I. Inaugural DiscontentsOn January 20, 1937 - the last time a Democratic president was sworn in for a second full term -- the nation's attention was focused not only on Franklin Roosevelt taking the oath in Washington, but also on a band of autoworkers in Flint, Michigan, who had brought America's biggest corporation to a shuddering halt. As Roosevelt boomed out his inaugural address, telling the nation that its mission was not yet accomplished, that one-third of its people were still "ill-housed, ill-clad and ill-nourished," the unionists of Flint were entering the third week of a sit-in strike that had closed down General Motors. By all presidential precedents, Roosevelt should already have sent in the Army to break the strike. But the winter of '37 was no time for precedents.Roosevelt had just won the most smashing victory in American electoral history, having concluded his campaign with a ringing declaration that he welcomed hatred of "the forces of selfishness and lust for power." The president was not describing some abstract enemy -- as far as he was concerned, that description certainly fit the Du Pont family, who had funded ferocious anti-Roosevelt diatribes throughout 1936, and who also controlled General Motors. The funding and the foot soldiers for his own campaign, by contrast, had come heavily from John L. Lewis' new CIO, whose fledgling autoworker affiliate was now sitting in at Flint in a desperate attempt to make G.M. grant its workers the right to vote on a union. And so Roosevelt let the strike continue until, three weeks after his inaugural, G.M. caved in to the union's demands. In the winter of Roosevelt's second inaugural, a new America was being born -- the first nation in history to have a middle-class majority.Bill Clinton is the first Democratic president since Roosevelt to embark on a second term after winning re-election. But there the parallels end, or at least become less interesting than the differences. The sense of rising working- and middle-class empowerment that Roosevelt uncorked is largely absent from Bill Clinton's America. The social solidarity of the New Deal order is crumbling, an erosion greatly hastened by last year's repeal of the welfare provisions in the 1935 Social Security Act. The middle-class majority is hollowing out -- some of its members growing richer, many growing poorer. Nowhere is a great corporation being compelled to treat its workers more decently. And the political pressure on the president certainly isn't coming from the left. Had Roosevelt been elected in 1992 rather than 1932, he would not have been able -- nor perhaps inclined -- to erect vast new government programs. He would not, as we've come to understand the name, be Roosevelt.So is Clinton simply a victim of a more conservative time, a Roosevelt manque born 60 years too late? Not quite. It is impossible to imagine Clinton telling the nation, as Roosevelt did, that he welcomes hatred of any kind, let alone the hatred of the most powerful elements in American society. Even in the midst of his one major campaign to extend Roosevelt's legacy -- his effort to enact universal health insurance -- Clinton never went after the hospital and business lobbies that were distorting and vilifying his program at every turn. A pit bull when he campaigns against rival politicos, Clinton turns into a pussycat when major economic powers threaten his program. He will not -- perhaps cannot -- go after them; the essential Clinton always believes there must be some way to win them over. Partly in consequence, Clinton has turned into the most pro-business Democratic president since Grover Cleveland -- at a time when the interests of globalized American corporations have largely decoupled themselves from the interests of American wage earners.It's a far cry not just from the Roosevelt of '37, but from the Clinton of '93. After 12 years of Reagan and Bush, Clinton came to power promising a progressive renaissance. While he positioned himself to the right of neoliberals like Michael Dukakis and Paul Tsongas on issues of crime and lifestyles, he was well to their left on the role of the state in the economy. The economic premises of Reaganism were all wrong, he argued during the '92 campaign. There was much to emulate in the more worker-friendly economies of Western European nations, he said. His advisers included prominent progressive theorists like Robert Reich, progressive strategists like James Carville, progressive apparatchiks like George Stephanopoulos. He was certainly no Jimmy Carter, who arrived in Washington bereft of liberal confidants or liberal ideas.And yet, on the brink of his second term, Bill Clinton has not only moved to Carter's right, but slashed whole portions of the safety net that even Reagan felt compelled to leave untouched. The progressive theorists, strategists and apparatchiks have, virtually to a person, fled -- or been pushed from -- the administration. Clinton vows to govern from the center now, preserving some popular government programs but subjecting all government activism to the straitjacket of a balanced budget. The American president who, more than any president of the past half-century, has a profound understanding of progressive social alternatives -- who in the '92 campaign actually discoursed unprompted on Swedish full-employment policies -- is presiding over a national lurch rightward.Blame the times. Blame Clinton, that he understands the times so well. Blame Clinton, that he lets the times go unchallenged.II. Balancing ActClinton avers