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The Economy: Too Good To Be True

By almost any measure, life is swell in the U.S. What went right?

By Eric Pooley

TIME magazine

(TIME, May 19) -- Hello, pilgrim, and congratulations. Your hard traveling has brought you to a strange and wondrous place: Right now, on a day you are lucky to be alive to see, the U.S. is enjoying its best economic and social health in 25 years. We're living longer, breathing cleaner air, drinking cleaner water. Crime is in free fall, with violent evildoing near a 22-year low, and the downtowns we once gave up for dead are bristling with coffee bars, green markets, life. New York City, that trusty symbol of terminal decay, is bloated no more. It boasts America's sharpest drop in crime, a rekindled economy and--mirabile dictu!--an $800 million budget surplus. Out in the suburbs, our gardens are costly and ambitious, and shiny grills are taking up residence on our new redwood decks. The statisticians assure us our houses are more valuable, our marriages more solid, our teenagers more chaste (and better at math).

Under the floorboards, the American economy is thrumming contentedly, warm but not overheated, seven years into a remarkably durable expansion. All the economy's parts seem to be working together for a change: joblessness is under 5%--a 24-year low--yet inflation is holding steady at around 3%, a combination that economists thought impossible. Productivity is growing smartly, and consumer confidence is near an eight-year high, which may help explain why personal debt is climbing. And the twin banes of the 1990s--job insecurity and income inequality--show small signs of improvement.

In a new TIME/CNN poll, 80% of working people say they're not worried about losing their jobs, up from 69% last winter. Incomes are rising among families of every level (wages and benefits were up almost 5% last month), with the poorest Americans seeing the largest percentage gain. Poverty rates for elderly and black Americans are at their lowest levels since Washington began keeping track of such matters in 1959. Welfare rolls are shrinking, and though too many human beings are falling destitute as a result, many more are being forced to remake their lives for the better. People who haven't held a job in years are rediscovering the sense of self-worth that working brings.

Wipe the smirk off your face. This is not a paid announcement for Gore 2000. Of course, things are far from perfect--life at the bottom of the ladder remains a desperate struggle for millions of Americans, and scrambling up the rungs can seem well-nigh impossible. But get used to it, pilgrim: For better or worse, this may be just about as good as it gets in the U.S.A..

So why is your stomach in knots?

Because you are an American, and Americans know that nothing good can last. Every boom goes bust. Every heart gets broken. We have been conditioned to look for the lead lining in every cloud. "There's something about the mandarin class of America--they have a hard time taking yes for an answer," says Philip Burgess, president of the Center for the New West, a Denver think tank. "But after 15 years of hand-wringing about America's competitive decline, the national media [are] coming to their senses."

It's safer to be a pessimist; that way you don't get burned. Americans will never reclaim the innocence and arrogance of the 1950s--even if it's warranted--because they remember too well the unraveling of the '60s and '70s. In the '80s, morning in America sounded good but proved to be a false dawn. The expansion was fueled by "high-yield" junk bonds and government debt, and when interest rates soared and the market crashed, the junk dealers on Wall Street started to look like perfect mirror images of the crack entrepreneurs in the slums. As we worried about getting 15-year-old killers off our street corners, the Japanese were buying up our trophy buildings and our culture machine--Rockefeller Center, Columbia Pictures--and beating the pants off us in the technology race. We felt like losers.

So when things started picking up for America early in this decade--when it turned out that our businesses really could compete, that our microchips really could outcompute Japan's--we weren't willing to trust the news. But now we may be beginning to do so: 63% of Americans say things are going fairly well or very well in the country, and in the latest TIME/CNN poll, 54%--including almost half of those earning less than $20,000 a year--describe this as a period of "good times" for the country. Except during brief, galvanic events like the Gulf War, says White House pollster Mark Penn, the national mood doesn't get brighter than this. "We can't go back to the Eisenhower days of the American psyche," says Penn. "There was a carefree confidence coming out of World War II that the country doesn't have today, an unbridled faith in institutions that's no longer so strong. Now Americans have confidence in themselves."

Which is why the poll's most revealing figures are also the most personal. Almost two-thirds of the Americans surveyed say they and their families are enjoying good times, and more than half are taking advantage of them by cutting back on work to spend more time at home. They want to kick back a little while they have the chance--maybe because close to half of them think the good times will be gone by decade's end.

But how long will the good times last?

It is a sign of maturity that we expect the good times to go away. Getting giddy and sprinkling gold dust on our dessert, as many did in the '80s, would be a sure sign that another bust is in the making. The nation is behaving like a veteran ballplayer who refuses to get too high or too low in mid-season. Maybe the experts are right when they say the good times will last, and maybe they're wrong. Maybe the market will tank the next time Federal Reserve Chairman Alan Greenspan hikes interest rates. Only one thing is certain, says 25-year-old Matthew Smith, a sales assistant with an Atlanta brokerage house. "Basically, you're going to have to take care of yourself."

