Clinton Gives New Council Wide Scope on Economy

But critics charge new body favors Wall Street and may be unwieldy. RECASTING GOVERNMENT

PRESIDENT Clinton intends to make his newly created National Economic Council (NEC) the most important policy lever in the United States government.

But the unwieldiness of this body - more than 20 Cabinet members and top aides bound by charter to coordinate economic decisionmaking of all government agencies and departments - raises questions about its ability to act. Can it tackle a broad range of issues from student loans to trade protectionism? Will its members reconcile their diverse views? And what is the NEC's role in national security policy?

Jeffrey Garten, who served on economic-policy councils under former Presidents Nixon, Ford, and Carter, says the scope of the tasks Mr. Clinton has assigned to the NEC is unprecedented. "If it's to be effective in any way, it's going to have to be very selective; if it's a filter for every issue, it will break down."

Mr. Garten, senior adviser to the Blackstone Group, urges the NEC to form long-term strategies such as trade policy and to address "acute crises," such as preparation of the federal budget, which he calls "the reflection of all national priorities."

Fred Greenstein, director of the leadership-studies program at Princeton University's Woodrow Wilson School, marvels at Clinton's ability "to talk about economic policy with an articulateness that is mind-boggling." But he says the facility is "very dangerous," because "it may not necessarily work in practice."

The NEC should ground Clinton in "the pros and cons of any number of economic policies," Mr. Greenstein says, adding that the NEC chief should be an "honest broker asking tough questions," to guide the administration.

By plucking Robert Rubin from a premier Wall Street firm to be his NEC coordinator, Clinton signaled to financial markets his resolve to remove the tax-and-spend tag pinned on Democrats and address economic problems in a fiscally conservative way.

Clinton's choice of Mr. Rubin, a skilled manager and consensus builder, was hailed by bankers, financial marketers, and big-business leaders. But it was seen by many as a curious move by Clinton, who put the erosion of middle America's economy at the center of his campaign. Appointing a Wall Streeter to steer the nation's economic policy dramatically departed from his election-season rhetoric.

The selection "institutionalized a lobby that is innately hostile to the interests of the average American," says Kevin Phillips, publisher of "The American Political Report" and author of a recently released book, "Boiling Point: Democrats, Republicans, and the Decline of Middle Class Prosperity."

As NEC chief, Mr. Phillips says, Rubin "will be whispering to the bond market: `Don't worry, we're not going to take care of [middle-class] Levittown.' "

Garten, now writing a book on Wall Street's relations with Washington, says financial markets "hold a daily referendum on how Clinton is doing. The market will lose confidence in US economic policy if Clinton fails to curb the deficit. Rates will jump, the dollar will sink, and economic recovery will waiver."

Rubin, former co-chairman of Goldman Sachs & Co., is keenly aware that the bond market responds favorably to fiscal measures, such as a major cut in entitlements, taxing Social Security benefits, and other measures that do not sit well with the middle class, Phillips says.

As organized, the NEC incorporates the chairwoman of the White House Council of Economic Advisers and the US Treasury secretary. The strong views of CEA chairwoman Laura D'Andrea Tyson, who wants to toughen US trade policy, and Treasury Secretary Lloyd Bentsen, who Clinton insists is his top economic consultant, could be eclipsed by the broader NEC.

The new council took its first public action on Monday, when US Trade Representative Mickey Kantor, "with guidance from the National Economic Council," imposed trade sanctions on the European Community for discriminatory procurement policies by government-owned utilities.

As commercial problems abroad are increasingly seen as grounds for economic warfare, observers will be examining the NEC's interagency reach. The secretary of state and the national security adviser join the US trade representative and the Commerce secretary, among others, as full-time members of the NEC. A White House source says the Central Intelligence Agency director will sit in on meetings as the need arises.

HIS troubles Stanley Kober, an adjunct scholar at the Cato Institute, who cautions against mixing intelligence gathering with economic policy. "There are already enough trade frictions - in the relationship between the US and Japan, for example - without creating more occasions for misunderstanding, ugly diplomatic incidents, or retaliatory measures," he says.

He warns that "involving the CIA in international economic affairs would create potential for corruption and abuse."

The agency's work "would necessarily benefit some companies more than others, and recipients of CIA data would probably be determined more by companies' political clout than by their ability to compete in global markets."