Third Way or U-Turn?

...This gives BlairGore a basis for supporting expansive government-funded child care schemes, thereby providing an inducement to mothers, both married and single, to work rather than be "trapped" in the more traditional role of principal child-rearer...

...Evoking memories of the sainted Beveridge Report, which laid the basis for Britain's welfare state after World War II, Blair revealed to the party activists gathered in Brighton that his was a "cradle to grave poverty strategy...

...But Blair can be taken at his word...

...That's why Blair's first act in office was to grant semi-independence to his country's central bank and why Clinton reap-pointed Republican Alan Greenspan to a new term at the Fed...

...True, he won't go all the way towards allowing parents to select the schools that are best for their children, but he has pushed through merit pay schemes for teachers and closed failing schools...

...Stated a bit more precisely, tax cuts would give individuals the power to determine whether they want to spend their money on enriching the education of their children, buying insurance policies that provide the health care coverage most appropriate to their circumstances, hiring baby sitters, donating a bit more to causes they deem worthy, stepping up their savings rate, or frittering away the increased take-home pay on such frowned-upon activities as motoring vacations in their SUVs...

...There is, after all, an endless list of things that government "should" be doing...

...Start with the surplus...

...Or, most likely, both...

...Both Britain's prime minister and America's presidential wannabe feel that their respective governments should somehow help their citizens in the delicate and, one would have thought, highly individual tasks of balancing work and family...

...Or that central administration of spending by the National Health Service—the world's largest employer aside from the Chinese military and Indian Railways—is likely to prove wasteful in the extreme...

...Blair came to the annual Labour party conference last week in this Channel-side community in a political tailspin from scandals, a consumer uprising against high gas taxes that almost closed the country down, and the financial collapse of the Dome (a Disney-style project Blair had touted as a symbol of Labour's millennial modernity...

...The schemes are strikingly similar: more government-funded health care (the National Health Service in Britain, "free" prescription drugs for seniors in America...

...Which is why the Third Way is new in at least one regard...

...Government, he said, will "not leave you at the mercy of the market" or "to fend for yourself...

...So Labour has promised a massive increase in public spending, never mind that inflation will be the result in Britain's almost fully employed economy...

...Gore comes to his positions after elaborate polling to discover just who he is, and whether he should forswear standard-issue blue suits for earthier tones...

...Third Way politicians need economic growth to pay for the expansion of the welfare state...

...Al Gore has gone to great pains to leave no one in doubt that that is where he plans to take America, and his fellow traveler on the Third Way, British prime minister Tony Blair, has just done the same in Great Britain...

...But sincerity alone does not guarantee sensible policy...

...But Clinton would speak loudly and carry a tiny twig: His wildly interventionist policy loses some luster when human rights are given a lower priority than commercial advantage in dealing with China, and when military intervention can be considered only if there is an assurance of no body bags...

...And Labour, like the Democrats, knows just how they should be used...

...But as the Third Way politicians revert to type, those surpluses are becoming too juicy to resist...

...Which leaves governments with direct taxes as the only potential source of new revenue, Labour has promised a massive increase in public spending, never mind that the spending will likely prove wasteful and that inflation will be the result in Britain's almost fully employed economy...

...If Gore adheres to the vision set down for his party by Clinton, he will join with Blair in what the latter describes as "standing up for our values even in countries far distant from us...

...In the end, Blair's Third Way, like Clinton-Gore's, stands on twin pillars—a belief that government rather than the individual can best deploy the nation's resources to produce a better educated, healthier, and happier nation, and the availability of a budget surplus to provide government with the means to realize the ambitions of its elected officials, its elites, and its bureaucracies...

...And just in the nick of time from the point of view of those, like Blair and Gore, who are eager to increase the role of government...

...other than that generated by a growing economy...

...And, as Blair found out when farmers, truckers, and assorted ordinary folk blocked refineries and roads in protest against taxes that led to $4.50-per-gallon gasoline in Britain, governments have probably reached the limit of what they can wring from direct taxes and still hope to remain in office...

...So they are inclined to reassure financial markets by allowing their independent central banks to set interest rates that, in times gone by, they would have railed against as so high as to be oppressing the debtor classes and first-time home buyers...

...Times have changed...

...BY IRWIN M. STELZER Brighton, England Now we know where the Third Way leads: onto the fast left lane of an expanded welfare state...

...So when Blair calls for an equal opportunity society, he means it...

...more cops on the streets of both countries' cities and villages...

...With welfare reform a success in America, and the Labour government in Britain having established its bona fides by lopping off the dole those who reject either training or a job, the expansion of state benefits is now "targeted" only at the deserving poor and, better still, at the middle classes...

...With poll ratings below those of his Tory opposition, he shared with his fellow Labourites "the next steps on our journey to renew our country...

...Much of this is old stuff, so old that even conservatives of a newly compassionate stripe can go along, though under the politically problematic banner of "me too, but less...

