WITH a renewed sense of direction for United States economic policy, Treasury Secretary Lloyd Bentsen and Federal Reserve Board chairman Alan Greenspan stepped confidently into this past weekend's London meeting of the Group of Seven (G-7) leading industrialized nations, where finance ministers and central bank governors from the US, Britain, Canada, France, Germany, Italy, and Japan met to discuss policy.
Armed with President Clinton's economic plan, as well as a strident trade position and the makings of a new US industrial policy, Mr. Bentsen and Mr. Greenspan found that the tables have turned from the past decade of G-7 meetings when the US economic position was relatively weak and its policies underwent constant attack.
Compared with its global partners - all steeped in recession and political turmoil - the US is rebounding, with private economists projecting over 3 percent growth in national output this year. (US rebound, Page 3.)
Washington's hand is even stronger because Mr. Clinton has proposed a domestic agenda of higher taxes and fiscal restraint, actions long called for by G-7 policymakers, who have viewed Washington's runaway government expenditures and constant borrowing as the major contributor to high interest rates and a drag on the world economy. Clinton also enjoys the strongest domestic support of any G-7 leader.
The US president has heightened European and Asian concerns about US protectionism through moves against unfair trade practices in steel and a threatened limit on European and Asian auto imports. US trade partners are also concerned about Clinton's protests against European industrial subsidies, and his call for greater US government assistance in developing key technologies that will help US industry compete worldwide.
Last week, Mr. Bentsen's self-described "casual comment" about the burgeoning Japanese trade surplus with the US, and the need for a higher yen and a lower dollar, caused the yen to rise precipitously. This had a stinging effect on Japanese officials, who view such talk as interventionist.
"We now know that Bentsen's basic philosophical premise is that the way to get at the trade deficit is with the weaker dollar," says Jay Collins, president of the G-7 Council, a private policy group of former finance and monetary officials. Clinton address
On the eve of the London meeting, Clinton delivered his first major address on the international economy. "Cooperation between the major powers toward world growth is not working well at all today," he said.
While he pledges to vigorously pursue a global trade agreement, he insists on reciprocal market and investment access. But he cautions that by promoting the welfare of Americans and preserving the US job base, America should not retreat into isolationism. James Elles, spokesman of the European Parliament's finance committee who directs a network of transatlantic politicians and business leaders, met last week with US legislators and Clinton officials. He is also wary of nations turning inward.
"Europe is in a fragile state politically and economically," he says, citing coming French elections that may unseat the Mitterrand government, European integration problems, monetary turbulence, and soaring unemployment in Britain and across the Continent. "We all have this feeling that we could soon revisit the 1920s and 1930s," he says. "Now is the time to button down the global trade accord to encourage open markets and economic growth. If we lose that opportunity, there will be every excuse not to c ooperate." Selling US economic plan
In his tireless appeal for approval of his economic plan, Clinton says America's leadership in multilateral affairs depends on its domestic resolve to develop a sound economy. "The future of the American dream and ... even of the world's economy, hangs in the balance on what happens in this city in the next few months."
Many international trade partners agree. Germany's business sector - once the most powerful force in the European economy and a leading world exporter - expects a continued downturn in its local prospects, according to indexes compiled by the German chambers of commerce and industry. Like all the other major trade partners, their hopes for recovery are pinned on US growth.
Clinton is fighting hard for his domestic policy changes - from targeted government spending on education, job training, and development of cutting-edge industries to reductions in the federal deficit. "Europeans and Japanese are taking the Clinton plan very seriously," says Mr. Collins. "I don't detect the skepticism you find in Washington," he says. In the coming weeks and months, Clinton must convince detractors who doubt the beneficial effects of the plan, given the tax increases imposed on US corpor ations and high-income earners who are the main contributors to economic growth.