A Perot Presidency Jude Wanniski June 11, 1992

Executive Summary: We can now confidently predict H. Ross Perot will be elected President of the United States in November, probably by a landslide in the electoral college. As the Ruling Class is exhausted after 60 years of unremitting depressions or inflations or wars, hot and cold, only Perot understands that the electorate now insists upon a return to normalcy. As a pure democrat, he promises to try to take the people where they want to go. They are drafting him for that purpose. There is almost nothing the tow parties can do to stop him, except join to predict chaos if he is elected. As the most successful entrepreneurial capitalist the nation has available for public service, Perot will "measure twice, cut once" in fixing the American economy. Clearly understanding the economy is starved for capital, he and his economic team will create a growth dynamic that will produce a DJIA of 6500 sometime in the next four years. An enormous voter turnout could easily bring a GOP House dominated by young men and women, Perot's coalition government drawing upon the best in both parties to realign government before returning it to the Ruling Class. Perot will define himself most by the Vice President he chooses and the criteria he develops for his Cabinet. Choosing Ed Rollins as one of his campaign managers helped enormously in defining Perot as being amenable to supply-side economics. We can speculate that he will choose as his running mate either Jack Kemp, Vin Weber or Mario Cuomo. The best financial mind available for Treasury in a Perot administration is Ted Forstmann of Forstmann Little & Co., whom Perot sought out and invited to Dallas for a long discussion on fixing America. The State Department should be recast to focus on foreign economic policy. Do not be surprised if Perot considers someone like Jesse Jackson as Secretary of State. The campaign to stop Perot this fall may see the Mother of All Political Battles. 

A Perot Presidency

It is now possible to predict with a high degree of confidence that H. Ross Perot will be elected President in November. In fact, it is possible to contemplate a Perot landslide in the Electoral College, with Governor William Clinton winning no electoral votes at all and President George Bush winning a scattering of electoral votes in the Northeast and Midwest. The moment is right for us to not only explain how and why this will happen, but to also contemplate the outlines of a Perot presidency, as we did four years ago in our March 1988 essay, "A Bush Presidency." Contrary to conventional analysis, Perot has given us enough specific information on which to base a useful scenario of the years ahead.

The compass is a useful way of understanding the Perot phenomenon. If, in a democracy, as Perot understands it, the President is the political leader who must attempt to take the people where they want to go, a two-party system can only work if one of the parties at least gets the general direction right. If the people want to go HWest,M but the Republican leader is heading "Northeast," and the Democratic leader is heading "Southeast," neither party is in the correct half of the circle. In an autocracy, the people have no choice but violence, at least assassination, perhaps bloody revolution. In a democracy, the people have many more venues to correct the direction of a Ruling Class gone astray. This year, the apparatus provided by the two parties has broken down. The directional problem seemed almost hopeless to a great many Americans early this year, until Perot happened to make his February 20 TV appearance on the "Larry King Live" show. We actually have New York Gov. Mario Cuomo to thank for having recommended to Larry King that he invite Perot on his show, Cuomo never realizing what a wave he would make — although obviously impressed with what he had heard about Perof s thoughts on the national condition.

Perot has several advantages over his presidential competitors, but the most important to my mind is that he is a pure democrat. Both President Bush and Governor Clinton, as well as most Republicans and Democrats in the U.S. Congress, are less so. For about 20 years Perot has been advocating an "electronic town hall" as a method of tapping into the desires of political consumers. It is only 15 years since I wrote in The Way the World Works my belief that an informed electorate always makes the correct political decision, that the central problem of civilization has always been the design of a system that enables government to tap the wisdom of the masses. This had led me to advocacy of a national initiative and referendum process, which might be refined over the next century to the kind of system that could pivot on Living Room Legislatures. What is important is not the technological gimmickry, but the political principle. Perot's primary thrust is not, after all, economic, and the election will not turn on "bread-and-butter economic issues," as Democratic National Committee Chairman Ron Brown has said. Perot understands that the voters want change in the way political business is conducted. He is offering himself to the electorate as the agent of that change, which will involve a shift of political power almost as striking as the movement toward greater democracy in the United States early in this century — when the franchise was extended to women, the electorate won the right to directly elect the U.S. Senate, and voters at the state level began to win the right to initiative and referendum. The national referendum can be incorporated into the Constitutional separation of powers by returning certain functions of the Legislative branch directly to the people under extraordinary circumstances, while maintaining the countervailing powers of the Executive and Judiciary.

