I - Obviously, in 1972 there was Nixon's CREEP - The Committee to Re-Elect the President:
Revelation of Watergate scandals begins (1972): on June 17, police arrested 4 men breaking into the Democratic National Committee's office in the Watergate apartment-business complex. The men were planting bugs in the phones and taking photographs of Democratic files. One of the men was James W. McCord, a former CIA committee who was security coordinator of CREEP. The other 3 were anti-Castro Cubans from Miami who worked for the CIA. Two other men were part of the break-in but weren't captured; E. Howard Hunt, an ex-CIA member turned CREEP security chief and G. Gordon Liddy, an ex-FBI member and a member of the White House Staff.
John Mitchell resigns as chairman of CREEP (Committee to Reelect the President) (1972): after the arrest of the Watergate burglars and the Democrats filing of a suit against CREEP, Mitchell resigns, denouncing the suit and saying that CREEP had nothing to do with the break-in. Meanwhile, Nixon was secretly giving CREEP $460,000 in "hush money" to cover Watergate up.
Vice President Agnew forced to resign; Gerald Ford takes over as VP (1973): pleading no-contest to charges of income-tax invasion and accepting bribes, VP Agnew was forced to resign. Under the provisions of the 25th Amendment, Nixon nominated Gerald Ford, the popular conservative House minority leader to replace Agnew.
Existence of White House tapes revealed (1973): during the trial of the Watergate burglars and the White House aides, it was exposed that the President had directed a cover-up, and one aid confessed that Nixon had a taping system installed in his White House office and that his conversations about Watergate were recorded.
Saturday Night Massacre (1973): after Nixon appoints Elliot Richardson to the post of Attorney General, Richardson appoints Harvard law professor Archibald Cox to the new position of Watergate prosecutor. Cox, with Richardson's support, court orders the White House to hand over the tapes of Nixon's conversations. Nixon forces Richardson to resign and orders the next-ranking official to dismiss Cox. The public outcry made Nixon appoint a new special prosecutor, Leon Jaworski, who took Nixon to court over the tapes.
II - Short term economic manipulation
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Electoral-economic cycles: 1972 and 2004, deja vu all over again
A long time ago I wrote a book Political Control of the Economy (Princeton University Press 1978), which sought to show the links between elections and economics (the political business cycle, political parties and macroeconomic policy, support for incumbents and economic performance). The chapter on the electoral-economic cycle featured detailed evidence about the 1972 stimulation of the economy for the re-election campaign of Richard Nixon. I was wondering when someone might comment on the run-up to 2004, where both monetary and fiscal policy are extremely stimulative. Here's a start from the Boston Globe:
. .
THIS BUSINESS CYCLE COULD GET VICIOUS By Robert Kuttner, 1/7/2004
IN 1975, POLITICAL scientist Edward Tufte and economist William Nordhaus put forth a theory of the political business cycle. Usually, ''business cycle'' refers to the normal ups and downs of the economy. Their insight was that the business cycle is influenced by politics.
These scholars documented that incumbent presidents often used their influence with Congress and the Federal Reserve to artificially pump up the economy for their reelections and dealt with the resulting damage once they were safely returned to office. Richard Nixon's 1972 landslide nicely fit the pattern. So did Lyndon Johnson's ''guns and butter'' economic program of 1967-68 (except that the Democrats were undone by the Vietnam War).
The theory later fell into disfavor. Neither Jimmy Carter (defeated in 1980) nor George H.W. Bush (defeated in 1992) could manipulate the economy well enough to save their jobs. Carter fell to stagflation and Bush I to recession and a jobless recovery.
But the political business cycle is back with a vengeance, and this time the morning after will be a corker. The only question is whether the damage will be visible before or after Election Day.
President Bush has unleashed the most massive fiscal stimulus program since World War II, with immense deficits that only grow after 2004 as the biggest tax cuts for the wealthiest kick in. He has timed the relatively meager breaks for the middle class for this (election) year.
Meanwhile, Fed chairman Alan Greenspan (up for reappointment in June) is doing his part to fuel the election-year boom. Despite his own misgivings about immense deficits -- he was far from shy about this during the 1990s -- Greenspan has loyally kept mostly silent when it comes to Bush's deficits. More important, Greenspan is pumping up the recovery with low interest rates notwithstanding his earlier concerns about the danger of economic bubbles.
Thanks to this short-term hyperstimulation, Bush might well have his election year recovery. For now, corporate profits are up, the stock market is booming, and there is even a trickle of job growth.
But there is not a reputable economist -- left, right, or center -- who thinks this act can continue beyond a year or two. Bush's own treasury secretary, John Snow, and his chief economist, Greg Mankiw, both warned about this danger in their previous lives.
As the deficits spin out of control, interest rates will rise. If Bush is reelected, the deficits would also be used as justification for a round of cuts in social outlays that would make Bush's program cuts to date look like mere tinkering.
Meanwhile, serious social challenges like the retirement of the baby boomers and the spiraling of health care costs would be shifted from society back to the individual through proposed privatization of Social Security and health plans that made the subscriber pay ever more of the costs out of pocket (or go without). The larger fiscal and economic mess would be left for Bush's successor after Bush was safely in his presidential library.
Not only has Bush taken short-term political manipulation of the economy, in Tufte's sense, to new and cynical extremes; he has invented a wholly new kind of political business cycle in the form of programs and policies that look impressive only in the short run and turn out to be disasters later on.
Exhibit A is the recently enacted Medicare drug benefit program. Consumers won't experience the fraud firsthand this year since the program doesn't become available until 2006. Nice touch, that. As the law is written, less than half of actual drug costs for most participants will be covered. And seniors will get only one chance to decide whether to opt for the (inadequate) Medicare program or to stay with (increasingly unregulated) private drug insurance coverage that could deteriorate over time.
No Child Left Behind, Bush's big education program, is even worse. It creates perverse incentives for districts to dumb down tests and ''lose'' dropouts in order to make schools look better. It adds impossible mandates that states and districts have to finance locally. By 2005 the program is likely to collapse of its own weight, but in 2004 Bush is parading as an education president.
Iraq fits the pattern. We have Saddam's head on a platter this year -- and the likelihood of greater regional instability, nuclear proliferation, and anti-Americanism afterwards.
Some of Bush's time bombs may be delayed until after the election. Some could explode prematurely before the election. But all of them could, and should, backfire on Bush now -- if voters are paying attention.
Robert Kuttner's is co-editor of The American Prospect. His column appears regularly in the Globe.
http://www.boston.com/dailyglobe2/007/oped/This_business_cycle_could_get_viciousP.shtmlThis story ran on page A15 of the Boston Globe on 1/7/2004. © Copyright 2003 Globe Newspaper Company.
-- Edward Tufte, January 11, 2004
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