Clinton Promises Seen Lacking Monetary Legs
Economists say presidential candidate fails to tell how he would fund economic recovery
AS Arkansas Governor Bill Clinton treks along the country's campaign trail, he promises great economic change to American voters. But economists say his broad-based spending proposals miss an essential component: adequate funding to carry them through.
The Democratic presidential candidate now avoids the politically lethal call for increased tax revenues to finance more government investments. The federal coffers are empty, and the only way to pay for new programs is to go deeper into debt.
Mr. Clinton's commitments - from universal health care to school loans for every applicant - would ring up huge expenditures. His proposal to redress "tax unfairness" would pay for a 10 percent cut in middle-class taxes with a higher rate on incomes over $200,000.
To Robert Shapiro, vice president of the Progressive Policy Institute, the economic policy arm of the Democratic Leadership Council that Clinton recently chaired, the tax plan is "revenue neutral."
David Hale, chief economist with Chicago-based Kemper Financial Services, trades ideas with the Clinton campaign and the Bush White House. He says that while Clinton asserts that the deficit won't go up with the proposed tax shift, the governor offers no extra revenues for what he is promising voters.
Like all candidates, Clinton uses the coveted peace dividend as a cornerstone for rebuilding the United States manufacturing sector. "For every dollar cut from military research and development, another dollar will go into civil, nonmilitary technologies," asserts Mr. Shapiro.
Clinton's call to cut defense spending by one-third within five years will cause widespread displacement of American workers, and much of the dividend will be reinvested in converting military plants into civilian production lines and reemploying workers, says Shapiro. What happens to the workers in the interim? Shapiro says the campaign is working on a strategy.
Clinton's economics "are very vague," Mr. Hale says. "He talked a more fiscally conservative game before the New Hampshire primary [but now] he sounds more like a populist. He's a flexible kind of opportunist who offers no clear message."