Perot may never have enunciated his belief in so many words, but he instinctively equates the market for goods with the market for ideas. A man does not go from a standing start to a net worth of $3 billion as rapidly as Perot has without a keen appreciation of the needs and desires of his customers. To Perot, "the customer is always right," in the political marketplace as well. When Larry King asked him why he didn't run for President, Perot's answer was entirely in keeping with this profound appreciation of democracy: He would run if the people wanted him and would demonstrate that desire by volunteering to get him on the ballot in SO states. It is that exceedingly rare confidence in the electorate that sparked the grassroots phenomenon, not any particular insight as to what he at the moment thought about the usual laundry list of economic issues.

If Perot were to now cast his feet in concrete on a host of specific economic ideas of the kind the Beltway journalists are demanding of him, this would interrupt the learning process he is undergoing with the people. The fact that he has contradicted himself many times already on economic facts and ideas is not yet an overriding concern to the electorate, which sees him steadily moving toward the right point on the compass as this trial-and-error process unfolds. One of Perot's favorite phrases is that carpenter's "Measure twice, cut once." As long as he is headed "West," the people will permit him wide latitude, 180 degrees on the compass, knowing he will not rush to cut before careful measuring. It is this kind of trial-and-error movement that last week caused me to reckon he would in fact be elected and that there is little President Bush or Governor Clinton can realistically do to stop him. Rep. Vin Weber of Minnesota, the smartest member of Congress, wrote in The New York Times, Sunday, that the President has to make major personnel changes in the Cabinet, although he does not want it to appear to be panic time. It is panic time, says Weber. For President Bush to can his economic team is the only option left to him, and he hates to fire anyone, especially if it means firing his best friend, Treasury Secretary Nick Brady, the man he must fire first. To George Bush, the captain of the Yale baseball team, where how you play the game is more important than winning, this is an almost impossible thing to ask of him.

The President still believes Perot will fade as people find out his specific policy prescriptions, but his advisors don't see Perot as clearly as the voters do as their agent of political change. On the critical economic issues of taxes and trade, Perot is at his worst when asked narrow, hypothetical questions, shooting from the hip, at times seeming as elitist as the Business Roundtable. He is at his best when the context is broader, when he stands back and looks at the breakdown of the entire economic system and promises to attack the problem without prejudice. His popular appeal is that he promises to change the process to engage the concerns of grassroots America on a continuing basis, not simply during political campaigns. Where Bush and Clinton are ready to answer the question, "How do you balance the budget?" Perot is only willing to say he wants to explore ways to balance the budget in ways the people will find acceptable. Clearly, both political parties are caught in a cul de sac, determined to balance the budget as their highest priority, because the polls show that high on the list of public concerns: Bush with a balanced-budget amendment and less spending, Clinton with a Keynesian growth formula and higher taxes on the rich. When Perot is asked specifically about this or that tax proposal, he'll respond off the top of his head, seeming to contradict himself from one week to the next. When asked what he would do as President, he leaves little doubt that he intends to scrap the entire tax system and start from scratch, with a blank sheet of paper. He this week rejected the idea of a balanced budget amendment and said he would prefer to devote his energies to finding ways of balancing the budget. When asked about a specific trade issue, like the proposed Free Trade Agreement with Mexico, he comes across sounding like a poorly informed Texas protectionist, although he will hedge by recalling the carpenter's phrase. When the context widens and he can add to the equation an expanding U.S. economy, he will talk of eventually phasing in an FTA in order to ease the burden of adjustment to the American worker, for example.

In several presentations to gatherings of institutional investors last week in Montreal and Toronto, I forecast a Perot presidency and in one gathering was offered a bet of $1,000 that he would not win. I accepted at even money, but with the one proviso that the bet would be off if the President would replace his Treasury Secretary. I also predicted a Dow Jones Industrial Average of 6500 sometime in the next four years. I decided I could safely make these predictions on the information that Ed Rollins had accepted Perot's offer to be co-campaign manager along with Hamilton Jordan, who had been Jimmy Carter's campaign manager in 1976. Rollins had been President Reagan's campaign manager in 1984 and Jack Kemp's campaign director in 1988. Rollins' acceptance was the last piece of information I needed, for as I advised the Perot people when they made the offer, I did not believe he would accept unless he was confident Perot was moving the United States in the direction on the political compass advanced by HUD Secretary Jack Kemp. Rollins, like me a former Democrat who abandoned the party in favor of the Growth Wing of the Republican Party, would not be able to work for a campaign that would move along a different band of the compass. As I have in recent weeks come to believe that Perot has the potential of being "Reagan cubed" (i.e., Reagan to the third power), I encouraged Rollins' participation. If Perot would swerve sharply away from that band on the compass, Rollins would quit. The manner of the arrangement persuaded me that Perot now knows broadly where he's going and that Rollins knows enough to sign up for the duration of the voyage.

