Heading for a Fall

WASHINGTON — That screeching sound in the nation’s capital of “fast track” breaking up involves more than the apparent demise of an unpopular mechanism for making tricky trade law.

The fast-track proposal withdrawn late last Sunday night by President Bill Clinton and House Speaker Newt Gingrich (R-Ga.) would have required Congress to accept or reject trade legislation without any amendments or modifications. But their reason for withdrawing it--near-certain defeat in a House of Representatives that has become aroused over U.S. trade policy--is what’s significant.

It could signal larger change: of voter opinion starting to matter again, of fabulous globalization profits for the few becoming a snarl to the many, of corporate jets starting to hit bumps on Washington runways and perhaps even of the shrinking or popping of Wall Street’s 15-year stock-market bubble.

It could even signal a new politics: Instead of fast track, maybe we’ll see “fair track.” Fast track itself--what inadvertent name has ever been more apt?--is not just an unpopular trade procedure, condemned in national polls by majorities of Democrats, Republicans and independents alike. It’s also a metaphor for what the Washington of both major parties has become in the last 15 years: a greedy metropolis of fast-tracking, influence-peddling elites.

Metropolitan Washington, for example, has seven of the nation’s top 20 per-capita income counties, fueled by the earnings of 60,000 lawyers and some 90,000 persons who lobby or support lobbying activities. Ninety percent of these people represent the corporate and financial top 1% of the country: the honchos of fast-track America, the check-writing Daddy Warbucks of national politics and government influence. After all, nobody gets to eat in three-star French restaurants by representing $52,000-a-year two-earner families in San Bernardino who get up at 4:30 a.m. to drop their kids off at day care.

What’s at stake here is as clear as a champagne bubble. Twenty years of fast-track trade negotiations and procedures have helped to make economic globalization a gold mine for upper America. Multinational corporate profits and stock-market valuations are up 800%-1,200%. For lower America, by contrast, globalization has been a comparative salt mine. The U.S. work forces of many of these same companies have declined by 40%-60%. Inflation-adjusted non-supervisory wages have actually shrunk.

Fast track has helped to manage the globalization process so that many of America’s biggest employers now have more workers in Sonora or Sichuan than in Saginaw or Sioux City. Horror stories abound. One U.S. giant, AT&T;, is even under fire from shareholders to adopt an anti-slave-labor policy for its operations in China; and California recently was the first state to adopt a ban on the purchase of slave-made goods from overseas.

In the days leading up to fast track’s collapse, the big jokes in Washington, ironically, were about union members camping outside congressional offices. You know: goons in bowling jackets with cheap cigars and 18-inch necks. Maybe it would be just as funny to joke about picking up some tiny, new cellular telephone and hearing a faint echo of H-E-L-P in Morse code.

But back to the point about a broader Washington “fast track” of political arrogance and undemocratic procedures skewing policy far beyond trade. This has also been vivid in post-1980 tax changes, with Social Security taxes on average families ballooning while income-tax rates drop most steeply in top brackets. Medicare cuts in the 1997 federal budget deal, in turn, helped make possible capital-gains tax cuts for investors. Free-market crises that might sting Wall Street--bank insolvencies, peso swan dives or Third World financial distempers--have been speedily resolved with doses of socialism (sorry, federal assistance) unavailable to textile workers or mom-and-pop grocery stores.

Priorities like these aren’t coincidental. They’ve been part of the ladder the Dow Jones industrial average has climbed up, from 776 in 1982 to 8,250 at the recent August peak. There is a striking overlap, moreover, between the most important owners of America profiled in the Fortune 500, the Forbes 400 and similar lists and the big contributors and soft-dollar donors to national politics cited in the reports of the Federal Election Commission and the Center for Public Integrity. Certainly, the last two decades have been years in which federal policy has sprinted in their direction.

Putting statistics around this interaction has to be subjective. Serious Wall Street analysts, however, have pointed out how the Dow Jones has roughly doubled since the GOP took over Congress in the 1994 elections. Supporters of Clinton, who has probably had a quarter of the Forbes 400 in for coffee and checks, boast that the Dow has gone from roughly 3,500 to 8,000 under his policy aegis.

They’re both right. It’s been the bipartisan collusion of the big-contributor Democrats in the White House and the big-contributor Republicans on Capitol Hill, along with some help from the former Wall Street consultant and money manager who runs the Federal Reserve.

Which brings us to the $64-trillion question: 1) Is the current stock market a global politico-financial bubble? and 2) Do the events of Oct. 27 (the 554-point Dow tumble) and Nov. 9 (the collapse of fast track) suggest, as they say in the great opera of politics, that the fat lady is about to sing?

Probably, but time will tell. What’s undebatable is that if the financial economy is indeed headed into some celestial meat grinder, there will be lots of political impact--mega-impact, in fact.

Among the juiciest data compiled by market mavens are those detailing how the big stock-market tumbles of the 20th century, ranging from 35% to 89%, were followed by long periods (seven to 26 years) during which the Dow remained below the previous high. These big market slides, in turn, tend to correlate not just with party turnover in the White House but with the last three major watersheds of national politics: the 1890s, early 1930s and late 1960s-’70s.

Today’s politics, of course, doesn’t yet confirm a national watershed, save, perhaps, one of apathy and disillusionment. But it confirms the need for such a watershed, and there are a few signals that may be worth watching.

On the Democratic side, we have the almost unprecedented rivalry between the Democratic president and the Democratic leader of the House, Rep. Richard A. Gephardt (D-Mo.). On fast track or just about anything else, Gephardt represents Old Democratic, or little-guy economic policy, and Clinton represents New Democratic, or big-contributor, high-roller interests.

Should Gephardt, rather than Clinton, represent the coming wave, which is possible if the great 15-year Dow Jones bubble is close to popping, then it could be something to take seriously. Clinton’s low-budget centrism--education tax credits and such--hasn’t done his party much good. Neither has his cod-liver-oil budget policy. The big victories of the last five years have come from fiercer stuff: the economic populism of 1992, lambasting the GOP in 1995-96 for using Medicare cuts to pay for upper-bracket tax breaks and last week’s fast-track scuttling in the House. On issues like these, the GOP is vulnerable.

The fast-track combat symbolizes the Gephardt game. In polls, half of self-identified Republicans admit their party’s penchant to favor the rich over the middle class. Clinton’s 1997 compromises have left the Capitol Hill GOP little challenged philosophically, and thus well positioned. Gephardt, by contrast, wants to take off the gloves.

Gingrich, for example, is lucky that GOP House members never had to vote on fast track. One midsummer poll showed a stunning 73% of grass-roots Republicans opposed, as GOP congressmen knew only too well. Worse still, Gingrich has a long record of overriding rank-and-file Republican-voter opinion on trade issues: the North American Free Trade Agreement in 1993, the General Agreement on Tariffs and Trade in 1994, the peso bailout in 1995 and now fast track. If the economy starts to slide in 1998, and especially if the stock-market bubble pops, the GOP’s rampant capitalism and corporate banner waving could become an albatross.

It’s too early to say this will happen. But it’s not too early to watch. “Fair track,” anyone?