Newsreal: The Reich stuff?

President Clinton's former Labor secretary is concerned less with the current scandals surrounding his longtime friend and more with the short-sighted policies that fail to address the widening chasm between America's haves and have-nots.

By Andrew Ross
Published February 11, 1998 8:00PM (EST)

The main reason, according to conventional wisdom, that President Clinton appears to have emerged whole from the alleged Monica Lewinsky sex scandal is that he has stuck by the slogan that got him elected in the first place: "It's the economy, stupid." The president's record high approval rating among voters, say the pollsters, correlates with statistics indicating the American economy has rarely been stronger. So strong in fact that Clinton confidently predicted on Tuesday -- the day the Dow Jones reached never-before-attained heights -- that the U.S. could withstand any economic shocks coming out of Asia.

It is one of the ironies that while Clinton has benefited handsomely from the economy, some of his closest political friends have been putting considerable distance between themselves and their former boss in the wake of the Lewinsky affair. George Stephanopoulos has as good as called for the president's impeachment; former Press Secretary Dee Dee Myers has grumbled darkly about Lewinsky's alleged 37 visits to the Oval Office; former Chief of Staff Leon Panetta openly wondered whether it might not be a good idea for the president to step down and give Al Gore a chance.

You won't find that kind of fair-weather talk from one of Clinton's oldest political friends, Robert Reich. The former Labor secretary in Clinton's first term has remained discreetly quiet about the allegations. But he is much blunter about an issue that has been all but drowned out in the current sex-scandal frenzy: the growing divisions between haves and have-nots in Clinton's America, and the failure of the president to address it.

Salon talked with Robert Reich about the economy, sex scandals, the labor market and other issues at Salon's San Francisco office.

Have you been subpoenaed by Kenneth Starr yet?


Do you expect to be?

Absolutely not.

Does that disappoint you? So many former administration officials have been. Doesn't it make you feel left out?

(Laughs) You mean like being on the FBI's list in the 1960s: If you are not on it, there's something wrong with you. I was recently looking at a photograph of the original cabinet that the president put together in 1993. I was astounded to realize that about half of that cabinet either died or was investigated or indicted or convicted of something. Those are pretty bad odds. Had somebody told me that I was getting into something that carried with it those bad odds, I might have thought twice.

You have been a friend of the president's since your days together at Oxford University. Have you been in touch with him during this current crisis, and if so what have you been telling him?

I have been in touch with the president but I can't disclose our conversations. Let me just say this: The president has been under attack many times before. His view is that the best way of dealing with this is to stick to the basics, to focus the public's attention on what is real and important. He delivered a State of the Union address about health care, child care and education, about saving Social Security and raising minimum wage, all of these issues that Americans care deeply about. And I believe that the public is getting a little bit tired of Monica Lewinsky.

How about Kenneth Starr? Do you think they are tired of him?

Maybe. The special prosecutor statute has to be changed. There is a broad consensus emerging that we simply cannot allow elected officials to be victims of star chamber proceedings that have no accountability.

But do you agree with Leon Panetta and George Stephanopoulos that if it turns out the charges are true, that the president should step down?

Certainly, if it turned out that the charge of suborning perjury were true, than the president should step down. But that is a huge "if." If it were the case that the president committed murder, if he ordered people to jump off of 20-story buildings for no apparent reason, then he ought to step down. We can come up with countless possibilities here, but there is no proof that the president did this.

But if he were to become so entangled in dealing with these various legal problems, might he not become so incapacitated politically and unable to follow through on the agenda he has laid out, that it would be better to hand off the administration, so to speak, to Vice President Gore?

It's difficult to answer that question because embedded in it is a kind of self-fulfilling prophecy. If the president were to start thinking that way, then other people could think that way and that in itself would reduce his capacity to get on with the business of government. I think what we saw during the State of the Union speech was a president determined to move ahead with an agenda. That determination had a self-fulfilling quality in the opposite direction. People saw a president determined and began to think, "Well, maybe he'll survive."

You have written in your book, "Locked in the Cabinet," what a rough town Washington has become since Clinton became president. The first lady has suggested that there's a "right-wing conspiracy" to bring down the president. Do you agree?

I don't think there is a conspiracy, in the sense that I simply don't believe it is possible to conduct conspiracies in an open society like ours. But I do see a lot of evidence of people trying to knock this president over.

Why? Why has this president been such a lightning rod?

It's hard to say. Perhaps because people on the right recognized early on how effective he could be, given his charm and intelligence. He is a brilliant politician, which the right, to its consternation, saw right away. Also, remember in the 1992 election, certain issues, like the draft and Gennifer Flowers, weakened him. It didn't cost him the election, but he only got 43 percent of the popular vote. It's entirely possible that the right saw potential vulnerabilities here and have played on them ever since.

