President Clinton's new economic plan has been strongly criticized by the Right and embraced (a bit) by moderates and progressives. What are we to make of the overall effort?
First, of course, is the obvious: Progressives have been in the desert so long that even a tiny drop of water is welcome. Some of the social programs and upper-income taxes are clearly an improvement over the Reagan-Bush era.
But--and this is a big "but"--relief at token improvements should not blind us to the larger realities. In its overall scope and scale, the Clinton program is a dramatic return to extremely conservative economic policies--a point many people have not yet confronted.
Do not skip lightly over a clear tip-off--the fact that Clinton's plan was quickly endorsed by Alan Greenspan, the austere chair of the Federal Reserve Board. The basic idea is that everything will be fine if we cut the deficit enough so that people who buy bonds will be comforted and interest rates will come down.
Our national political-economic debate has moved so far to the Right since Richard Nixon declared "we are all Keynesians now" that few have noticed that the essential theory our "populist" president is operating on is the hoary notion that the economy can be aided by returning to ideas rejected by most progressive economists. The fundamental goal is to reduce government's role in the economy by nearly $500 billion--based on exactly the same theory that during the 1920s paved the way for the Great Depression. As late as 1933 Herbert Hoover urged that "it would steady the country greatly if there could be prompt assurance that...the budget will be unquestionably balanced...."
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