When President Clinton was first elected to the White House, I wrote that I hoped he would be heavily favored for re-election in 1996 because that would mean things were going well for the country, that his policies had proven to be the correct ones. After two years perhaps it's time to see how well the president is doing, though, judging by the recent midterm election results, the obvious answer is: "not too well." Nevertheless, let's put together a report card.
What did Mr. Clinton promise? How has he delivered? How does the economy look?
Mr. Clinton, it seems to us, campaigned on several key domestic promises: First, to reduce the budget deficit; second, to cut taxes for the middle class; third, to create millions of new jobs; and finally, to reform health care.
Sure enough, the budget deficit has come tumbling down since Mr. Clinton's election. At first sight it seems Mr. Clinton's 1993 tax increase was the correct medicine. But when you look behind the numbers, it's clear other factors were more important.
The slashing of defense spending, which might have gone too far, was a big contributor. So, too, was the ending of the big annual payments for the savings-and-loan crisis. In fact, the sale of properties from failed S&Ls helped finance the budget.
While defense spending has been cut, government spending in total still is rising. As a result, although budget deficits are down temporarily from their peak, they're not back to where they were in 1989 immediately following President Reagan's final term. Further, they are projected to begin rising again in 1996.
Give Mr. Clinton a "C."
The middle-class tax cut that Mr. Clinton failed to deliver might have been a factor in the heavy swing to the Republican Party in the midterm elections. Give the president an "F" on this one, or perhaps, an "incomplete."
How about millions of new jobs? Yes, millions have been created, but at a slower rate than in the mid-1980s, and slower than in many economic recoveries. Nevertheless, give Mr. Clinton a "B."
Health care reform was a disaster for Mr. Clinton, and probably also was a factor in the midterm election results. Give him another "F."
Finally, what is the outlook for the economy? Surprisingly good. Despite the Federal Reserve Board's fears, there is little sign of inflation; and gross domestic product, strong in 1994, seems sure to be almost as strong again in 1995. Corporate profits are expected to be healthy in 1995 also, and employment should continue to grow at a healthy rate. The only obvious negative is that interest rates should continue to edge up, pushed by the Fed, and that will make things difficult for the stock market.
The president gets the blame if the economy is in the tank, so let's give Mr. Clinton the credit for the health of the economy with no obvious distortions. He gets an "A."
The problem for the president is that by early 1996 the economic recovery might be showing distinct signs of age. If so, the voters might easily give him an overall grade of "F.'"