Dr. Rivlin’s Diagnosis & Mr. Clinton’s Remedy

Reviving the American Dream: The Economy, the States and the Federal Government

by Alice M. Rivlin
The Brookings Institution, 196 pp., $15.95
Bill Clinton
Bill Clinton; drawing by David Levine


It really was “the economy, stupid” that elected Mr. Clinton to the presidency. He also emphasized a parallel and important theme: “change.” Its potential significance is suggested by the fact that even Mr. Bush, that apostle of domestic passivity, tried to represent himself as the candidate of “change.”

The content of “change” was never made clear by anyone. If it means anything at all—which is not to be taken for granted—it must presumably mean more than just making things better: increasing employment, restraining inflation, raising SAT scores. “Change” sounds more qualitative than that. There were occasional pseudo-clarifications, like the mention of “structural” change. But “structural” often appears to be a word used to communicate that one is talking about something deep, but doesn’t actually know what it is.

Alice Rivlin is much more concrete. In Reviving the American Dream she proposes a major change in the way government relates to the economy. She would like to reshuffle the specific responsibilities of the federal government and the state governments, with the states (and cities) taking over a considerably larger share of economic policy than they have ever done since the Great Depression of the 1930s. It is a standard conservative ploy to say that the states should do more because they are closer to the people, while at the same time failing to suggest where the states are to get the financial and intellectual wherewithal to carry out their greater responsibilities. That is not an oversight: the conservative goal is not to redistribute the economic functions of government but to diminish or eliminate them. Dr. Rivlin is not in that game at all. She means what she says, and the fact that the idea comes from her lends plausibility to it in a special way.

Dr. Rivlin is President Clinton’s appointee as deputy director of the Office of Management and Budget. The director is Leon Panetta, an experienced California congressman, wise in the ways of making and negotiating the budget. There is no reason to think that he or Mr. Clinton would be willing to accept the “change” advocated skillfully by Rivlin, although it is hard to imagine that they did not know about the ideas contained in their colleague’s book. It speaks well for Mr. Clinton that he is willing to have, at the analytical heart of a centrally important agency like OMB, an articulate believer in a way of organizing the economy that may not be his own.

What makes Rivlin’s advocacy of devolution to the states and cities noteworthy is the fact that she has worked in Washington throughout her professional career. It is an eminent career—she has been president of the American Economic Association—but carried on essentially outside the universities. Her long-term association has been with the Brookings Institution, the preeminent Washington think tank, where the elite meet to eat and to write their books.

Then, when the…

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