War of ideas returns to Capitol

Debate about public policy has made a sudden return to Washington - and with it has come another ambitious attempt by President Clinton to claim the center of American political life for himself.

The lengthy list of initiatives in the president's State of the Union address Tuesday evening seems almost as much a statement of principles as an outline for actual legislation. From its sweeping Social Security plan to education and antitobacco initiatives, Mr. Clinton's gambits may represent nothing less than an attempt to frame the important policy debates of 1999, while preempting Republican calls for an across-the-board national tax cut.

Much of the administration's new agenda will never become the law of the land, at least in its present form. That's often the case with issues launched during the State of the Union. Whatever happened to the campaign-finance reform Clinton called for in last year's speech?

But the outline is useful in identifying broad priorities. With its focus on Social Security, Medicare, and other needs of the aging, this year's speech showed that the White House may believe the most important argument to come may be about how to use today's prosperity to best protect tomorrow's elderly population.

"How we fare as a nation far into the 21st century depends on what we do today," said the president.

How Clinton fares soon in the 20th century also depends on how voters react to his proposals. His high poll ratings remain one of his best defenses against impeachment. Most Americans say they want Washington to focus on substance, not the president's alleged crimes.

Republicans are aware of this fact, and thus went out of their way after the speech to stress that the impeachment process would not keep them from proceeding to issues of public policy. "Our lives will be filled with practical matters, not constitutional ones," said Rep. Jennifer Dunn (R) of Washington, in the GOP response to the State of the Union.

Social Security seems the practical matter most likely to consume Washington's time in coming months. The president's proposal contains both challenges and concessions to the GOP point of view about what needs to be done to rescue the mammoth program.

The challenge comes from Clinton's plan to devote 62 percent of prospective federal surpluses - some $2.7 trillion over 17 years - to bolstering Social Security's financial reserves.

Fencing off such a large sum, in conjunction with other moves such as an increase in defense spending, might leave too little cash for the top GOP priority: a 10 percent tax cut for every American.

The concession comes from the fact that Clinton would for the first time introduce Social Security to Wall Street - a longstanding Republican desire.

A portion of the new reserve would be invested in stocks, under Clinton's plan. And, in a major break from previous White House positions, Clinton would create a new type of individual savings program that would supplement regular Social Security coverage.

The government would provide every taxpayer a certain sum of cash to begin these accounts, up to a total of about $500 billion in money from the coming surpluses. Then Uncle Sam would match contributions, up to a point, each year.

Center ground

Here's where Clinton is once again trying to occupy the center, while pushing the GOP to the right. His plan would mean Social Security privatization, of a sort - something the GOP has long said it wants. But it preserves the basic structure of Social Security, which promises a defined benefit in the future - a long-held liberal position.

Congressional Republicans don't like the fact that a government board would direct the Social Security stock market investment. That would mean bureaucrats directing an investment equal to 4 percent of the total amount of money now in US equities, according to the GOP.

But Wall Street itself would be delighted to see such an influx of funds. Market managers envision billions of new dollars flooding into the markets, sustaining what has already been a record run of prosperity.

"This would add fuel to the already hot fire," says Lisa Cullen, an investment strategist at Merrill Lynch & Co. "Just the talk of it would be bullish."

Trade and tobacco

Another idea that might find a more receptive audience among Republicans than Democrats is Clinton's proposal for a new set of trade talks, to be called the "millennium round."

The talks would try to lower further world barriers to trade in such areas as agriculture, services, and intellectual property.

Clinton will receive support for this move from the business community, which would like to open up new markets for its products. But labor unions are less enthusiastic because they still believe their members lost jobs as a result of the North American Free Trade Agreement.

"For any new round to be credible depends on strong support from [the GOP-led] Congress," says Robert Hormats, vice chairman of Goldman Sachs, International in New York.

The GOP may not find common ground with Clinton on his antitobacco proposals, however. Clinton will seek an increase of 55 cents a pack in the federal tax on cigarettes. A similar proposal last year failed when the tobacco bill was killed in the Senate.

The president also announced plans to sue tobacco firms to recover government money spent on treating tobacco-related illnesses. Experts say this move is something of a surprise. There have been federally mandated health warnings on cigarette packs since the 1960s so it's hard for the government to argue it did not know tobacco was bad.

"Clinton's announcement is a nice political ploy, but it doesn't make any sense," says Richard McGowan, an economics professor at Boston College and author of a book on cigarettes.

Education president?

Other items on Clinton's new agenda include billions for new child-care programs, and a $1 increase in the hourly minimum wage. Education, however, might be judged a last big attempt by Clinton to command the nation's attention.

Clinton proposes using federal education dollars to reward school districts that adopt a package of reforms, including ending the practice of letting students pass to the next grade before meeting the requirements of the last. In addition, districts must publish report cards on every school, shut down or improve their worst schools, and require new teachers to pass performance exams.

Many states are already taking such actions: 19 states now require tests for student promotion or graduation; 18 states mandate report cards on every school, and 24 states have policies to intervene in low-performing schools.

Contributing to this report were Monitor staffers Francine Kiefer in Washington, Ron Scherer in New York, and Gail Russell Chaddock in Houston.