he will govern from the center, but that only raises the question of which center. There's the balanced-budget center, which has demonstrable popular support. There's the preserve-universal-entitlements center, for which every poll shows majority backing. And there's the slash-universal-entitlements center, and the expand-NAFTA-to-all-the-Western-Hemisphere center -- centers that don't have much mass support, positions for which you'd never have heard an encouraging word during campaign '96.Nevertheless, the reduction of entitlements and the expansion of free trade have emerged from the Stalemate of '96 at or near the top of the governing center's to-do list for the next four years. The election assured that we'll see no more either of the progressive Clinton of 1993-94 or the rabid Gingrich of 1995. In their stead, we have the center -- but the center as defined by K Street and Wall Street, not Main Street. '96 was a bad year and a bad election for the the small-business lobbies seeking the repeal of every regulation back to child-labor laws; they rose and fell on the Gingrich tide. But elite business, large corporate business, awoke the morning after the election to find a world wholly to its liking: a government with no branch under liberal control and inclined to bipartisan support of business' otherwise not hugely popular agenda. Indeed, in the first week after the election, the quintessential K Street idea was that Bill Clinton should ask Bob Dole to head a bipartisan entitlement-review commission. Crude populists might point out that Clinton had just carried 31 states insisting that he had fought to save Medicare while Dole could not be trusted to, but a true Beltway Bipartisan cannot be deterred by a mere election outcome.That the Dole idea could even be floated reveals just how contradictory were the themes on which Clinton campaigned. On the one hand, Clinton was the stout defender of Medicare, Medicaid, education and the environment ("M2E2," as it was known around the White House) against the cutback-crazed Gingrichites. On the other hand, Clinton had signed on to achieving a balanced budget within seven years -- a neat-sounding formulation wholly at odds with his commitment to defend M2E2. As the new session of Congress convenes, Hill Democrats are concerned that Clinton, compelled to choose between the themes, will want his legacy to be "a balanced budget uber alles," in the words of one senior congressional staffer.While the president isn't giving Dole the entitlement franchise, he has certainly taken up with strange bedfellows. "Look who he's having his first meeting with on balancing the budget," the staffer lamented. "Not Tom Daschle [the Senate Democratic leader], not Dick Gephardt [the House Democratic leader]. He's meeting with Bill Archer" -- the far-right Republican chairman of the House Ways and Means Committee. The congressional progressives' fears are only compounded by the flight of progressives from the executive branch. "A lot of Democrats are concerned," says West L.A. Congressman Henry Waxman, a leader of congressional liberals, "that the president may not get a fully balanced perspective before he makes his decisions."That would be fine with the folks at the Democratic Leadership Council (DLC), the center-right group that is openly calling for Clinton to form a governing bloc with congressional Republicans, leaving Democratic liberals out in the cold. Last month, the DLCniks did their bit in the crusade to undermine entitlements by trotting out one of the more biased polls in recent memory. The public absolutely wanted to remake Social Security, they asserted, and they had the poll numbers to back it up. "Do you think it would be better to stay within the existing system -- for example, raise payroll taxes and cut benefits -- or would it be better to move toward more structural changes to Social Security like letting people control portions of their own retirement savings?" pollster Mark Penn asked respondents last November. Not surprisingly, by a 67 percent to 25 percent margin, they preferred controlling their resources to paying out more and getting less back -- a mandate, the DLC insisted, for dismantling the current system. (A Wall Street Journal poll from December asked the same question straight, and found that the public, by a 52 percent to 30 percent margin, preferred "protecting" Social Security to "reforming" it.)Under the guise of concern that the aging of the boomers will drain the Social Security trust fund around the year 2030, Wall Street is pushing for a partial privatization of Social Security -- slashing seniors' guaranteed benefits and mandating that everyone individually invest in the market. (The brokers' commissions for handling a trillion dollars or so in new investment would be tidy.) In fact, Social Security could be made solvent in any number of ways that don't subject the security of millions of Americans to their ability, or luck, at picking winners in the market. Contributions could be increased slightly. The government itself could have a portion of the trust fund invested in a broad array of stocks (which raises all kinds of questions on social policy, though: Would the government invest in tobacco companies?).As his second term begins, Clinton is already under pressure from the financial community and its allies in both parties to move toward policies like privatizing Social Security. With the gap between elite and mass opinion so great on this issue, though, it is surely the better part of valor for Clinton to punt this one to the next administration. In three other areas, though, Clinton's more likely to acquiesce:* By agreeing to a reduction in the consumer price index, Clinton can reduce the deficit without actually having to make any cuts -- though the consequence of a lower CPI would be smaller Social Security checks and cost-of-living adjustments for workers.