Reading: Big Bob vs. Little Bob — The Rubin–Reich Feud (1996)

Grade Level: 11th Grade

Subject: U.S. History II

Utah Standards: U.S. II Standard 4 (The American People Face New Challenges) — domestic policy debates of the late 20th century

Essential Question: What happens when two cabinet members disagree about the direction of the nation's economy — and what does that tell us about how economic policy is really made?

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Reading: "Big Bob vs. Little Bob" — The Rubin–Reich Feud (1996)

Treasury Secretary Bob Rubin is a cautious man who doesn't like surprises. But in early January, he got a big one when he read the op-ed page of The New York Times. Labor Secretary Bob Reich, decrying the massive layoffs at AT&T, proposed that the government give tax breaks — taxes are Rubin's domain, not Reich's — to corporations that avoid downsizing and offer benefits like job retraining.

Rubin wasn't happy. He'd set up a mechanism — the National Economic Council — for vetting new ideas. And here was Reich, off on his own, stomping on Treasury's territory. "I assume he wouldn't want to read about my latest minimum-wage proposal in The Wall Street Journal," he groused later at a White House senior staff meeting.

The Rubin-Reich feud is about more than turf. It's about what kind of economic message the White House will send to voters. By the numbers, Clinton's got a good case: unemployment is low, and the deficit is getting smaller. But public unease about stagnant wages and downsizing means numbers aren't everything, and the president must find a way to attack corporate greed without completely alienating business.

Rubin would be happy to see the whole anti-Wall Street issue disappear. A multimillionaire currency trader who came to Washington from Goldman Sachs, he's a deficit hawk who's deeply suspicious of Big Ideas for fixing the economy. Rubin is content to see Clinton stick with a modest menu of prescriptions like tax credits for college.

Reich, the voluble Kennedy School liberal who jokes about his 4-foot-10 height ("Do I look like big government?" he says to open some of his speeches), is the administration's premier class warrior. He lives for Big Ideas. Reich wants the president to take the corporate downsizers on directly. At a lunch with reporters last week, Reich trashed profitable companies "resorting to laying off their workers to pump up their stock price."

That kind of Main Street populism infuriates Rubin. "It spooks 'Big Bob' when 'Little Bob' goes around talking about the paycheck economy vs. the pinstripe economy," says one administration official.

Their dispute has generated unusual tensions. It turned NEC chairman Laura Tyson, a Berkeley economist unaccustomed to refereeing political spats, into a putative peacemaker. To mend the rift, she met with the two in late February, including a breakfast in the White House mess. The result was a memo, signed by all three, agreeing that Reich's get-tough rhetoric would stop. But he wouldn't stand down.

After his comments at last week's lunch, Tyson and chief of staff Leon Panetta appealed for Clinton's help in dealing with Reich, arguing that he was diverting attention from their main economic message. The next morning, Rubin and Reich appeared in the White House briefing room to present a united front. For now, says one source, there's "relative peace."

Characteristically, Clinton is waffling. He has encouraged Reich to explore the issue publicly, and recently Clinton has singled out enlightened companies for praise even though he won't endorse specifics like the tax proposal. For Big Bob and Little Bob, it's a typical response from Big Bill, who's lodged squarely in the mushy middle.

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Discussion Questions

1. What is the actual disagreement between Rubin and Reich? Is it only about "turf," or about something bigger?

2. Why does Reich want to punish companies that downsize? What does he believe about the relationship between corporate profits and workers' wages?

3. Why does Rubin oppose Reich's tax-break proposal? What values or assumptions drive his position?

4. The article describes Clinton as "lodged squarely in the mushy middle." What does that phrase mean, and what pressures is he trying to balance?

5. This article is from 1996. How do the debates it describes — downsizing, stagnant wages, tax breaks for corporations, "the paycheck economy vs. the pinstripe economy" — echo in today's politics?

Source: News magazine article, 1996. Republished for classroom use in History Education Foundation materials.