I told the gatherings in Canada that it should be no surprise that the people of the United States would flock to Perot once he made himself available. The United States, along with the rest of the world, is starved for the kind of entrepreneurial capitalism that dominated the 19th century. Perot is the most successful entrepreneurial capitalist of our time who is also available for the job of leading the Ruling Class back on track. Steven Jobs of Apple Computer or Bill Gates of Microsoft are in the same dollar ballpark, but they have not reached the level of maturity to think of public service the way Perot has. It makes sense that Perot's presidential model should be that of the first administration of George Washington, using the last decade of the 18th century to prepare for the 19th. Washington, a successful Virginia businessman, was nothing less than an agent of political change from monarchy to democracy. He belonged to no political party and in assembling a Cabinet picked the best people available from the broadest pool of the citizenry.* In choosing a Treasury Secretary, for example, he was not deterred by the fact that Alexander Hamilton of New York was a mere 32 years of age.

When asked in Toronto last week how I could be so sure Perot was going to be the kind of President that could lead to a 6500 Dow, when he had not given specifics on how he would handle the economy, I told them of Perot's appearance on "Meet the Press" after the Los Angeles riots. Asked what he would do to relieve the problems of the inner city, he answered briskly: Eliminate the capital gains tax, because the risks are so high for capital that the rewards must also be high. I said that Perot is the only presidential candidate of the dozens in the past generation who would have given this correct answer. Not only the right policy, but also the correct reason. Even Jack Kemp would carefully include it in a longer list of things to do. President Bush would advise an anti-crime program, welfare reform and a balanced budget amendment. Governor Clinton would tout a Marshall Plan.

My answer in Toronto: If I were given a jigsaw puzzle of a hundred pieces and asked to guess the picture after looking at just one piece, and I saw that the piece was the end of an elephant's trunk, I would know the picture was of an elephant. Perot and I had discussed economics the previous week in his Dallas office, but we had not discussed the capital gains tax, as he told me there was no need to, that we were "joined at the hip" on that issue. The Wall Street Journal's Washington Bureau had engaged in a bit of character assassination when it reported that I had "bragged" of meeting with Perot to "educate" him on economics. A reporter for Barron's, whose editor is also hostile to entrepreneurial capitalism, tried endlessly last week to get me to say that Perot was a "supply-sider." I repeated again and again that only economists are supply-siders. Perot is an entrepreneurial capitalist who is now advancing himself as a political leader. I can be a dogmatic supply-sider as an economic theoretician, but a wise President must remain open to all the seriously presented ideas of his electorate. Ronald Reagan never termed himself a supply-sider, explaining in his memoirs that his tax-cutting program was built on common sense. Indeed, it would be surprising if Perot did not know much more about practical economics than I do, as my accumulated net worth is considerably less than his. He was on the record long before me in arguing for a lower capital gains tax, as Louis Rukeyser recently pointed out in his syndicated column, which appeared in Human Events, 5-30-92.

Does this make Perot a Republican? A conservative? Will he take more votes away from Bush or from Clinton? How will he get elected if he merely pulls votes from both, divides the vote in thirds, and throws the presidency into the House of Representatives, which will favor the Democrats and Bill Clinton? Each of these is a textbook question that is relatively meaningless in an unprecedented campaign year. In my meeting with Perot, I did offer the opinion that the voters were tired of the Twentieth Century experiments in socialism,communism, fascism and corporatism. They have endured two hot world wars of unprecedented slaughter and myriad "minor" wars encompassed by the Cold War of nuclear superpowers. The only reason the voters have not previously reached for a Perot to get things headed in the right direction is that the Ruling Class has more often than not been pointed correctly on foreign policy. In 1988, Vice President George Bush was the only candidate of either party who supported President Reagan's handling of Moscow and Mikhail Gorbachev. I told Jack Kemp that he could not win in 1988 because the American people would not support a presidential candidate who opposed Reagan on this issue, as Kemp did. Reagan was headed in precisely the right direction to end the Cold War peacefully. Ending the Cold War peacefully had to be the highest priority of the people, who had to risk Bush's leadership on domestic issues. Now, President Bush's considerable skills in handling Gorbachev are no longer needed. The electorate can turn its attention almost entirely to domestic concerns.

