TODAY'S INAUGURATION marks a peaceful transition of
power during a period of unprecedented prosperity for this nation.
There is a lesson in how we got to this point that incoming President George
W. Bush ought to heed.
Eight years ago, when Bill Clinton took the oath of office, he inherited
senior George Bush an economy in recession, with 7 percent unemployment
and sky-high budget deficits.
Had Mr. Clinton adhered to traditional Democratic theory -- inflationary
policies to help create jobs, more government spending, more federal debt --
we would face a deficit now the size of the Grand Canyon.
Instead, the new president broke the mold. He embraced policies that steered
Democratic Party away from its historical roots, toward a centrist economic position
that accepts certain aspects of conservative, market-driven Republican theory.
Along the way, he became a graduate student of the economy, absorbing lectures
given by Federal Reserve Chairman Alan Greenspan, a revered Republican economist,
and Treasury Secretary Robert Rubin, a successful Wall Street capitalist.
What emerged was an unconventional approach for a Democratic president
that led to higher taxes not to expand services but to slow the growing deficit;
budget cuts to help lower interest rates; and in recent years of surplus, a focus on paying
down the federal debt instead of embarking on spending sprees or giant tax cuts.
This strategy succeeded beyond Mr. Clinton's wildest dreams. As government
deficits began to shrink, fewer government bonds were required. That freed up
money on the financial markets for private-sector investments, especially in
technology that vastly improved business efficiencies.
This, in turn, set in motion a prolonged expansion that is only now starting
moderate. More than 20 million private-sector jobs were created.
Unemployment stands at 4 percent, near a 30-year low.
We're far better off, economically, than we were eight years ago.
Mr. Clinton took the advice of free-market thinkers and economic
conservatives. He positioned the country -- with major help from the Federal
Reserve -- to take full advantage of the new Internet Age. It wasn't a
Democratic policy he implemented, or a Republican agenda. He chose a
pragmatic route, which has come to be known as the Third Way.
The outgoing president turns over to George W. Bush an economy that is
vibrant, though showing signs of a necessary cooling. Recession isn't a
likelihood, according to most economists. That much-discussed "soft landing"
Mr. Greenspan is trying to produce could be bumpier than he wished, however.
Like Mr. Clinton, Mr. Bush enters the presidency with a set of political
pledges that may have to be jettisoned to keep the economy on track. In a
perfect world, President Bush could reward Republicans with a $1 trillion-plus
tax cut, as promised; cut government spending, as promised; and dismantle
much of what the Clinton administration has erected.
But that doesn't mesh with either the economic or political realities.
Mr. Clinton, President Bush is faced with a situation that doesn't lend itself to
an ideologically driven solution.
A sharply divided Congress will require Mr. Bush to abandon his hard-edged
campaign rhetoric on the economy if he wants to get results instead of
gridlock. And a slowing, but still-growing, economy calls for tender
presidential nurturing, rather than a shock treatment of massive tax cuts.
The Third Way succeeded for Mr. Clinton because it was based on what
worked, not on what party ideology demanded.
Presidents must be flexible. They must set aside party platforms. Keeping
economy humming so more jobs are created should be uppermost on Mr.
Bush's mind. Keeping the federal government in surplus for years to come is
what people want to see happen.
If that calls for unorthodox political steps or a quest for common ground
the opposition, Mr. Bush should seize the opportunity. The country's
well-being is what counts, not whether it's a Republican or Democratic idea.