Evans & Novak

The White House thinks it is really out of the woods on the campaign finance scandals, as signified by the departure of spokesman Lanny Davis back to private law practice. Nevertheless, popping the champagne corks may be a trifle premature.

1) What worried the President's advisers was the prospect of Sen Fred Thompson's (R.-Tenn.) investigation blowing the White House out of the water. That was avoided by a) insisting on the Dec. 31, 1997, deadline and b) the clever pre-emptive strategy of releasing embarrassing material before Thompson had a chance to.

2) According to the Clinton strategy, that leaves the open-ended investigation by Rep. Dan Burton (R.-lnd.), which was thoroughly discredited in much of the mainstream news media before it had a chance to start. The view at the White House is that Burton, while better disciplined and better organized than expected, is nothing to worry about because he will never break through on television as Thompson might have.

3) But that could be a miscalculation. Burton has a wide-ranging investigation underway that will probe the heart of an alleged Justice Department cover-up as well as the campaign irregularities themselves.

4) The bigger worry for Clinton is what happens to Interior Secretary Bruce Babbitt. The official administration line is that there will not be an independent counsel to investigate him, but there are Clinton sources who say the contrary, that there is no way that it can be avoided. If Atty. Gen. Janet Reno does name a special prosecutor, the big question is how far the grant of authority by the threejudge panel headed by Appeals Court Judge David Sentelle will go toward opening up a full-scale campaign finance investigation.

Federal Reserve Chairman Alan Greenspan's remarkable admission in Chicago this weekend that deflation may be on the horizon has enormous consequences.

1) Greenspan's remarks followed Jack Kemp's call on national television last week for lower interest rates. Blaming the tight-money policy of the Federal Reserve for triggering the Asian fiscal crisis, Kemp boldly went where no politician-certainly no conservative Republicanwould go by criticizing Greenspan.

2) Kemp and now Greenspan contradict the U.S. Treasury line that there is no global deflation and are aligned with supply-side consultant Jude Wanniski, who was until now the lone voice of dissent on the matter of deflationary expectations.

3) With the new speculation that the next step by the Federal Reserve will be easing rather than tightening and with Congress in recess, it remains to be seen whether Republican lawmakers will follow Kemp's lead. Several members of the Federal Open Market Committee still call for an antiinflationary rate increase whenever possible, but it is apparent that Greenspan has no intention of going that route now.

Defense Secretary William Cohen is not saying it publicly, but a major reason he opposes an open-ended Bosnia troop commitment is that it will render impossible the fulfillment of the core defense strategy. Such a commitment would be down two of only 10 Army divisions indefinitely, thereby negating the possibility of sustaining enough force to handle two simultaneous "major regional" wars.

The special report, by Rowland Evans and Robert Novak appears exclusively in HUMAN EVENTS. For subscription information on their Evans-Novak Political Report call 800-789-5367.

Copyright Human Events Publishing, Inc. Jan 16, 1998
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