December 26, 1997
Margaret Warner discusses the political implications of the South Korean bailout and reviews the year in politics with syndicated columnist Mark Shields and Wall Street Journal columnist Paul Gigot.
A RealAudio version of this segment is available.
December 26, 1997:
Is South Korea on the road to economic recovery?
December 24, 1997:
The jury delivers a mixed verdict in the Terry Nichols bombing trial.
December 22, 1997:
President Clinton visits the troops in Bosnia.
Browse the Shields & Gigot index.
Browse the NewsHour's coverage of Asia, Bosnia, and Law.
The homepage for United Nations
The homepage for the International Monetary Fund.
MARGARET WARNER: Now, our regular end-of-the week political analysis with Shields & Gigot, syndicated columnist Mark Shields and "Wall Street Journal" columnist Paul Gigot.
MARGARET WARNER: Paul, how well do you think the administration has handled this Asian currency and financial turmoil so far?
The Clinton Administration's handling of the Asian crisis.
PAUL GIGOT, Wall Street Journal: Well, Margaret, I remember at the Asian summit that the President attended, I think it was in Canada about six weeks ago, he was asked about the Asian crisis and he said, that, well, it was just a few glitches, and it really wasnít something we should worry about, and theyíd handle it. Now, six weeks later, itís a full-blown crisis that we are being asked to spend American taxpayer dollars on, so anything that moves from a glitch to a crisis in six weeks probably has suffered some indifference, if not inattention. I think you can fault the administration for that. The other thing that I think is going to be a big debate in this country next year thatís wrapped up in here is the administrationís reliance on the International Monetary Fund, and their blend of policies, which include tax increases and currency devaluations, and obviously, they didnít stop at the crisis in Thailand; they hoped it would; didnít stop it in Indonesia; didnít stop it at first in South Korea; and now we have to hope that this does. So I think thereís going to be a much-needed debate on that too. So I wouldnít give the administration very high marks on this one.
MARGARET WARNER: Do you give them high marks?
MARK SHIELDS, Syndicated Columnist: No. I donít think the administration gets high marks on it. Treasury Secretary Bob Rubin, Margaret, who is probably the most respected, popular, however you want to put it, cabinet officer, has been consistently--said it just a few weeks ago--that to--it would be a "moral hazard" to give in to bailing out the large investors, obviously which include U.S. banks, European banks, Japanese banks. And I think thatís where the administration is vulnerable.
MARGARET WARNER: Just pointing out, itís U.S. and foreign investors who went in and loaned a lot of this money.
MARK SHIELDS: Thatís exactly right, and I think where the Democrats and the administration are vulnerable is perhaps where the Republicans canít explain it, and that is that theyíre bailing out investors, that I think Paul could make an argument, but I think there will be a number of Republicans who may be somewhat reluctant to attack a plan that does bail out investors.
PAUL GIGOT: Margaret, I love it when Mark talks economic language like that "moral hazard." I think--I think Mark is right; that some Republicans will be reluctant to do it, particularly Newt Gingrich and the leadership, because it means that the might feel they have to take responsibility if something goes wrong afterwards. But I think what youíre going to see is not just the Pat Buchanan wing oppose this but youíre going to see the free market Jack Kemp wing, and Jack Kemp has some credibility on economic matters, and so I think heís going to oppose this pretty vigorously, and thatís probably good because we do need a debate over the role of the moral hazard question because we bailed out Mexico, remember, and that was supposed to have solved the problem. But I think you can make a really strong argument that when creditors saw what we did in Mexico, they said, hey, I can get away with that anywhere; theyíll cover all my bets. So we need to debate about that.
MARGARET WARNER: It is an issue that could have some real populist appeal, couldnít it, even in the Democratic--
MARK SHIELDS: I think it could have real populist appeal, and Iíd just point out that the Mexican bailout worked for (a) the investors and the lenders, theyíre paid back. Who didnít benefit from it were the Mexicans. Start with before the bail out there was a 30 percent poverty rate in Mexico among Mexican families. Now itís 50 percent, and wages have been cut by 25 percent. So it does come down to who is being bailed out. Is it the investors? Is it the lenders? Is it the banks? Is it the--the larger money, rather than aiding the farmers, the factory workers of Korea and their families?
MARGARET WARNER: All right, Paul, letís look now at the year in review, and what kind of a year do you think the President has had both politically and in terms of what he has achieved?
The political year in review.
PAUL GIGOT: Well, politically, I think that he had the better of the year than the Republican Congress. I think that he managed to achieve on the budget deal most of what he wanted. I think the problem the President has is that it wasnít very much that he said he wanted to do in 1996. Now that heís achieved it, you can sense on the Presidentís part and the press conferences and in his answers to questions a little testiness and frustration about his legacy when somebody says, is this all there is. But his approval rating has remained very high, remarkably high. I mean, all this ethical stuff just seems to go right underneath them, all questions about ethics donít seem to touch him. The Republicans clearly are intimidated by him in some ways. Theyíre afraid to assert much of an agenda. But Iíd say that the big winner politically this year is prosperity. The healthy economy has made the public a lot less angry about politicians, so thatís helped all incumbents, and itís given a kind of immunity to President Clinton, I think, on the question of ethics because nothingís going wrong in the country. People feel good about the country again, at least about their economic circumstances, and that really helps people in Washington.