* Though popular support for such a move cannot be found, Clinton is considering extending NAFTA first to Chile and then to the rest of Latin America, and permanently extending Most Favored Nation status to China. And the administration has no serious plan to make our trading partners raise their labor standards; its commitment to a free-trade ideology undermines any such notion.* A balanced-budget deal seems in the offing, despite the apprehensions of congressional Democrats that their concerns for the very M2E2 programs Clinton repeatedly defended will be ignored. "Many of us worry that [Clinton] may feel he has to satisfy the Republican majority and forget about the fact that he's also the leader of the Democratic Party," says Waxman. "I hope we can have an agreement that he will at least get a majority of Democrats on the major bills he supports." But in an interview with the Los Angeles Times' Ron Brownstein in late December, Clinton was asked if he would "support a budget only if it attracts a minimum percentage of Democratic support." On this, our transpartisan president was uncharacteristically succinct: "No," he told Brownstein.Clinton's stunning, if controversial, success as a fund-raiser limits his ability to distance himself from business's agenda. No other Democratic president has so cultivated business support. In his first term, membership in the Democratic Business Council -- which requires a corporate donation of $15,000 or an individual donation of $10,000 -- rose from 200 to 1,900. And according to Common Cause, business donations to the party, which exceeded those from unions by a 4-1 margin in 1991-92, rose to the point where they exceeded labor contributions by a 9-1 margin in 1995-96. That level of support buys a lot more than overnights in the Lincoln bedroom.III. The Fleeting ProgressiveFor all that, there will be occasional sightings of the Compassionate Clinton during his second term. Having failed to achieve universal health coverage in one swoop, he's interested in getting it piecemeal -- the biggest piece being "Kiddie-Care," which would extend coverage to 10 million uninsured children. There is certainly political space for mandating better coverage from HMOs. Creating tax credits for college tuition would be a major and enactable achievement. Campaign-finance reform has widespread Democratic support but very little on the other side of the aisle.But the Compassionate Clinton quickly runs up against Budget-Balancing Bill. Funding Kiddie-Care without levying new taxes while producing a balanced budget will be extremely tricky. Fiscal constraints will also limit the scope of tuition tax credits. In his first term, many of the programs that Clinton touted were so constricted by tight budgets that they were largely symbolic. Family and Medical Leave let Americans take off up to 12 weeks to be with an ailing family member -- but a government survey found that, since the leave is unpaid, 64 percent of potential recipients said they couldn't afford it. The Americorps Program, which let students pay off student loans with public-service work, could enroll only 25,000 students per year. Early in Clinton's first term, one critic termed it a "pilot-program presidency." In the second term, in order to come up with a balanced budget, even pilot programs may be difficult to fund.With higher taxes nowhere on the agenda, the one way out of this conundrum would be to go after the defense budget. Currently, we spend $254 billion a year on the military, on the premise that we need to be able to fight two simultaneous wars against the rogue states, as the Pentagon calls them - North Korea, Cuba, Syria, Libya, Iran, Iraq. The total annual military budget of all six of these nations, though, is just $15 billion. Even more bizarrely, we spend $80 billion a year defending Western Europe, in the event that the Russian army, if it can ever subdue the Chechnyans, decides to take on NATO. While the story of America's cities, roads and schools is one of needs without resources, the story of America's military is one of abundance without mission.Still, some Democrats to Clinton's left fear that the support isn't there for cutting back the Pentagon -- more specifically, that one word from Colin Powell would doom any such proposal. Resigned to working within the excruciating budget restrictions, many congressional liberals are planning to focus instead on off-budget issues of economic inequality. In the Senate, Ted Kennedy may revive the notion of linking corporate taxes to corporate treatment of employees. In the House, Dick Gephardt is talking about requiring federal contractors to provide pension and health benefits (something of a national equivalent of the municipal living-wage campaigns). It's not likely that such proposals will be enacted in a Republican-controlled Congress, but they serve at least to define the Democrats on the central issue of rising economic inequality - an issue the White House prefers to sidestep.For the most part, though, congressional liberals are planning to spend the next two years, at least, fighting defensive battles. Though Dick Morris may be banished from the Oval Office, Morrisism