Perot's chief contribution to history and to his fellow citizens could be to bend the alignment of the two political parties, adjusting them to the peacetime era. On "Face the Nation" last Sunday, his two longtime business associates, Mort Meyerson and Tom Luce, correctly argued that Perot's contribution will save the two political parties, by which they mean making them relevant again by pulling them out of the Beltway gridlock of partisanship and special-interest favoritism. Tom Luce talked about a coalition government of the best Democratic and Republican ideas, with people at the top of the Executive branch who are committed to getting problems solved rather than jockeying for partisan positions. Fred Malek, the Bush campaign chairman, insisted later on "This Week with David Brinkley" that President Bush is committed to ideas that the American people favor. True enough; Kemp would have resigned from the Cabinet long ago if he didn't think at least the President's heart was in the right place. Perot, though, seems equally intent on finding the right sequence of policy initiatives. He knows when he gets up in the morning that it is much easier to put his pants on before his shoes. By putting budget balance before economic growth, President Bush might as well tighten his belt before trying to don his trousers. It would take him four years to get to work.

The chief threat to the Perot candidacy will come later in the year, when the two political parties and their agents in the Ruling Class realize they have to join forces to defeat him. At the moment, they are still of the opinion that his entry might hurt the other party most. When they get around to realizing he is getting stronger, not weaker, as his method works its way ever closer to the optimum direction on the compass, Democrat and Republican institutions will combine to foster the notion that a Perot presidency will bring national chaos. Here is what we will hear: Without a party political apparatus at his command, President Perot will be unable to get anything done from the Oval Office. The budget deficit will spin wildly out of control toward $1 trillion annually; interest rates will soar; unemployment will climb above 20%; the cities will bankrupt; riots will spread everywhere.

This was precisely the stratagem designed by the Ruling Class in 1978, in an attempt to stop the citizen anti-tax movement led by Howard Jarvis, a California curmudgeon who collected a million signatures to get Proposition 13 on the ballot. Some of the most distinguished Ivy League economics professors warned of total chaos in the California economy if the people would be so stupid as to vote for the measure. Jarvis of course stood his ground and two thirds of the people of the state supported him, although not a single newspaper in the state gave Proposition 13 its endorsement. Against the advice of several of his advisors, Ronald Reagan issued a statement of support, the only California politician of note to do so. The California economy boomed for years thereafter. Its current recession is being blamed on the lingering side effects of the Jarvis initiative and the unwashed mob that voted for it. Some of the same Ruling Class economists are now developing Governor Clinton's fall strategy, which will be to offer an "action agenda" approved by 100 economists --  James Tobin of Yale of course in the lead. The Democratic leaders of Congress will announce their intent to pass the agenda in the first hundred days of the Clinton Administration, while they simultaneously promise chaos in a Perot Administration. This stratagem could easily lead to a Republican takeover of the House by a freshman class with an average age somewhat under 40.

There will be no chaos in a Perot Administration. Chaos is what we have now. The Congress elected this fall will be completely different than the intellectually exhausted body that now sits in Washington, different both in number and attitude. As the primary motivation of Democrats is now to prevent the advance of GOP power, and vice versa, the climate can only improve with a President who is not identified with either party. Perot is neither a breakaway Democrat like George Wallace, nor a breakaway Republican like John Anderson. This means neither party will feel it has to discipline him for having left the faith. As he does not represent a party, but will simply leave office after fixing things up, the congressional representatives of both parties will be able to assist him, hoping to get him out of town as soon as possible. They can then hire their scribblers to write history proving that the Perot Administration was a failure.

We must remember that Congress is simply a Committee of 535 men and women, a Committee of the Whole House, which includes all the rest of us. As I've argued many times, it has only a collective intelligence, like a blind beast that stumbles forward, bouncing off walls, when it feels the sting of power from the electorate. As long as President Perot has the direction right, his popularity rating on domestic policy will climb to heights achieved by President Bush during the Gulf War. When the phones ring on Capitol Hill demanding support for President Perot, the Committee of 535 will get out its rubber stamp.

What will it rubber stamp? We don't know because he has not yet selected his Vice President or his Cabinet, the process by which a President really defines himself. Perot's Vice President will be his most important appointee, because he will have him serve as White House chief-of-staff. Because of the enormous threat to the Ruling Class that a Perot presidency brings, it would be wise of him to appoint someone who is equally committed to his revolution. To "balance" the ticket with someone from the Ruling Class would simply invite an early attempt of assassination by the dark forces of the entrenched interests. Imagine how the last dozen years would have played out if the bullet that struck President Reagan soon after his inauguration had mortally wounded him. George Bush, we must recall, was placed on the Reagan ticket as a result of a campaign by the Ruling Class to help keep this senile right-wing, retired movie star President under control.

