisle wondered whether small entrepreneurs, who do the bulk of U.S...

...After many Clinton concessions to House members and Senators, what emerged bore scant resemblance to the original draft...

...To begin with, the President has scrapped as politically untenable the notion of a Canadian-style single-payer system...

...the feared "Iron Triangle" that runs the whole blooming mess...

...They would do so through regional networks of quasi-independent "health care alliances...

...Businesses would be tapped to pay the tab...

...health care system...

...That, at least, is the premise behind the second item in the Clinton fall catalog, dubbed "Reinventing Government...

...But any such move is likely to anger the same anti-tax citizenry Clinton's political circle says he must court if Phase II of his Presidency is to be successful...

...At a minimum, it would give people an economic reason to weigh more carefully their choice of medical coverage...

...Fewer still noted that the previous major tax reform package, passed in 1986, carried an implicit bargain the President and Congress broke...

...Both wings of the anti-nafta coalition hold that the pact will cause American companies to move jobs to Mexico as a means of curbing high labor costs...

...among others, thinks the sharp drop in commercial real estate values caused by the '86 tax changes triggered the collapse of the savings and loan industry, making necessary the massive Federal bailout that gave the deficit yet another sharp push upward and brought us to where we are today...

...Crafted by Vice President Al Gore, it had to be restyled before it was put on display to meet a cry from Congress for more spending cuts...

...This is, after all...

...The Fortune 500 firms care about nafta??but not that much...

...If Greenberg is right, then the fall season will be as much about a Presidential need to ford the deep mood of skepticism that prevails in the land as it will be about reforming health care, overhauling trade policy or "reinventing government...

...But what would happen should "reforms" in government procurement rules unleash some woolly spending and, maybe, a juicy scandal or two...

...The Clinton team anticipates that some of the money would come from higher taxes on tobacco...

...This was a prime example of the Law of Unintended Consequences, which one suspects Clinton will neglect in his new round of Adventures in Government Land...

...Moreover, tycoons would just as soon do business in Chile or Indonesia as in an alienated Mexico...

...Although every Republican on Capitol Hill voted No, a relative handful openly challenged a core feature: steeply higher tax rates for their best-off constituents??the part of the package Democrats lauded as a return to tax fairness following a decade of Reaganite excesses...

...The ground beneath him softens, however, once the focus turns to who will pay the $150 billion or so needed to finance the inevitable inflationary demands on the system...

...That is a major flaw...

...On the other hand, Clinton apparently has come out of that storm with an understanding he lacked when he got his job with only 43 per cent of the popular vote...

...Opposed are the people who did the most to get Clinton elected??organized labor and minorities...

...During those initial traumatic months, the broad-based appeal to the political center that won him his electoral victory last November was becalmed through a series of false launches made by a novice captain and steered by an often foolish crew...

...The rest of it would come from some form of controls on providers, long skilled at the art of cost-shifting...

...If they have learned history's harsh truth, they will write tough cost-cutting incentives on their prescription pad...

...They are watching Bill Clinton to see if he succeeds, though they are predisposed to doubt the genuineness of anything that happens in politics...

...The deal capped marginal rates at 28 per cent, in return for the closing of a slew of hoary tax evasion loopholes...

...Not until the long-awaited national health plan is examined in detail on Capitol Hill will we know whether the lawmakers are prepared to undo the mistakes they made when they enacted Medicare 25 years ago...

...Among those people are the 20 million voters who backed Perot in 1992...

...Regardless of how much Clinton and Gore may want to "reinvent," most Federal agencies, their lawyer-lobbyist consorts and the Congressional masterminds may "uninvent...

...The key items on the Phase II agenda are securing Congressional approval of the North American Free Trade Agreement Andrew J. Glass, a longtime contributor to The New Leader, is head of the Cox Newspapers bureau in Washington...

...If Clinton is to put some wind behind his back, he will need to jettison his severest Democratic critics...

...Clinton has also spurned the strictest form of "managed competition," the kind that imposes government mandates and price controls...

...Clinton and company might ponder how Perot and the talk-show Mafia would respond...

...Nor does the plan in its present form encourage consumers to shop around for the best bargains??as they normally do for everyday needs??or providers to make deep cuts...

...If the Fortune 500 companies could downsize to under 12 million workers, the Federal government, with a work force of 3 million, could similarly change its spots...

...The President prevailed in the budget battle because fellow Democrats realized that they too would be badly hurt if he was savaged virtually at the start of his voyage...

...The first of the triad, the pending trade accord, cobbled together chiefly under Republican rule, enjoys strong support from David Rockefeller and other such establishment types, plus every living President, past and present...

...Levying a tax on employer-paid premiums would be one way to turn things around...

...Then he will have to fill out his manifest with Republican replacements...

...It is fine for Clinton to say we should give more responsibility to people who must solve problems and achieve results, although there are probably not too many votes in pursuing that line...

...For as Speaker Thomas S. Foley of Washington State observed the other day, "The arrival of the President's program on Capitol Hill marks the beginning, rather than the end, of the [policy] discussion...

...Perhaps in fear of fomenting a populist backlash in 1994, Republicans focused instead on the importance of further slashing government outlays, a stable conservative mantra since 1980...

...Nowhere is the Law of Unintended Consequences more apt to maul Clinton's high hopes than in the health reform arena, where both emotions and costs tend to hit ceilings and bust right through them...

...Under the Clinton approach, employers would continue to enjoy an unlimited tax exemption for their medical contributions...

...Given the inherent risk-averse nature of civil servants, that alone was a tall order??and with the addition of having to cut 252,000 jobs it becomes all the harder to fulfill...

...hiring these days, might prove less disposed to take on new workers after absorbing a steep increase in their marginal tax rates...

...Aides say he now sees clearly that he can hardly spend the next 42 months simply hoping that, on each and every big test, at least 84 per cent of House Democrats will support him...

...At this stage Clinton should be able to fathom the sea charts, yet he still cannot be sure of ever reaching port, let alone know what he will have wrought by the time Congress ties the ship of state to its distant piers...

...The probable lesson to be learned here is that when economics runs on a global scale and politics runs on a national one, the gears don't mesh...

...They are joined, for this outing only, by Ross Perot and the Nativist Right...

...Nafta), overhauling the Federal bureaucracy, and changing the U.S...

...to be sure, will claim their share of the credit...

...The original concept called for merely revitalizing waxen bureaucrats with market-style mechanisms and bottom-up decision-making...