Economic-Policy Advisers Line Up for Cabinet Roles

CEOs, bankers, and liberal economists are setting the tone of Clinton's economic proposals, which promise a real break with the low-tax policies of the Reagan years

AT the Clinton-Gore campaign's Little Rock headquarters, economic policy director Gene Sperling holds the dubious distinction of putting in the longest and most frenetic day.

Mr. Sperling has to move fast during his 19-hour workday to pull together the steady stream of proposals from the dozens of economists and businessmen advising the Clinton organization.

The Arkansas governor draws from a diverse pool of advisers, Sperling says, running down a list that includes Wall Street bankers, CEOs, and economists, some of whom have long supported more government intervention in the marketplace, such as would result from industrial policy that helps business compete aggressively in global markets. Some of them see the immediate need to contain government costs and bring down the burgeoning deficit while others put the highest priority on added government spending.

Just about the only common denominator in this group is the view that government should be more active in promoting the private sector and public financing - or as Clinton says, to address the "investment deficit."

The candidate's plans range from federal mandates on employers to cover workers' health insurance costs (or submit to a commensurate federal tax) to investment tax credits that encourage businesses to invest in their own development and expansion. They say Uncle Sam should pour more public funds into education, job training, and infrastructure projects such as transportation.

Advocates of Clintonomics see it as an attempt to bridge the widening divide between America's rich and poor by creating the conditions for business development and more jobs. For starters, the Clinton plan calls for $219 billion in new government spending for education, worker training, and other programs to enrich the country's "human capital resources."

Where's the money going to come from?

Robert Shapiro, vice president of the Progressive Policy Institute, the think tank of the Democratic Leadership Council, says it won't come from higher income taxes, although Clinton's plan includes raising the tax burden on the rich and trying to crack down on foreign firms that avoid US taxes. "The bottom line ... is that every dollar of new spending will be offset by a dollar of savings elsewhere in the budget."

Mr. Shapiro, who contributed to Clinton's economic plan and is a likely candidate for budget director in a Clinton administration, says "the problem is not sim-ply that we don't spend enough money. The problem is also the way we spend money." Clinton would reduce growth in government spending to curb the deficit and cut funding for defense and discretionary programs. "Ultimately it's got to come out of entitlements," Shapiro says.

Harvard economic policy professor Robert Reich, whose association with Clinton dates back to their days as Rhodes scholars at Oxford, disputes the view that deficits, by definition, are dangerous. If anything, he says, the US economy is stalled because government refuses to devote enough resources to building a better educated, more competitive work force.

Mr. Reich identifies two primary reasons why worker productivity and the US economy is slackening. First, wealthy individuals and businesses have failed to invest a sufficient portion of their windfall from the fat Reagan-Bush years into US factories, machinery and equipment. At the same time, government is in a debt stranglehold, and cannot muster adequate funding for human and physical resources: education and training, early child and health care, roads, tunnels, and bridges.

New businesses are the primary source of new jobs, says Shapiro, who points to Clinton's program to stimulate American entrepreneurship by providing targeted investment tax credits, a 50-percent investment tax credit, and a permanent research-and-development tax credit.

Clinton often speaks of technological advancement as the wave of America's manufacturing future. His focus on high-tech is part of the broader economic policy that calls for a better-educated, more highly-trained work force. Sperling says technology is a major component of his candidate's economic plan, and points to scores of endorsements from scientists and leaders in the manufacturing sector.

Clinton says his running mate, Sen. Al Gore, is his intended White House technology policy czar. In this capacity, Senator Gore would help spend part of Clinton's proposed $20-billion infrastructure fund on a technology-based agenda that devotes government research funds to critical technologies, links federal laboratory research to private sector initiatives, restructures the tax code to foster more R&D, and redefines trade policies to promote US technology in world markets.

What are Clinton's prospects of moving his agenda through Congress?

"It won't be government by Clinton," says veteran Republican political analyst Vincent Breglio. "It will be government by [House Speaker Rep. Tom] Foley and [Maine Senator and Senate Majority Leader George] Mitchell."

Shapiro predicts that "the Governor will be elected with a mandate to make changes" and that Congress will welcome a strong Democratic president. In divided government, he says, each party has "a really fundamentally different view ... both sides go for maximum on their position because they will ultimately have to split the difference."

Judging from the endorsements from the Congressional majority leaders, the 103rd Congress, by contrast, may simply split hairs with a Clinton White House. In its final report entitled "Senate Democratic Record of Progress vs. Obstructionism of the Bush Presidency," the Democratic Policy Committee, chaired by Senate Majority leader George Mitchell lists "key Democratic Priorities for the 103rd Congress": economic growth/job creation, health care and campaign-finance reform. The first two top Clin-ton's ag enda, Shapiro says, which he is bound to put in his first 100-day plan if he wins on Nov. 3.

Who will be on hand to push ahead with a Clinton 100-day plan? "He'll bring liberals, moderates, and conservatives together. That's how he's always been," says Craig Smith, who for six years screened candidates and made recommendations for Gov. Clinton's political appointees to boards and commissions.

Critics charge that with an overabundance of opinionated advisers nearby, Clinton will become entangled in a web woven by ideologues (such as industrial policy advocates) or by special interests (such as the labor unions).

Sperling protests that these charges are the result of the past 12 years of failed approaches. "Ronald Reagan and George Bush have created this perception that whoever whispers in their ear has a lot of influence. It's probably been true for the two of them," Sperling says. By contrast, he says, Clinton takes in a broad spectrum of views and then selects what he considers the best contributions.

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