The most important contribution Hamilton Jordan will make to the Perot Administration will involve the experience he brings in this regard from the Carter campaign. Jimmy Carter, successful peanut farmer, was a perfectly good citizen candidate in 1976 until he won the nomination. At Madison Square Garden that summer, as Ham Jordan surely recalls, the Big Guys closed in on poor Jimmy like piranhas, chewed him down to a skeleton, and sat Walter Mondale in his lap. The only reason Carter won in the fall is that the piranhas had gotten to President Gerald R. Ford much earlier. The only reason I voted for President Ford was in the hope that Donald Rumsfeld and Richard Cheney would be more successful in the following four years in defeating the Wall Street Big Guys who controlled the Treasury Department via William E. Simon.

Conventional wisdom always goes with the conventional candidate, and it is only now beginning to realize that H Ross Perot might in fact win the presidency. As the days of summer unfold, the Ruling Class will dispatch countless numbers of "respectable" citizens to do to Perot what they achieved in 1976 with Carter and in 1980 with Reagan. The word in Washington in recent weeks has been that William E. Simon, for example, is banging on Perot's door trying to get an early bead on an appointment. It will soon look like deja vu all over again to Hamilton Jordan. By the time the Carter Cabinet was formed, the only outsider left with real influence over the spoils of governance was Bert Lance, who Carter had appointed Budget Director. It was only a matter of months before the Big Guys had pulled the appropriate strings within the Eastern Establishment press and Lance was thrown out, chewed to bits by the piranhas.

In the same way, Ronald Reagan was viewed as no more than a nuisance by the Ruling Class in early 1980. Only we few wacko supply-side economists, Rep. Jack Kemp, and people who listen to radio talk shows were paying him any mind. By the time Inauguration Day rolled around, the supply-siders had been shoved into the corner. The only ally we could place in the Cabinet was David Stockman at Budget, and he almost immediately was devoured by the piranhas. The only reason the Reagan Administration succeeded in any measure was that the Treasury Secretary, Donald Regan of Merrill Lynch, betrayed the Ruling Class that had placed him in the job. Regan, who never met Reagan, had contributed to the Carter campaign, and had no known record of supply-side tendencies. But a spark of the democrat ignited in his soul. He asked to read Reagan's campaign speeches to find out what the new President had promised the people. He appointed two supply-siders, Norman Ture and Paul Craig Roberts, to execute those promises on tax policy. It took six years for the piranhas to devour Donald Regan for his betrayal, but they finally caught him at the White House by turning Nancy Reagan against him. He was thrown out in early 1987, just in time for the Ruling Class to recommend that Nicholas Brady be named Treasury Secretary. It is inconceivable that Regan would have permitted President Reagan to fall for the Brady appointment, urged upon him by his best friend, the Vice President, George Bush. Of all people in Washington, Donald Regan knew that Nick Brady was the most inept investment banker of our era, having reduced the once esteemed Dillon Read to a pushcart operation.

It is of course in the interest of H. Ross Perot to have the support of as many people as possible, on the theory that in a democracy piranhas also have their rights to be heard. In recent weeks I have heard any number of times that Perot is not to be trusted because of his contacts with Felix Rohatyn, the Lazard Freres investment banker who regularly advises Democratic hopefuls on economic policymaking. Paul Gigot of The Wall Street Journal has wondered aloud how it is that both Jude Wanniski and Felix Rohatyn could be simultaneously supporting HRP! This will soon end, he posits, as Perot moves in one direction or the other. Not necessarily. Perot's most important friends on Wall Street are three men whose common characteristic is they are all outsiders for different reasons. Two of them are Jewish, automatically outsiders as they do not have great inherited wealth. One is a Catholic, an outsider who could be President Perot's Treasury Secretary unless Perot finds someone more to his liking.

