At Least Someone Has a Plan

By Michael Kramer

George Bush's popularity is vaporizing faster than teardrops in a blast furnace. Matched against an unnamed challenger in recent polls, the President actually loses the 1992 election. Unfortunately, you cannot beat somebody with nobody, and Bush still trumps the current Democratic field in head-to-head pairings. But each bit of bad economic news heartens the opposition and reveals a paralyzed Administration whose divisive domestic policy sessions have come to resemble dining-hall food fights.

The Democratic contenders have yet to make the most of this opportunity. They are all great on diagnosis, but only Arkansas Governor Bill Clinton is close to cobbling together something resembling a coherent economic policy.

Clinton has little use for either supply-side economics or "the old Democratic theory that we can just tax and spend." He is most concerned with helping the U.S. compete globally, so he emphasizes education and worker training.

Clinton's plan is best perceived as a series of short- and long-term steps. To deal with the immediate crisis, he says, three antirecession measures are needed: 1) quicker spending on highway construction to provide 45,000 new jobs; 2) a higher ceiling on Federal Housing Administration mortgage guarantees to aid half a million first-home buyers; 3) a revenue-neutral tax- rate cut averaging $350 a year for middle-class families, to be paid for by increasing the tax burden on those who earn more than $200,000 a year. Most other Democrats favor a child-care tax exemption instead of Clinton's prescription, but only about half the population would be helped by such relief. Either approach would have almost no economic impact, but by acknowledging that the rich have reaped a decade-long windfall at the expense of the middle class, both reflect compassionate social policy.

Over the long haul, Clinton would fully fund Head Start and institute a program of national service under which students would repay college-tuition loans by serving their communities for two years. Those two programs alone would require close to $10 billion, a cost that Clinton suggests could be covered by reducing defense spending and by imposing private-industry performance standards on government programs, with yearly 3% funding cuts mandated across the board.

Overall, Clinton would limit government-spending growth to the rate of increase in personal income, which has been rising anemically for the past 20 years. Only investments in "wealth-producing, future-oriented" programs like research and development would enjoy deficit financing. Clinton would push for union work-rule revisions, and he would impose a tax penalty on corporations that pay their executives excessive salaries -- a provision that could kick in when big shots' salaries exceed 25 times the earnings of a company's lowest- paid worker. Clinton views most current worker-training schemes as virtually useless. "Roughly 70% of corporate training expenses serve only 10% of employees," says Rob Shapiro of the Progressive Policy Institute, a centrist think tank that is advising Clinton. "Companies are loath to train lower-rung employees for fear they'll leave for other jobs. Compelling all U.S. corporations to spend similar amounts on all employees would solve the problem."

If Clinton's campaign makes headway, his program will be scrutinized mercilessly. If not, it will be ignored. Whatever the outcome, Clinton has already proved that he, unlike Bush, appreciates the advice offered the President by Housing and Urban Development Secretary Jack Kemp. The people will "forgive you for trying" to innovate economically even if you fail, says Kemp. "They will not forgive not trying at all."