In one sense, all this good news is bad news for Bill Clinton. After all, Presidents tend to achieve greatness in times of adversity--and major wars, depressions and other cataclysms have been happily absent from the Clinton years. Many of the deeply adversarial forces in the culture seem to be taking a break just now. It's been months since an abortion clinic was blown up. The government isn't being shut down. Where does that leave Clinton? His popularity stands at a staggering 92%--in Costa Rica, where he visited last week. Here at home, it's a more modest 59%--not bad, but almost surely as high as it will ever go, thanks to the protracted scandals that are defining his second term.

Oddly, Clinton has offered little in the way of policy or presidential stagecraft to counter those scandals this year, other than to tear up his knee. He is a good bet to become the only Democratic President in modern history to enjoy two terms of peace and prosperity, and he's using them to do... what? Balance the budget--or, to be precise, promise that someone else will balance it after he's out of office. Fine, except that the elusive deal (which was looking shaky at week's end) self-destructs sometime after 2002, when the boomer retirement bomb goes off. Most Americans, according to the TIME/CNN poll, like the agreement but don't think it will stick.

A senior White House aide told TIME last week that with the budget deal out of the way, Clinton could finally turn his attention to the rest of his agenda. But when asked what truly weighty issues were on that list, the aide could come up with just one: the initiative on race that Clinton is expected to announce next month. It will no doubt include both a stirring call for tolerance and a neat sidestepping of the thorny racial-preference controversy. The President has already signaled that he isn't ready to confront the crisis of rocketing Medicare costs. (He'll appoint a commission.) He would like to use this time of prosperity-- 11 million new jobs created since 1993, two-thirds in occupations that pay above-median wages--to tackle the economy's remaining problems, especially the lack of skills and education that keeps millions of Americans from competing for those good new jobs. The Administration's strongest voice for helping these people, former Labor Secretary Robert Reich, is a rueful diarist now. "There are still millions of people desperately trying to stay afloat," he says. "One in five children lives in poverty. Forty-four million Americans have no health insurance. The average 50-year-old without a college education hasn't seen a wage or benefit increase in 20 years. But Americans are segregated by income as never before, so it is far easier to pretend the worse off don't exist. They're out of sight."

Is Clinton leader enough to confront these truths?

Though the election is well past, his advisers say this is no time to talk about such downbeat matters. "There will be no return to Reichism," says one. "That would shatter the public mood."

Clinton isn't the only rudderless ship in Washington. The whole place, primed for battle so long, is having trouble coping with conciliation. Working hard to be charming, Newt Gingrich ends up making his loyalists loathe him more. "There's no interest in politics right now because there's no conflict," former Clinton strategist James Carville complained to the New Yorker last week. "Democracy demands conflict." Washington politicos brighten visibly only when asked about the likelihood of new brawls breaking out. They promise "big fights." They can't wait to start slugging.

Who can blame them? Good times are terrific for raising children and arugula, but they lack the pulse-quickening vitality we've come to expect from late-20th century life. Maybe that's why our national cinema these days is populated by mutants, aliens, snakes, velociraptors, lava rivers and doomed ocean liners. It isn't art, but it does get the blood pumping.

There just aren't many flesh-and-blood bad guys left. Radovan Karadzic and most of his Serbian followers certainly qualify, but there was surprisingly good news here last week when Dusan Tadic became the first Serb to be tried and convicted of crimes against humanity.

In this country, there's nothing that dramatic going on. Even right-wing militia wackos--folks you could always count on for antisocial behavior--are acting responsibly. Ever since Waco, it turns out, some militia leaders have been working secretly with the FBI to ease tensions between the feds and groups like the Republic of Texas, whose standoff this month ended without a conflagration. Even the once radical N.R.A. was overtaken by forces of moderation at its national convention. What's an angry white male to do?

Twinkle, twinkle. The tiny white lights glitter in the ficus trees by the pool at Skybar in the Mondrian Hotel, Los Angeles' latest shrine to the good life. At 10 o'clock on a weeknight, poolside is alive with people drinking and smoking and looking superb. Some are rich, but many more are having fun pretending. Five years after rioting tore this city apart, they are lounging on huge, posh communal beds, sipping their drinks, floating in the bubble of this long good run and wondering, some of them, when it will burst. They thought the crunch was coming when the market got rocked last month, but it didn't and it hasn't, and now some experts say it won't. It won't tonight, anyway. So they're tipping better. "People were cheap for a while," says waitress Cynthia Cruz. "But now they're getting more and more generous. Things have definitely gotten good."

That doesn't mean we can't complain about it. "Money doesn't go as far as it used to," says Sandra Ambrookian, 43, a medical-supply saleswoman from Milwaukee. She's relaxing in L.A. after a vacation in Palm Desert, Calif. Drinking with her is lawyer David Adelman, 41, divorced and in debt but looking great. "I think people are pretty good at hiding the fact that times are not as good as we'd like them to be," he says. Sean Love, a 26-year-old movie post-production worker, couldn't agree more. He smiles. He knows what happens to bubbles when you touch them. His humble Toyota Corolla is outside, well apart from the BMWs and the Porsches parked in the dark beyond the twinkling trees.

--With reporting by Cathy Booth/Los Angeles and John F. Dickerson and Adam Zagorin/Washington





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