Will the candidates' economic plans do the job?

ECONOMIC growth and the federal deficit are the 1992 presidential campaign's top issues. Each of the three major candidates has proposed ways to generate jobs, stimulate business investment, and cut the deficit. In today's concluding segment of a two-part series, Monitor correspondent Amy Kaslow takes a detailed look at the candidates' spending plans for the United States. INVESTMENT VS. CONSUMPTION SPENDING: TWO VIEWS

President Bush attacks Democratic rival Gov. Bill Clinton with "tax and spend" charges. Governor Clinton talks about "investments" in America. Independent candidate Ross Perot details shoring up the nation's "human capital."

Stephen Entin, an economist at the nonpartisan Institute for Research on the Economics of Taxation, objects to the way the term "investment" has been thrown around during the campaign. "Investment, money towards plant equipment or buildings, should earn a return and contribute to the nation's gross domestic product (GDP). Defense spending, which all three candidates propose to cut, is "a good investment because it generates use over many years," Mr. Entin says. So is public infrastructure because roads,

bridges, and tunnels "last a long time," he says. By contrast, consumption spending is on food, medical care, clothing, and shelter, he says.

Entin would much prefer to see more private- sector investment. "It is a major mistake to think that public-works jobs would constitute a net gain in employment, or that services of the public works themselves would add to the gross domestic product after construction." Public works wind up being political "pork" projects rather than productive investments, he says. And they crowd the private sector out of work.

Education, Entin says, can be an investment in "human capital," if it improves productivity and incomes.

Jay Levy, chairman of the Forecasting Center of the Levy Economics Institute at Bard College, would win Mr. Perot's ear with his suggestion that government should behave more like business. But he would lose it with his claim that deficit spending is not all that bad. "When the government puts more money into the economy than it takes out, it is stimulating activity."

To Mr. Levy, government spending promises future dividends. "By cutting down net flow of government money into the economy you're reducing personal and business purchasing power, you increase unemployment and the need for social safety nets, and you wind up with as big a deficit as you started with and you've hurt the economy in the process."

If government racks up debt, it ought to spend the borrowed money on assets, Levy says. DEFENSE Bush

Plans to cut defense spending by $44 billion over the next five years. Would keep 12 aircraft-carrier task forces, continue funding for the C-17 transport plane, forge ahead with a ground-based anti-missile system and devote more funds to space-based defense research. Would cancel Seawolf submarine.

Steven Kosiak, a senior budget analyst at the non-partisan Defense Budget Project questions whether Bush is starting from a realistic baseline by assuming that he can bank on the $70 billion worth of defense savings his budget director projected from 1991-1997. The overriding concern, Mr. Kosiak says, is whether Bush can retain the same preparedness with further cuts.

Clinton

Would slash spending $60 billion beyond the cost reductions Bush proposes. Would cut back to 10 aircraft-carrier task forces, retain the Seawolf, build the C-17. Talks about conversion to civilian production.

Clinton aims to "garner substantial savings by cut-ting the force structure, and by cutting spending for the Strategic Defense Initiative to save $2 billion or $3 billion over five years," but he uses a Bush baseline that may be off, Kosiak says. Perot

Would cut defense spending by an additional $40 billion above Bush cuts during the next five years. Would cut the Seawolf submarine. Talks about conversion from military to civilian production.

Kosiak says lack of detail from Perot prevents analysis. INFRASTRUCTURE, RESEARCH AND DEVELOPMENT Bush

Supports additional $4 billion for national highways, air-traffic control, and high-technology transport. Would increase funds to retrain defense industry workers by $2 billion annually over five years.

Brookings Institution economist Barry Bosworth says Bush has already signed legislation -- the $151 billion highway transportation bill -- that means a substantial increase over current levels of infrastructure spending.

Clinton

"Rebuild America Fund" would put $20 billion a year into transportation, communications, environmental technology, and defense conversion.

Mr. Bosworth says "It will never happen," because the transportation sector, where most of the funds are directed, "can't absorb in a four year period that magnitude of an increase." Perot

Would spend $28.5 billion more on research and development over the next four years and pour roughly $8 billion a year over five years into infrastructure projects.

Bosworth says that Perot's emphasis on new highway construction, like that of the other candidates, is misplaced. "It will just lead to ... more commuter traffic." EDUCATION Bush

Proposes a "GI Bill for Children" designed to supply middle- and low-income families with vouchers worth up to $1,000 in tuition assistance for private and parochial schools. Proposes $1 million in grants for "break the mold" schools across the country. Requested a $6.6 billion 1993 federal funding increase for aid to low-income college students (Pell Grants).

Bosworth says the Pell Grants' net costs will have to be funded with other spending cuts and a reallocation of funds from other education programs. Critics charge that Bush's voucher system will cost $30 billion to implement nationwide. Clinton

His big-ticket education item is a proposal to replace the ongoing student loan program with a system that would offer higher-education loans to all interested students. Borrowers would repay loans through payroll deductions or community service.

Repayment rate on government student loans is between 30 percent and 40 percent. Non-repayment on a program the size of Clinton's proposal could add tens of billions of dollars to the deficit. Perot

Perot supports $2.5 billion in additional education spending. While short on specifics, he stresses pre-school programs beyond the current Head Start program.

Despite Perot's strong background in education reforms, he fails to lay out a plan cogent enough to analyze. ENTITLEMENTS Bush

Wants to cap growth of entitlement programs (except Social Security) but doesn't detail his cuts. Among programs Bush has hinted he will cut: Medicare and Medicaid health programs; food assistance, such as food stamps and child-nutrition allowances; veterans' benefits; retirement benefits for federal workers. Claims such measures will save $100 billion a year by 1997.

Bosworth says the arithmetic is correct. "But this is just a goal. How would he achieve it? I don't think it can be treated as a serious proposal." Stephen Entin, an economist with the Institute for Research on the Eocnomics of Taxation, agrees. "It's straight forward arithmetic. The problem is, getting it enacted." Clinton

For the "wealthy," would increase portion of taxable Social Security income and Medicare payments. Claims this and his health-care plan would save $4.4 billion over four years.

Bosworth says, "Those are pretty modest claims on the tax side," and Clinton "doesn't provide much detail, except for very small cuts in entitlements." Perot

Claims that his proposals to slash social spending will save $100 billion annually, by the end of his five year program.

Bosworth says that Perot offers specifics on only half of his program; like Bush, offers nothing specific with the so-called "cost containment for Medicare and Medicaid." HEALTH CARE Bush

Proposes tax credits and deductions to help middle- and low-income people buy insurance. Would limit damages in costly malpractice suits and to prevent companies from denying coverage to those with preexisting medical problems.

Bosworth says this expensive proposal lacks congressional support (especially among Republicans). Bush "has no way to pay for it. It would increase the budget deficit by around $25 billion a year." Clinton

Seeks to put the burden on private sector by requiring employers to provide coverage or pay into a government-supplied program. Says uniform payment procedures, elimination of tax breaks for drug companies, and spending targets would save $4 billion by 1997.

Mr. Entin says needed pharmaceutical research would suffer sever cutbacks and business would be crushed under the mandates.

Perot

Puts no price tag on his proposed benefits package for universal coverage and taxation of the wealthy's benefits. Claims a savings of $141 billion over five years would result from costs containment on Medicare and Medicaid.

Entin says price controls (cost containments) do nothing to correct inadequacies of the health-care system, but are certain to diminish the quality of service.