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Better Economy, But Can Clinton Take the Credit?

By Ron SchererStaff writer of The Christian Science Monitor / August 27, 1996



NEW YORK

Bill Clinton ran for the White House four years ago by waging a campaign based on George Bush's management of the nation's economy.

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In presidential politics, the economy has long taken a defining role - Americans often vote with their pocketbooks. Now the critic has his own track record to defend. So, it is fair to ask: How has the former governor of Arkansas fared as an economic steward?

The short answer: Better than most modern presidents.

The unemployment rate has dropped from 7.1 percent to 5.4 percent, under President Clinton. The nation's gross domestic product (GDP), a measure of its production of goods and services, has shown modest but steady growth compared to a roller coaster ride during the President Bush's years. And, the Misery Index, the sum of the unemployment rate and the inflation rate - once employed by Ronald Reagan to embarrass President Carter - is at a miserly level.

"You have to give [this administration] pretty good grades. Frankly we have not had a better combination of low inflation and low employment in maybe 40 years," says Edward Gramlich, dean of the School of Public Policy, University of Michigan in Ann Arbor.

But few economists credit Mr. Clinton with a strategic vision that produced the results. Like his politics, his economic philosophy seems more pragmatic than dogmatic. He is not a supply-sider or a traditional Keynesian, who believes in government intervention.

"He gets pushed around from issue to issue and tries to achieve the compromise," says Mickey Levy, chief economist at NationsBank Capital Markets in New York.

Still, when the economy is ticking along well, moderate moves might just be the best strategy.

"He didn't do anything to muck things up," says Lyle Gramley, a former member of the Federal Reserve. He notes that President Nixon enacted disastrous wage and price controls in the early 1970s. And, President Reagan cut taxes without cutting spending.

In fact, Clinton is acutely interested in understanding economic issues, according to Robert Shapiro, who helped the Clinton team formulate their economic game plan before taking office. "He does not take on faith the views of his advisers. It's always remarked that Clinton wants to understand policy," says Mr. Shapiro, a fellow at the liberal Progressive Policy Institute in Washington.

As economists are quick to point out, however, there is a limit to how much the president can actually do to influence the nation's $7 trillion economy. After all, the president does not persuade Americans to go out and buy a new car or house, or tell them which stocks to pick.

But the president can make appointments to the Federal Reserve Board; proposes, vetoes, or approves congressional budgets; and promotes certain pieces of legislation. Clinton has done all of these. Here's how economists rate him on some of these key elements:

*The Federal Reserve Board. As president, Clinton has reappointed Alan Greenspan as chairman, and added Janet Yellen, Alice Rivlin, Lawrence Meyer, and Alan Blinder as members. Most economists consider the Greenspan appointment the most important. "It outweighs any other decision, he could have made," says Mr. Levy.

Even the other appointments - including Mr. Blinder who has subsequently left - receive high marks, though. "They are all mainstream Democratic economists who are concerned about controlling inflation as well as output," says Mr. Gramley, a consulting economist at the Mortgage Bankers Association in Washington.