The most distinguishing feature of Felix Rohatyn is not that he is conventional in his economic postulations, but that he thinks big, which means he must contemplate the unconventional. I've disagreed with him on his policy prescriptions for the economy, but have never thought of him as a transmission belt for an ideological dogma. Rohatyn four years ago had responsibility to release $600 million for New York City school construction: HI got a call from Perot saying that if we were going to build schools for inner-city kids, we should build small buildings so the kids won't get lost and feel dehumanized. I got lots of advice, but he was the only one who talked about the kids." He certainly favors my position on the taxation of capital. So does another of the important early Perot supporters on Wall Street, Alan "Ace" Greenberg, the guiding genius behind the rise of Bear Stearns & Co., which has become the number one clearing house on Wall Street under his hands-on stewardship. Until this year, Greenberg has been politically neutral, contributing to everyone who asks him for cash without paying much attention to what they are all about. Six weeks ago he stunned Wall Street and the neoconservative Jewish community by emphatically announcing his support for Perot — the political equivalent of a senior citizen fathering his first son. He has since formed a "Perot for President" committee on Wall Street and is spending precious hours away from the Bear Stearns trading desk telephoning friends to win their support for Perot. It's an odd situation since he does not have to ask for their monetary support, considering Perot's liquidity.

By far the most interesting of Perot's conquests on Wall Street is Theodore "Teddy" Forstmann, founding partner of Forstmann Little & Co. Two years ago, I began with the seemingly logical assumption that a nation in deep financial doo-doo should have the best financial mind available to public service. I began urging Mr. Forstmann to think of becoming Treasury Secretary of the United States, if a president would find it necessary to call upon him for the job. From my vantage point, the only American who could possibly contest Ted for a gold medal in financial creativity in the past 20 years is my good friend Michael Milken; MM unhappily is not available for public service that would require him to be far from his federal home in Dublin, Calif, for any length of time. Forstmann, like Milken, has a God-given talent for peering into the soul of a deadbeat and seeing financial promise, a return-on-investment. If there is any domestic deadbeat who needs his help at the present moment, it is the United States of America.

To me, Forstmann looks like Industrialist Perot's mirror image in the financial community, a fellow who had a topnotch education, but no inherited wealth beyond his inherited contacts and old school ties. Where Milken developed high-yield "junk" bonds as his mechanism for financing risky people and enterprises, Forstmann employed subordinated debt. In recent years, Forstmann became a fierce critic of the use of junk bonds for leveraged buyouts and, in a sense, a critic of Milken, whom he has never met. I came to admire both, not because of the instruments they used in creating great wealth for the nation, but because of their gift for seeing rainbows where other financiers saw only fog. If George Washington were President today, he would wish for one of these fellows as Treasury Secretary, I would respectfully submit.

As it happens, Forstmann was asked this past February by the Harvard Business School to address its students. He chose as his subject, "What's Wrong With America, and How to Fix It," more or less. His lecture was well received. It was adapted to an op-ed in The Wall Street Journal, "Free Entrepreneurs to Fix the Economy," 3-31-92. It was read carefully by Mort Meyerson, Perot's closest business associate for the past 20 years. He read it just as Perot was realizing that his Larry King promise was indeed ripening. He showed it to Perot, who called Forstmann. Forstmann flew to Dallas. Perot met him at the airport in his 1984 Oldsmobile. They drove to a Dallas restaurant and sat for more than three hours talking about how to fix America. Whatever Perot said about how to fix America prior to that meeting can be discounted. Perot is on the hunt for the optimum solution, and as he gets closer to it, he is amazingly quick to dump yesterday's view. We can recollect how crazy it seemed a hundred years ago for Andrew Carnegie to order the scrapping of machinery he had purchased for his steel mills several years earlier, on the grounds that the newer technology would keep him ahead of the curve. Just imagine the amount of "crazy" scrapping of investment it has taken in the computer industry to stay ahead of the curve and you will be able to appreciate Perot's mental dynamic. As soon as he hears a superior idea and tests it against his logic, he absorbs it as state of the art. It should be sufficient to say that over the past two years, as I discussed the capital gains issue with Forstmann, it was he who persuaded me that it made no sense to tax capital gains at all, and we should not spend our energies simply trying to shave it. The only other person to make this argument to me as bluntly is Alan Greenspan, chairman of the Federal Reserve, who told me a year ago that he believed it is easier to argue for its elimination than for its reduction.

* * * * *

How will Perot pick his vice presidential running mate? How will he pick his Cabinet?

We must constantly remind ourselves that Perot is not a traditional textbook candidate. He may not simply appoint a group of graybeards to meet, pore over a list of V.P. possibilities, and give him a short list of three or four to interview. On "Face the Nation" last Sunday, Tom Luce said there would almost surely be "some sort of convention" of Perot's two or three million volunteers, which would presumably decide on a running mate in some fashion. It hasn't been done before in this way and it's clear they have not made a first stab at designing a method. But we can be sure a serious effort will be made to fit Perot's criteria with the approval of his grass roots supporters. There is no "short list" at this moment. Perot wants to consider only those people who could succeed him at a moment's notice, which means they should be able to function as chief-of-staff. They do not have to have national name identification, he has indicated. A chief executive officer of any major company in America would find these criteria useful in planning for succession.

