Clinton Administration Sets Economic Agenda

IN the first 100 days of his administration, President-elect Bill Clinton will set out to accomplish what many experts regard as a contradiction in terms: the design of a short-term economic growth package accompanied by a deficit-containment plan to control and ultimately reduce Uncle Sam's debt.

The centerpiece of Mr. Clinton's plan to regenerate the sluggish United States economy is to increase by $20 billion a year government spending on transportation, communications networks, and new technologies to help provide the jobs he has pledged the nation's unemployed. (Clinton names transition team, Page 9.)

This "Rebuild America" infrastructure program, as well as worker training and health-care reform will top the Arkansas Democrat's priorities when he reaches Washington in January. Clinton must submit his budget 11 days after he is inaugurated.

To succeed, Clinton has been enlisting business support. While he will push for an investment tax credit and other ways to stimulate the private sector, Clinton also expects American business - from small firms to major corporations - to help government foot the bill for many of his plans.

Government will initially increase its spending and decrease its tax revenues, and Clinton is trying to allay Wall Street's concern that Democratic government is synonymous with fiscal irresponsibility. "Change," he promises, will not mean instability.

Senate majority leader George Mitchell (D) of Maine, pleased to have a Democratic leader at the other end of Pennsylvania Avenue, heralds Clinton's arrival as the "new Democrat." Congressional Democrats and Clinton will work together "to make the [economic] pie grow rather than see it equally distributed," he says.

The business world hopes that Clinton and Capitol Hill legislators will heed their own election-year charges that past years of unbridled federal spending have been a drag on investment, productivity, income, and job growth.

Allen Sinai, chief economist of The Boston Company, warns "because of high budget deficits, the `bang for a buck' of any policy instrument must be calibrated ... in terms of gains in output, inflation, and employment."

He says the US economy can afford an additional $50 billion in fiscal stimulus without letting the inflation genie out of the bottle. "Further deficit reduction can come after growth is revived," he adds.

As a presidential candidate, Clinton pledged to match any revenues lost (such as those from tax credits) with revenues raised (such as higher taxes on the wealthy and US businesses). He talked about cutbacks in defense spending, for example, as a way to pour more money into civilian research and development.

Another way Clinton proposes to cut spending is through savings earned with health-care reform. Runaway Medicare and Medicaid costs, the need to reduce government expenditures and create jobs "are all interrelated," Senator Mitchell told reporters at a Monitor breakfast on Thursday.

Some of Clinton's expected early efforts, such as accelerating $151 billion in already approved infrastructure spending (a jobs program that creates physical assets) will be a lot easier to complete than a complex health-care plan, Mitchell says.

A VETERAN of past health-care battles, the majority leader says a new health-care plan will likely be tackled by the end of 1993. Mitchell also expects "broad support" from both Clinton and lawmakers for a targeted reduction in the capital-gains tax accompanied by higher taxes on the wealthy.

Hoping to influence the upcoming legislation, the US Chamber of Commerce - the traditionally Republican bastion of big business - drafted a "national business agenda" on election day. At the top it put balancing the federal budget, calling it "the most important business-related issue facing the nation."

William Archey, the chamber's senior vice president for policy, says Clinton's first 100 days will set the tone for macro- and micro-economic policies that are needed in the years to come.

"The real issue is the quality of the work force. We will see a more activist government, working with industry and business in job training and retraining, and research and development to ensure the creation of high values jobs."

Mr. Archey, who is eager to help Clinton advance this agenda, says the Arkansas Democrat will move swiftly to stimulate the economy with an investment tax credit and a capital-gains proposal to reward long-term investment.

Clinton, he states, will also seek spurs to private-sector development, such as wider use of federally funded national laboratories to develop cutting-edge civilian technology. (They have long existed for defense technology.)

But Archey quickly points out: "Clinton has said, `I can't fix the economy if I can't fix health care.' "

For health care, the US far outspends its leading competitors. "Clinton knows the competitiveness of the US economy starts from within," Archey says.