You have said that four years in the cabinet was enough and that you're quite happy to be out of the politics business. But don't you have some regrets at not being in the government at a time when there appears, at long last, to be some money to spend?

No. The necessity -- or the assumed necessity -- of balancing the budget still has public policy in a straitjacket. President Clinton's programs might look like a lot of new spending, but $100 billion, out of a $1.7 trillion budget, is rather small relative to the challenges facing the country right now: Over 41 million people without health insurance, far more than were without it in 1992; over 20 percent of our children in poverty; the median wage, adjusted for inflation, below where it was in 1989; a growing gap between rich and poor; and so on.

What would you do, if you were the president?

I would have gone considerably further than the president did in expanding health care and child care, also expanding the earned income tax credit. There is no reason that a full-time worker, in this country, should be in poverty today. That is inexcusable.

We have almost full employment and a higher minimum wage. So how can this be happening?

Job change, and the fact that most people who leave a job today, involuntarily, have to take a new job that pays less.

How could the situation be alleviated?

I would come up with a different kind of unemployment insurance system than we have now. Call it re-employment insurance, which would pay the difference between the higher wage in the old job and the newer, lower wage -- maybe half the difference -- for perhaps six months or a year. It would ease some of the transition pains that people endure.

There are other possibilities. Take, for example, the notion of a grubstake. Perhaps a young person from a family below the median income ought to get a $25,000 grubstake, as an incentive to finish high school, to encourage that person to go into higher education or to put the money into stocks and bonds, creating a new class of capitalist. Society in fact spends about $25,000 per child who goes on to college. But we spend virtually nothing on a child who does not go on to college. We ought to rectify that imbalance.

How do you pay for this grubstake?

Let me get way out on a limb -- I am already out on a limb, so why not go out further -- what about a wealth tax? Wealth is becoming extraordinarily concentrated in this country. Federal Reserve data for 1995 shows much greater concentration of wealth than in 1993, or in 1989. A wealth tax is certainly something that ought to be on the table.

But how realistic is it?

Very little that I have said may be considered "politically realistic," if by that you mean could we get it enacted this year or next year. But is it politically realistic in a different sense? Is it worth putting down some markers for the future, for a progressive movement over the next five or 10 years? It is possible, were there to be such a progressive movement, that these things could actually be achieved? Yes.

What would it take for such a movement to emerge?

Very good question. I am afraid that the first prerequisite -- and I am certainly not recommending this, nor am I in favor of it -- would be an economic slow-down. A slow-down which revealed to everyone the hardships that lie just below the surface of this otherwise seemingly tranquil and wonderful economy. Consumer confidence is very high right now, in part because everyone has been told how wonderful the economy is. But interestingly, in the December survey of consumer confidence, only about 28 percent of the respondents felt that they were likely to get a raise. Most people understand that they will be lucky enough to keep their job. Consumer debt is now 90 percent of disposable income, a record high. Bankruptcy is also at a record high. In other words, underneath the surface of this wonderful economy lies a lot of insecurity. I am not desirous of more insecurity. I don't want people to have to grapple with even more economic pains than they are already grappling with. But I do expect that a progressive movement would at least require more direct recognition on the part of most people.

And will make them fonder again of "big government"?

The fact that Americans don't like -- never have -- government is not the real issue here. We will inevitably face hard choices as a society -- particularly as the gap widens between the have-mores and the have-lesses -- about whether to try to stop globalization and technological change, and put restrictions on capital, or to become a more open society. The fact that the president lost the "fast track" debate suggests to me that we may be in the early stages of choosing the wrong road, toward a closed system. That's because so many people feel insecure. If fast track went down to defeat when the economy is as buoyant as it is today, what will happen when the economy slows?

Aren't people naturally afraid of change, particularly when you talk in terms of "information economy," which many people -- including me -- don't really understand?

I think the insecurity comes less from nomenclature than from the practical experience that people have had in losing a job, then getting a new one that pays less. And that's particularly true for people who lack college degrees. This downward mobility is a continuous fear. Many economists are scratching their heads, wondering why we could have such a low rate of unemployment and yet not have much in the way of wage inflation. The answer, put simply, is that so many Americans are afraid of losing their jobs. They know how easily they can be replaced by technology, or by low-wage labor elsewhere around the world. They are willing to forgo health benefits, pension benefits, or even settle for lower wages, in return for maintaining their job.

And they are not saving. The latest savings figures are the lowest in decades. Yet all you read about in the business pages is that Americans are pouring billions into mutual funds -- and the stock market keeps going up.

Again, we have the emergence of two separate economies. If you are in the top 20 percent, you are crazy about mutual funds, you are deep into the stock market, you talk about little else with your friends. But most people are not there. Most Americans have no net assets at all, apart from their automobile.

Andrew Ross

Andrew Ross is Salon's executive vice president.

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