MARK SHIELDS: The old rule of politics, when the economy is bad, the economy is the only issue, and when the economy is good, the only way you beat an incumbent is on other issues where the incumbent might be vulnerable. As of January 1998, barring some cataclysm between now and then, the Wall Street Journal/NBC News poll will show that President Bill Clinton, beginning his sixth year in the presidency, has the highest favorable rating of any president in modern history, including such giants as Dwight Eisenhower, Ronald Reagan, the beloved. Itís rather remarkable. Itís a man whoís twice been elected as a minority president. You got his performance in office, or his perceived performance obviously is rated very, very highly by Americans. So I think that is remarkable, and it does stand in stark contrast to the man heís picked to be his successor, the vice president. Paulís right. The president had nine months of rather unflattering stories on campaign finance. Al Gore, count Ďem, had three days of the Buddhist nuns from Hacienda Heights coming and kind of making him look silly, and yet, his own popularity went to the lowest point in July of 1997 itís been in his entire public career, and you almost had the feeling that if Bill Clinton drove a convertible with the top down through a car wash that Al Gore would get wet.
MARGARET WARNER: Paul, how do you explain--I mean, many people both in the Democratic Party and the Republican Party say, but, Bill Clinton hasnít done much in the way of anything big picture, thatís the criticism. Is that part of what makes him popular? Whatís the connection there?
PAUL GIGOT: I do. I mean, I think that the country doesnít want much from Washington and doesnít expect very much from Washington, and itís getting it, and itís happy. I think that is part of the--part of the secret here. I think that was part of the presidentís secret in 1996, when all of those small, little items, he wasnít threatening anymore. He wasnít threatening to nationalize the health care system. He wasnít threatening to raise anybodyís taxes. In fact, he was going to cut them for specific groups of people. He wasnít going to try to rock the boat, and the country is still very skeptical of politics, still very skeptical of politicians, and I think when it comes to the ethical questions, the President benefits from this general public cynicism because, as Mark pointed out, I think the press and the Congress did make the argument that laws were broken on campaign finance; that the President was at least in many ways indifferent to some of those laws and to some of the people he hired, who probably did break the law, but he suffers a kind of--he gets a kind of a buy on it because the public seems to have bought the Democratic argument, the defense, which is, everybody does it; this is no worse than anybody else does it, so itís all those folks in Washington, so weíll just ignore them, and as long as theyíre not threatening our pocket book or doing too much mayhem, let Ďem go, let Ďem do what they want. Weíre happy enough.
MARGARET WARNER: Mark, what kind of a year do you think the Republican leadership has had in Congress?
The Republican leadership.
MARK SHIELDS: Well, the Republican leadership, you could make the case that both sides have had good years in the sense that weíve had the biggest tax cut since the Reagan era, a $95 million tax cut, finally capital gains, the Holy Grail of the conservative movement, has been reached, a cut in capital gains tax, a $500 child tax cut promised by the Republicans has been achieved. For the first time since 1969, the balanced budget is probably within reach. You know, itís really rather remarkable when you look at those achievements, you can say the President had tamed the Republican Congress, I think he did, 13 appropriations bills passed on schedule, with no close down or threatened shutdowns, the government--so I think New Gingrich had a roller coaster year. He started off paying $300,000 in fines, in ethical lapses, borrowed it from Bob Dole to keep the story alive for a little bit longer, and the faced a revolt from the game that couldnít shoot straight, his own leadership, who agreed that he should go but couldnít agree on who should take his place, and yet, at the end of the year heís talking about running for president in the year 2000, which is good news.
MARGARET WARNER: Paul, how do you explain though that the Republican leaders seem to have a much lower profile than they did even last year?
PAUL GIGOT: Well, first of all, itís great news for Mark if Newt Gingrich runs. I mean--heís just going to be in heaven.
MARK SHIELDS: Iím keeping my fingers crossed, Paul.
PAUL GIGOT: You were urging him to run, I remember, in Ď96, and you just canít resist urging him to do that again in 2000. The Republicans have a low profile because--in part because their leader, when he stands up in Congress, half of the country turns off the set, figuratively speaking. They just donít like looking at him, so theyíre not going to listen to what he says, and thatís Newt Gingrich, and thatís a fact of life. Itís unfortunate, but itís a fact of life. Some of the other people who do speak up, theyíre not as well known, but I think in part this has become a much more traditional Congress, that is, with--the first two years power was centered in the speakership. You had a unique point in time in American political history where power in Congress was driven by one man through the speakership, with power filtering away from him, itís gone to the committee chairman, itís gone to the Ways & Means chairman, Commerce Committee chairman, people that the country doesnít really know anything about. So the President gets to dominate much more the political debate because thereís nobody going head to head with him. And itís very hard to lead a political debate because nobody has that same--from Congress--because nobody has that same bully pulpit.
MARGARET WARNER: All right. Thanks, Paul. Iím going to have to stop leading this. Thank you both very much, and Happy New Year!
MARK SHIELDS: Happy New Year!