The Democrats who I believe are capable of being President of the United States at the present time are simply those who would be capable of moving the country in the right direction on the political compass, at least broadly speaking. They are also democrats -- viewing people as resources rather than as obstacles. They include: New York Governor Mario Cuomo; former Massachusetts Senator Paul Tsongas; Oklahoma Senator David Boren; perhaps even former California Governor Jerry Brown (as long as he would inherit a Perot Cabinet). The only woman in the nation I would feel comfortable with as President is Texas Governor Ann Richards, a Democrat, but she is unavailable to Perot since two Texans cannot be on the ticket and meet constitutional requirements. Governor Clinton would optimize his candidacy by picking one of the above. I'd pick Governor Richards. Except for Cuomo, who seems determined not to want to get anywhere near Washington, none of the above Democrats would be especially effective as Perot's chief-of-staff.

Those Republicans who I believe are capable of being President at the present time are also democrats. They include: HUD Secretary Jack Kemp, Mississippi Sen. Trent Lott, Wyoming Sen. Malcolm Wallop, Vice President Dan Quayle, and Rep. Vin Weber of Minnesota. Of the group, Jack Kemp would be my choice to be President at a moment's notice. But if Perot is serious about having the Veep serve as chief-of-staff, I'd pick Weber, who is Kemp's best friend in the House of Representatives. Weber, who recently announced his retirement from Congress at age 39, believing he is simply spinning his wheels inside the Beltway, is one of Ed Rollins' closest friends. Weber, who is cerebral and Reaganesque in his unshakable pleasantness, is of the intellectual caliber of Jefferson or Madison and will probably be President some day. At the recommendation of Ted Forstmann and others, Perot's associates, Meyerson and Luce, flew to Washington several weeks ago to meet with Weber, as has been reported in the press. By all accounts, they impressed each other. He has not met Perot. In a "beauty contest" for Perot's volunteers, I think it would come down to Kemp or Weber, perhaps Cuomo. We hear other names bruited about, including former Fed Chairman Paul Volcker, former U.N. Ambassador Jeanne Kirkpatrick, former U.S. Senator Warren Rudman. Even a moment's consideration against Perot's stated criteria eliminates them from consideration.

When it comes to the Cabinet, Perot's most important pick will be that of his Treasury Secretary. The way Perot leads in business is to delegate a function to a team he trusts and to have them proceed unimpeded. If they fail, he dismisses them unceremoniously. He will define the economic contours of his administration by the selection of his finance minister. If I were to bet at the present moment, it would be Forstmann. Perot, though, is not a man to be hustled. He will give more thought to this position than any other except his running mate. A potentially great political leader will always destruct if he has a weak finance minister. A seemingly weak leader will always look better in history if he happened to select a solid finance minister. If I were President, after studying the availability of talent, I'd select Forstmann, or someone in his league. Certainly not a commercial banker. Perot would not give Treasury to a national industrial planner because he does not believe in the concept of managing an economy, the very idea that the Ruling Class of the former Soviet Union tried without success for 75 years.

There's actually no reason for Perot to name anyone to his Cabinet until he is elected. During the fall campaign, he could merely list his criteria for each of the Cabinet posts. More than anything else he does, this would specify the direction of his governance. Reporters want to know how much money he would appropriate for the education of left-handed, retarded Bulgarians, but the electorate as a whole will be satisfied to know that he intends to go philosophically "West," not "Northeast" with Bush or "Southeast" with Clinton. To merely indicate he will put his pants on before his shoes, going for growth before budget balance, is plenty specific.

