US President's Stimulus Plan Draws Early Fire

Clinton heads to Detroit to market package that Republicans say is no longer needed

TO many, the signs are unmistakable. Leading indicators from housing sales to manufacturing show the United States economy rebounding.

But despite this upturn, unemployment remains persistently high at 7.1 percent - higher than it was in when the recession began in 1990.

Intent on honoring his campaign promise to "put America back to work," President Clinton is pushing hard for a $31 billion fiscal stimulus devoted primarily to job creation and worker training. Today the president is in Detroit to market the plan.

Citing 16 million people out of work, rampant white- and blue-collar layoffs, and future perils facing the nation's employed, Clinton casts a shadow over the Commerce Department's recent economic data.

But Republicans say the statistics are the brightest signs of growth in almost a decade and they reject Clinton's call for stimulus.

The debate over the stimulus package, to be announced in Clinton's Feb. 17 State of the Union address, centers on short-term possibilities, the budget deficit, and long-term planning. (States gear up to spend, Pages 6 and 7.)

Stimulus supporters underscore the link between job security and the economy's future. Labor Secretary Robert Reich cautions Americans to "remember, there have been two false dawns already in this very strange recession." And "until the jobs come back," he says, the US should not expect "a buoyant recovery."

House Ways and Means chairman Dan Rostenkowski (D) of Illinois says, "The American people work on perception ... and this administration has to convince the American people that we're going to create jobs in the near future." New jobs promised

Clinton promises 250,000 new jobs this year and 8 million total during the next four years. Economists temper this by stressing the sluggish nature of Clinton's planned public-works projects, and say only a fraction of the intended employment will be created in the short term.

But a stimulus package has been heralded by strong supporters from prudent bankers to liberal advocates.

New York investment banker Felix Rohaytn favors the package because both public- and private-sector cutbacks in spending have made prospects for new job creation bleak.

Others point to a job-creating stimulus package as a way to ensure cost cutting in current federal obligations, including unemployment compensation (which Clinton said Feb. 8 he plans to expand) and welfare payments.

"For every 1 percent that we reduce unemployment, the federal government can save as much as $50 billion," says Robert Lucore, an economist at the liberal Americans for Democratic Action Inc.

But in a Feb. 7 letter to Clinton, Senate minority leader Robert Dole (R) of Kansas stresses the economy's "solid recovery"; the best way to begin deficit cutting, Mr. Dole says, is to abandon the stimulus plan.

Others urge the White House to adopt a long-term outlook, with a twist.

In the past, Washington economic policymakers have centered their concerns around corporate America, says Tapan Munroe, chief economist at the San Franciso-based Pacific Gas and Electric Company, the country's largest publicly held utility.

"Big corporations are providing fewer and fewer jobs; it is the small and medium-sized firms that offer the greatest job-creation potential," Mr. Munroe says. California - the state with the nation's largest economy, worst unemployment, hardest-hit and defense industry, and suffering from permanent corporate downsizing - is a reflection of the job sector nationwide, he adds.

The 500,000-member National Federation of Independent Business (NFIB) lobbies hard to redress conditions its says hinder small-business development. It is fighting costly regulations, including stricter environmental standards and mandates that require employers to provide for benefits ranging from health-insurance coverage to family leave.

The NFIB wants government to loosen restrictions on banks that have tightened credit supplies to start-up firms and small and medium-sized companies trying to expand. Help to small businesses

Munroe urges Clinton to help these entrepreneurs with investment tax credits, federal funding for job training, and access to capital. But given the makeup of Clinton's economic team, the future of Munroe's proposed shift - from favoring large corporations to job-generating small and mid-sized firms - is uncertain.

National Economic Council chairman Robert Rubin has strong ties to major US corporations through his years as a successful Wall Street dealmaker. His recent letter asking former clients for their "continued interest and support ... and whatever suggestions [they] would offer" reaffirmed these links.

During his tenure as chairman of the Senate Finance Committee, Treasury Secretary Lloyd Bentsen was a champion of big business, acting on behalf of his important Texas constituents - oil, gas and real estate companies. His deputy secretary, Roger Altman, hails from the corporate world of investment banking.

While the economic team is deficit-wary, it will likely add heavier burdens on the small companies that are America's employment future, says NFIB president Jack Faris.