...We will then learn whether the Third Way proves to be a route back to massive budget deficits or to higher taxes...

...Help in covering the cost of college tuition, or in buying a computer, or in setting up a small business—this is the meat on which middle-class voters feed...

...Both those who would expand the role of the state and those who are trying to keep more money in the hands of individuals have problems selling their arguments...

...Like the United States, the U.K...

...Such cuts, in the view of those who have traveled the Third Way back to a tax-and-spend, expanded welfare state, would mean fewer doctors, nurses, teachers, cops, and, if truth be told, bureaucrats...

...There are differences, too, in foreign policy...

...Taxes on businesses are limited by the increased mobility of capital...

...For politicians of the left are now keenly aware that levying new taxes is political suicide, and that any increase in the funds available to them will therefore have to come from the revenue generated by economic growth...

...That's not all...

...He has confronted the teachers' unions when they stood between him and the achievement of the educational standards he feels are crucial to giving poorer kids some hope of succeeding in the world of high-tech jobs...

...Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD, director of regulatory studies at the Hudson Institute, and columnist for the Sunday Times, London...

...Not for spend-ing—a word that has passed into disuse— but for "investment...

...For the not-so-poor there is to be a British counterpart to Gore's "targeted tax cuts"— "tailored tax cuts" for farmers and other groups who are politically potent enough to warrant such relief...

...is enjoying a good run of relatively inflation-free economic growth...

...They know that deficit spending is not a sustainable source of those funds, and that interest rates must sometimes go up if inflation is to be contained in the face of rapid economic growth...

...Blair, although no stranger to the use of focus groups (he has been advised by the likes of Bob Shrum, James Carville, and Stanley Green-berg), really seems to have what he calls an "irreducible core" of belief...

...And when governments were running substantial deficits, this dissatisfaction with the way welfare programs were being targeted, and in many cases abused, combined with empty government pockets to spell "welfare reform" and program cuts—or at least a reduction in their rate of growth...

...The latter have to concede that with less money, the government can do less...

...Taxes on incomes are limited in part by the international mobility of high earners and the ingenuity of their tax consultants, and in part by the tendency of voters to say "enough is enough...

...It has scuppered the Keynesian theories of the post-World War II period in favor of monetary and fiscal policies that should gladden the hearts of most conservatives...

...He bridles when his brood of four is photographed or otherwise brought to public view on other than a few set occasions designed to satisfy public curiosity...

...Budget deficits have now become surpluses...

...The alternative—tax cuts that return money to those who earned it—is dismissed by Gore as "risky" and by Blair as "blanket irresponsible tax promises...

...Which was fine with middle-class voters when the curtailment of government programs would affect mainly those who were seen as malingerers and welfare cheats...

...And Gore has promised new programs that, as they take root and grow, will surely more than wipe out a surplus which would not even exist if the government accounted properly for its contingent liabilities...

...It will provide free computers when you learn and work, and adequate funds for you when you retire...

...And not only for the deserving poor, for it is "not just poorer families that need help...

...Gore, by contrast, has shown that he is willing to compromise the integrity of his running mate by making the heretofore straightforward Lieberman swear not only that he now opposes school vouchers, but that he never really favored them...

...His destination sounds eerily like the place to which Al Gore would take America, given the chance...

...What distinguishes the Blair-Gore approach, and what makes it such a pronounced retreat from the Third Way's emphasis on individual responsibility, is the sheer ambition and reach of their concept of the role of government...

...It is easy to be cynical about such a claim, especially for Americans who have become accustomed to Bill Clinton's ability to fake sincerity...

...This is a formula for the expansion of the state, and for the formation of new constituencies that will forever be beholden to the party that creates and redistributes the new goodies...

...And it gives government yet another role to play in what once was a purely private matter...

...more education spending to reduce class sizes, raise teachers' pay, and build new schools in both countries...

...Big Brother might not be watching you, but he certainly will be watching over you...

...But before listing the similarities between the no-longer New Democrats and the no-longer New Labour party, a word about the differences...

...And that's why formerly profligate politicians have been willing to run large budget surpluses, both to provide funds for new and expanded government programs, and to make token reductions in the national debt to reassure financial markets that they have not regressed to their old spending ways...

...He may be wrong to think he can right the world's ills, but at least he is willing to put his troops and his political capital where his mouth is...

...John Maynard Keynes, R.I.P...

...Unlike Gore, for instance, he is so devoted to his wife and family he doesn't exploit them for political gain...

...All of this to be funded from the surplus...

...Blair, who shares the Clinton-Gore view that there is a moral imperative to prevent atrocities in places as different as Middle Europe and equatorial Africa, is willing to put British troops in harm's way if necessary to contain Saddam Hussein, or Slobodan Milosevic, or to take out the gangs that threaten the stability of Sierra Leone...

...Add to that bulging Treasury coffers, and you have the possibility of benefits at no apparent cost—without tax increases...