His Cabinet will also be diverse, I believe, because he fully intends to govern with a coalition, as Meyerson and Luce have indicated. On pure personal speculation, I would imagine many of Perot's choices will seem untraditional, even astonishing, because he will be able to make his selections without the pressures of a partisan structure, without having to succumb to the demands of the Ruling Class. To imagine what the decision process might be like, think of Perot considering Jesse Jackson as Secretary of State. With the end of the Cold War, foreign economic policy is now at the top of the agenda. The Third World nations have been starved of growth for a half century. To appoint almost any name associated with national security would risk losing the opportunity to address this crying need. If Governor Clinton were to be elected President, his agenda would be set by the global environmentalists, who are controlling all other industrial nations in pursuit of Malthusian no-growth goals. Secretary of State James Baker HI, who would likely remain at his post in a second Bush term, has shown little interest in the economic policies toward the Third World, leaving dominance in that area to the intellectually bankrupt Treasury Department, which in turn controls the intellectually and spiritually bankrupt International Monetary Fund. A weary JBIII, who has been running at top speed for 12 years, has also turned Russia and the East Bloc over to Kissinger Associates, which is determined to leave the region splintered and impoverished, to keep it out of action for the next century. Former President Nixon, by contrast, has displayed a profound and generous concept of American national interest in his efforts to assist this former foe. Someone like Jesse Jackson at State would focus his energies on pro-growth policies everywhere. A President Perot should prepare to help the rest of the world find its way to entrepreneurial capitalism in a democratic framework, although he clearly means to fix America first. There's probably nobody around better at understanding how the people at the bottom of the pile feel about the crushing weight of the people at the top than Jackson. At Defense, a President Perot might consider former chief arms negotiator Fred Ikle at the top of his list, recognizing Ikle's public leadership in attempting to make post-communist Russia a military ally, rather than enemy, of the United States. This would certainly assure the national security community that the geopolitical advice President Perot was getting was of the highest caliber..

For a President who does not believe in a government that attempts to "manage" the economy, Ross Perot has only three policy instruments that he must wield with care: Fiscal, monetary and regulatory. If he manages fiscal and monetary policy correctly, the regulatory apparatus that encrusts the state and smothers economic activity will tend to take care of itself. Government is called upon to regulate when economic contraction produces tensions between transactors. After 60 solid years of Depressions, Inflations, and Wars, it should be no surprise that there are 750,000 lawyers in the United States. A dramatic simplification of the tax system in the manner Perot promises would represent the "return to normalcy" the people demanded on tax policy after World War I. It would produce economic expansion of breathtaking proportions, simultaneously reducing the need for the regulatory apparatus and providing enormous new opportunities for unemployed lawyers.

If Perot chooses the right Treasury Secretary, he also chooses the right monetary policy. If the economy is growing rapidly via correct fiscal policy, the Perot Administration does not have to yell at Fed Chairman Greenspan to inflate the economy to prosperity. Chairman Greenspan could then concentrate on keeping the dollar's value constant relative to gold, which is what he would really like to do. If he is tempted to deflate further, the Treasury Secretary could jawbone him into stabilizing the dollar value of the nation's gold reserves. There is nothing on the record to indicate how Perot feels about the ideological wars surrounding monetary theory. But if he asks his grassroots constituency how they feel about it, they will always tell him they prefer sound money. Only the Big Guys benefit from inflations and deflations, having the resources to hire Fed watchers.

Economic growth also defies the Malthusians, who are now driving most of the governments of the West toward stagnation policies. As the contrast between high-growth Japan and no-growth Russia demonstrates, expansion is good for the environment, for it provides the resources that permit the people to clean up after themselves. Perot says we must take care of Earth because it is the only home we have. His history strongly suggests he is not the kind of a man who would shut down the world economy because the earth might get warmer when there is as much evidence that it might get colder. He will insist on serious study. He would even think of putting the information available on global warming before an electronic town hall before he would ask the country to submit to a Carbon Tax. This is the last thing the anti-democratic forces abroad in the land desire. They believe they, not the people, know what is best for the nation, and the people will only be confused by a genuine debate. The Establishment News Media has been almost entirely corrupted in this manner. Time Inc. and The New York Times have turned their organizations over to the greenies and their Malthusian message has been burned into the networks. Ross Perot has wisely decided to keep his distance from these elitist opinion-leaders, who are organized to destroy him. The cable talk shows and call-in shows are fortunately available, permitting him to interact with the electorate.

A Perot Presidency would be a colossal event in the history of the world, cracking through the dark side of mankind that has dominated the Twentieth Century. It would irrevocably alter the terms of trade between the masses of people around the world and their would-be political leaders. It would upset a half-century of careful feathering of nests by the entrenched interests in Washington and in other capitals of the world. For that reason, we can expect the stormiest, darkest, dirtiest knock-down presidential campaign in memory. Perhaps the Mother of All Battles. In the end, though, we are predicting that the greatest entrepreneurial capitalist of our time, who also happens to be the purest democratic leader we have seen in this century, will triumph. It will be a good thing too, right in the nick of time.

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* Washington's initial Cabinet appointments in 1789: Alexander Hamilton, Treasury Secretary, was 32, New York; Thomas Jefferson, Secretary of State, 46, Virginia; Henry Knox, Secretary of War, 39, Massachusetts; Edmund Randolph, Attorney General, 36, Virginia.