Winning Only First Step for Democrats

Should Clinton become president, he and running-mate Gore would face an economic Gordian knot

FOR the past 12 years Democratic leaders have had a lot of time to assess the nation's mounting economic problems and to learn from mistakes they blame on Republican administrations.

But political pundits and economists say the Democrats will have to work hard to shed the "tax-and-spend" tag Republicans have pinned on them over the years. The pundits caution that, if Democratic leaders truly seek to restore the country's economic growth, they will have to muster a lot more courage than they have exhibited so far.

Should Gov. Bill Clinton of Arkansas and United States Sen. Albert Gore Jr. of Tennessee make their way to the White House this fall, they will inherit tough economic conditions. During three Republican administrations wages have fallen, health-care and housing costs have soared, and the nation's debt has quadrupled. Americans today save only half as much as they did during the 1960s and 1970s.

"In the new economy, prosperity depends as much on the innovative capacities of a country's workers and firms, and on their flexibility to change, as it does on managers' abilities to cut costs," says Robert Shapiro, vice president of the Progressive Policy Institute, a Democratic think tank. Mr. Shapiro is a top Clinton economic adviser

Putting forth the "people first" message of the Democrats, Shapiro says the best way to provide improved living standards for Americans is by better educating and training students and workers. A better-prepared labor force coupled with stepped-up investments in technology will make American firms more competitive in the world market, he says, and cause the US economy to grow.

Today's high debts, both public and private, choke the government and private sector's ability to invest.

Promising the "biggest flood of investment since World War II," Mr. Clinton plans to finance new investment in cities, workers, and infrastructure with spending cuts and higher taxes on corporations and the wealthy. But apart from that, he has all but avoided the politically lethal call to raise taxes. Invoking "tax fairness," he has targeted only a small portion of taxpayers - those earning more than over $200,000 a year. His call for tax hikes on the wealthy encourages some of the party's leftists and

softens the impact on increasingly marginalized, old-order liberals, who balk at mainstream Clinton plans such as making welfare payments conditional on work. Cuomo urges straight talk to voters

New York Gov. Mario Cuomo, who Democratic National Committee chairman Ron Brown calls "one of the most powerful voices in American politics," says Democrats must seize this opportunity to tell voters the truth about solutions for the deficit.

If that includes higher taxes and cutting entitlements, say economists, then the Democrats will be on the right track. David Hale, chief economist at Chicago-based Kemper Financial Services, has served as an informal adviser to both Clinton and the Bush reelection campaign. He recalls a recent meeting between the Democratic candidate and his staff in Little Rock, Ark., in which "Clinton took the side of the fiscal conservatives" who fought for more-moderate government spending. Mr. Hale says Clinton's future fiscal plans are "not that far from Bush's."

Former Massachusetts Sen. Paul Tsongas, who failed to rally a majority of Democrats behind his call for "tough economic choices," told reporters at a Monitor breakfast this week that Democratic control of both the White House and the Congress would not necessarily result in change. Clear-cut plan for voters a necessity

If the Democratic ticket wins but fails to present voters with a clear-cut plan to redress the country's most paralyzing problem - the federal deficit - all talk of change is illusionary, says Tsongas. "Where's the mandate?" he asks. "Without it, you'd still have gridlock in a real sense," he adds, if not a "partisan sense."

Hale agrees that to cut politically sensitive programs such as Medicare, an incoming administration needs a mandate from voters. But given the probable three-way race for president in 1992, the chance of anyone securing overwhelming voter support is slim.

The Democratic lexicon is shifting. Clinton, Democratic National chairman Brown, Democratic economic advisers, and the party's "spin" controllers offer a government that affords Americans "opportunity." In return, Americans must assume "greater individual responsibility."

The Democratic Party platform blasts the Republicans for bringing America "a false and fragile prosperity based on borrowing, not income...." Pointing to the "mountain of public debt and a backbreaking annual burden in interest," the platform seemingly invokes this campaign's most often-heard concern: the future of the nation's economy. "It is wrong to borrow to spend on ourselves, leaving our children to pay our debts," the platform says.

The follow-through on "whatever a candidate may promise depends on the environment he inherits as president," Hale says. "If the economy is still slow, there will be more spending as soon as it improves."

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