Clinton Digs In on Stimulus Plan

Stalled package seen as more critical to the president's reputation than to the recovery

PRESIDENT Clinton needs to win passage of just enough of his filibuster-bound economic-stimulus package to save face - not to spark the sputtering economy but to protect his political reputation.

This is close to a consensus view among Washington hands of both parties. Relatively few now believe that the package is important to the economic recovery.

But veteran strategists assert that Mr. Clinton needs to reach a compromise with Senate Republicans to show he cannot be stopped so soon in his presidency, on an issue that was so central to his campaign.

At stake is the inside-the-Beltway prestige he carries into the far-bigger battle beginning next month - a radical overhaul of the health-care system.

"If he is perceived to be someone who can be rolled, they will try to roll him again and again," says Mark Siegel, a Democratic consultant and former Carter official.

"What he needs is not to be defeated this soon in his term," says Ted Van Dyk, a Democratic political consultant and policy adviser. "If there's no compromise by the end of the month, he loses. If he gets less than half his package, he loses."

"If he gets nothing ... that's a very bad omen for a guy with three and a half years left as president," says Bill McInturff, a Republican strategist and pollster.

Clinton and his aides are arguing more strenuously than ever that the package is needed to kick-start the recovery.

But this view is a hard sell with business economists, not to mention many Democrats outside the administration.

"I don't think the people in the White House even believe that," Mr. Siegel says.

Even as the president talks tougher at the unified GOP bloc that has stopped his stimulus bill in the Senate, his aides have indicated they expect to compromise. White House communications director George Stephanopoulos simply says Clinton wants to get as much of the package through as possible. (Lobbying bid, Page 3.)

The economic-stimulus package is separate from the rest of Clinton's economic plan, which is contained in his budget proposal, because he intends for the stimulus to take effect during the budget year already under way. Unpopular tax credits

More than $20 billion of the original package consisted of investment tax credits for business. These have found little support in Congress or among big business, so they are considered unlikely to pass. The rest of the package is $16.3 billion in new spending and $3 billion in highway funds that would be released for spending.

Even if the spending bill was passed intact and fairly soon, the Congressional Budget Office estimates that only $6.9 billion could be spent during the current fiscal year. The rest would enter the economy in 1994 or later.

About half the spending is aimed at improving social welfare, rather than job creation, with programs such as unemployment compensation, childhood immunization, and student loans for the poor.

Still, as Jay Levy of the Jerome Levy Economic Institute says, "Any government spending is a stimulus to the economy."

But how much?

"When you get right down to it, the stimulus package is worth fractions of a percent of growth for the year," says Joel Prakken, vice president at the economic forecasting firm L.H. Meyer & Associates in St. Louis. The firm's computer model of the economy predicts that without the investment tax credit, the package would add 0.3 percentage points to the growth of the gross domestic product for 1993.

Mr. Levy says that without new spending in the Clinton package, economic growth could halt for a quarter. His judgment, however, is at the outside edge of what most economists predict.

During the campaign, the Clinton team wanted some extra spending as insurance against a faltering of the recovery, Mr. Van Dyk says.

In spite of occasional bad news, such as the slowdown in March retail spending reported Tuesday, the administration is having trouble sustaining a sense of urgency about the economy.

Without an economic emergency, the Republicans can hold forth against spending that raises the deficit without much fear of alienating Ross Perot voters. `Pork-barrel' spending

If Clinton offers a compromise that removes so-called "pork barrel" spending, such as block grants that go to cities, then Siegel believes a continued Senate filibuster would hurt Republicans with Perot voters. In this case, the GOP might become vulnerable to Democratic charges of "gridlock" and "old politics."

Van Dyk says Clinton needs to reach a compromise with moderate GOP senators before the end of April, perhaps knocking the $16.3 billion spending bill down to $8 billion. Then the stage will be set for dealing with health-care reform, which the White House plans to unveil in mid-May.

The president's harsher rhetoric this week fits a Clinton pattern, Van Dyk says. "He always does that before he falls back and makes his deal."

Clinton can little afford an abject failure on this bill. "The guy spent a year campaigning on [the promise that] the first thing he's going to do is a jobs bill," Mr. McInturff says.