WASHINGTON — STRONG signs that the nation's economic recovery is faltering have prompted a strategy shift in President Clinton's promotion of his economic plan - but that may not be enough to overcome skepticism among consumers and business leaders.
Wary of losing support from businesses and consumers, the White House seems to be throttling back its previous demands for higher and broader-based taxes, and putting the benefits of budget cuts front and center.
Mr. Clinton told reporters that a 1 percent drop in the Index of Leading Economic Indicators during March - the sharpest fall since the depths of the recession two years ago - buoys the case for his five-year budget-cutting measures. Fiscal restraint will boost financial markets and drive interest rates down, the president argues, thus generating growth.
But while Clinton's earlier calls for "shared sacrifice" are now muted and the release of his costly health-care reforms is delayed, corporations and individuals still see added government costs and higher taxes looming ahead.
Business leaders from small firms to large multinationals have sharpened their attacks on the White House agenda, which they claim is offered at their expense. And after three months of the Clinton presidency, American taxpayers - whose hopes were boosted by Clinton's election last winter - now are more anxious about their position and where the economy is headed.
One of the most important barometers of the economy's health - consumer confidence - dropped during the first three months of 1993. Consumer purchases make up two-thirds of US economic activity; when they begin to sink, businesses scale back investment and hiring plans.
The measure of consumer sentiment is down "because people don't know what to expect" from government or business, says Gail Fosler, chief economist of the New York-based Conference Board, which compiles the closely watched monthly index.
Clinton could help buoy confidence, she says, "if he spoke more consistently and in more positive terms." Instead, Americans are inundated with negative news about poor prospects for employment in this "jobless recovery" and face "so many unknowns - from taxes to health-care costs," Ms. Fosler says.
Ultimately, she projects, lower interest rates and greater availability of personal and business loans will improve consumers' outlook. "The perversity is that Clinton will get more credit for and do less policy-wise" to decrease the deficit because the "low interest rates alone will "have a powerful impact," she says.
But in the interim, consumers and businesses "don't feel secure making decisions today that obligate them for the future," she adds.
In an interview, Labor Secretary Robert Reich says efforts to win businesses' endorsement are somewhat frustrating: "The Clinton administration is doing its part by getting interest rates down and giving the private sector the resources it needs to invest ... but we're powerless unless the private sector takes some reponsibility."
Mr. Reich, one of Clinton's top domestic policy advisers, says, "The economic plan does exactly what business wants" by slashing federal spending and offering "all kinds of incentives for business development." Its passage, he says, "is crucial to long-term growth here in the US."
But since the administration's recent failure to win congressional support for the $16.3 billion stimulus package, opponents of the broader tax plan have been on the offensive, warning Americans that it will undermine economic growth.
A string of disappointing economic data fueled their fire - including the drop in the Index of Leading Economic Indicators, a dramatic decline in the output of US goods and services between 1992's last quarter and the first three months of this year, April's news that industrial production was almost flat, and last Friday's Labor Department report that unemployment remains at a naggingly high 7 percent.
Jerry Jasinowski, president of the National Association of Manufacturers, blasts Clinton's proposed phase in of an energy tax as "a jobs killer" that will cut more than 600,000 workers from employment rolls by 1998.
While the White House is pushing this portion of the plan as a consumption tax, Mr. Jasinowski asserts that some $42 billion of the expected $72 billion increased revenues from the tax would be paid by business.
In an address to senior corporate economists, General Electric Company chairman John Welch Jr. warned that "higher taxes and higher health-care costs are in direct conflict with more jobs."
Reich replies: "I don't believe for a minute that our unemployment problem has anything to do with concerns about the economic plan. We inherited an economy mired in recession.... If anything, the action already taken by the president has had a good effect."
The labor secretary says Clinton's ability to convince "Congress to push ahead with specific budget cuts and tax increases ... had a tonic effect on interest rates.... It's now critical that the business community get involved."