is alive and well within the administration. Clinton II is shaping up much as Morris wished it - as a welter of small, symbolic programs within the constraints of a Republican-backed budget. Clearly, Clinton believes that by charting this course, he has created a "vital center" that will dominate American politics for some time to come. Clearly, congressional liberals believe that the vital center, thus defined, fails to address the issue of stagnating living standards in a globalized economy.This is the conflict that will dominate the Democratic Party during Clinton's second term. The key moment will come if Clinton cuts a deal with Republicans and center-right Democrats on a budget that liberals cannot accept. At an analogous moment in the 1990 budget deliberations, when George Bush had struck a deal with congressional Democrats and Republican moderates, the most right-wing and junior member of the GOP legislative leadership stalked out, called the deal a sell-out of party principles, and thus provided the rallying point for a new, more ideologically driven insurgent Republicanism. That member was Newt Gingrich. The question for liberals is whether one of their leaders is willing to take that kind of stand today - and whether that will provide liberalism with the impetus that Gingrich's gambit gave to conservatism.IV. The Gang of FourSometime before June, Britain will hold a national election, which Labor Party leader Tony Blair is universally expected to win. If Blair does prevail, there will be a peculiar harmonic convergence among the leaders of the major nations of the industrialized West. Bill Clinton, Blair, German Chancellor Helmut Kohl and French President Jacques Chirac each pretty much defines his mission as scaling back the welfare state that emerged in his nation in the decades after World War II, but in a less brutal manner than a Reagan or Thatcher might have done it. In continental Europe, the job security and generous state benefits that evolved over the past 50 years are being ratcheted down; in Britain and the USA, economies that were less generous and equitable than those of continental Europe to begin with are becoming a less generous and equitable still. Everywhere, the pressure of mobile capital is eroding the sense of economic security that historians may one day regard as the great short-lived creation of the mid-20th century. For Clinton, Kohl, Chirac and now Blair, should he make it to 10 Downing Street, the role of leadership has become retrenchment with a human face.There are, of course, alternative courses they can pursue -- Clinton most especially. The American people are not clamoring to have the wage standards for the world be those of Chinese prisoners or Pakistani children. The United States is far and away the largest single market on the planet, and access to this market could be conditioned on standards of decency that would be a major force for leveling upward throughout the Third World (and increasingly, the First). Closer to home, the administration could reduce a major downward pressure on low-end wages in the United States by stabilizing the economy of Mexico. Forgiving the Mexican debt could considerably alleviate Mexico's chronic poverty -- all the more if it is conditioned on a genuine democratization of what remains a brutal one-party oligarchy. And here at home, polling makes clear that there would be abundant popular support for using the tax code to reward corporations that treat workers decently and penalize those that treat them shabbily. The case for reviving employees' rights to join a union is more controversial with the public, and an absolute non-starter with the Republican Congress, but the failure to make this case makes any prospect for rebuilding a middle-class majority even more remote.If he chose to, Clinton could also talk sense to the American people on the subject of balanced budgets. In his '92 campaign, he advocated dividing the budget into two - one budget for current expenditures, the other for capital investments - and explained that just as it was vital to keep the first in balance, it was equally vital to make investments that paid off over time with the other budget. He could now make clear that subjecting all our needs to the strictures of a single balanced budget only means that our needs will not be met - and that in times of economic downturn, they could well become catastrophically unmet.On a distinct but related front, Clinton could further make clear that the proposed balanced-budget amendment to the Constitution, which Congress is expected to vote on next month (and which may yet be beatable in the House), would hurl the nation 70 years backward to pre-New Deal - that is, meager and hugely imbalanced - levels of prosperity. Derailing this amendment - whose enactment would make the abolition of welfare and even the privatization of Social Security seem a picnic in the park by comparison - is the single most urgent task confronting the president.Politically, of course, the re-education of the American people on the subject of a balanced budget is a thankless, goddamn risky task. A number of these other proposals, though, are considerably less perilous. None of them, however, is likely to surface from the second Clinton administration. America will reach the millennium with a leader who clings to the center, who is funded by business, and who grows steadily more deaf to the echoes of those workers at Flint who once joined Franklin Roosevelt in building a thriving and generous nation.