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Clinton's economic education began in earnest in late 1991. Facing an electorate immune to campaign promises, Clinton added heft to his diagnosis of the nation's ills with a 15-page paper titled "A Plan for America's Future." With its emphasis on a tax-rate cut for the middle class, the plan served Clinton well in New Hampshire and for most of the remaining primaries. But by late spring Clinton was pretending he had never seriously proposed the tax cut, and he knew the plan could not survive the close scrutiny it was beginning to receive. It had accurately signaled Clinton's priorities -- which remain basically intact -- but there was little supporting data. Experts like Representative Leon Panetta and Alice Rivlin (whom Clinton has tapped for the two top slots at his budget office) derided the plan as unsound, and Ross Perot ridiculed Clinton for a "a bunch of junk numbers that don't compute." Perot's criticism dovetailed perfectly with Republican claims that Clinton was a tax-and-spend liberal, and the Democrat's standing in the polls sank precipitously.
Sent back to the drawing boards in June with orders to "firm up the math," Clinton's team quickly produced Putting People First (or PPF, as it is called), a 232-page paperback chock-full of numbers, all of which Clinton swore "added up." At its bottom line, the proposal promised to halve the nation's deficit by 1996, an assessment many considered sober and even courageous because it backed off Clinton's earlier intention to wipe out the red ink entirely by the end of his first term. But even this modified deficit- reduction promise owed little to Clinton's programs. Almost all of the decrease was due to what Clinton's economists call "natural effects," in this case growth assumptions generated by the Congressional Budget Office and estimates of when the government's savings and loan bailout operation would be completed. Nevertheless, the prospective halving of the deficit was well received by an electorate starved for a plan -- any plan -- that seemed to signal tough action.
The trouble began almost immediately; the "natural effects" started changing shortly after the new plan surfaced. By August the anemic economy and spiraling health-care costs caused the CBO to increase its estimate of the 1996 deficit by $100 billion, a profound change that both the Clinton and Bush campaigns conveniently ignored. "To accommodate the CBO's new predictions would have made it look like we were caving in to Perot's view of the world," says a Clinton adviser. "Also, redoing PPF would have told the constituencies we needed to win that we'd be hard pressed to fund the programs that were attracting them to us. Shutting up was smart politically, and it worked because it was in Bush's interest too. For Bush to scream about our numbers would have forced him to admit that his were wrong also, and that the recovery he kept saying was just around the corner wasn't."
Campaign staff members could not take into account another part of the "natural effects" problem until after the election. Congress adjourned without appropriating further funds to cover lost deposits in the failed S&Ls; the effect of that inaction was not known precisely until mid-November. Now, says Clinton, there is "a need for more money to pay depositors and therefore less debt relief than I was counting on."