Clinton Tries to Forge Economic Consensus
Some see weakness in fiscal summit, others see strength
WHILE putting together an attendance list and an agenda for his upcoming economic summit, President-elect Clinton is demonstrating a willingness to consider diverse solutions for the nation's economic difficulties.
Mr. Clinton will invite a wide spectrum of economists and business and labor leaders to Little Rock, Ark., on Dec. 14-15. But if his laundry list of priorities and disparate group of advisers are any indication, the two-day conference will not be a cogent meeting of the minds.
"It's really not a summit anymore - a summit connotes decisions," says Jeffrey Garten, author of "The 100-Day Economic Agenda," an article published this month in the journal "Foreign Affairs." "This will turn out more like a town meeting - creating a central place to collect ideas and build support."
Critics charge that the summit is a call for help that diminishes public confidence in Clinton's ability to lead the country out of economic distress. The president-elect, they say, has identified so many economic problems and has pounded away at so many related issues - from an inadequate health-care system to deficiencies in education - that he has raised concerns about his ability to pursue a focused policy.
But others see the wisdom in bringing together the best economic and business minds for a national strategy session. The president-elect, says Allen Sinai, chief economist of the Boston Company, needs to improve on his current blueprint, "Putting People First," which offers a plan that would only be of minimal help to the economy.
Mr. Sinai says the country's troubles - including high unemployment, low growth of incomes, government debt, recession in important United States markets, and lack of savings and investment - require long-term strategies. He cautions Clinton against undertaking any immediate actions that would undermine long-term economic growth, and he stresses that the president-elect must choose between spurring the economy with a fiscal-stimulus plan - such as the large infrastructure program Clinton is considering -
and reducing the government's debt burden. Both cannot be accomplished simultaneously, he says.
Sinai says he supports "taking action to increase growth first" rather than "tackling deficit reduction," which "probably would weaken the economy and cost jobs." He estimates the incoming Clinton administration can afford $50 billion in stimulus without causing inflation.
State and local leaders, feeling burned by the "new federalism" of the Reagan era that promised greater autonomy for their governments but left them a legacy of new mandates and underfunded programs, are anxious to influence the current economic decisions.
The National Conference of State Legislatures (NCSL) has asked for its members to be represented at the Little Rock summit, and has submitted its criteria for an economic-stimulus package: Stepped-up government spending should go through state structures, and state fund-matching requirements should be reduced. NCSL officials say Clinton's gubernatorial experience gives him unique insight into the need to avoid federal policies that force states to cut spending, raise taxes, and "frustrate federal efforts
to jump-start the economy."
For his part, Mr. Garten, now a senior adviser to the Blackstone Group and a Columbia University professor of international finance and economics, hopes the group convening in Little Rock will force Clinton to focus on how the US economy will function in the context of the global economy.
"The international dimension has been grossly underplayed," Garten says. "A domestic stimulus program alone will not deliver a big wallop if it is done in insolation." If the incoming Clinton administration fails to coordinate its plans with Japan and Germany, which are important US export markets and sources of finance, then "we will be sucking in everyone's exports," he says, spending more, exporting less, and forfeiting growth.
The luxury of planning for action must lead to concrete work and fast. By mid-March, Clinton faces important deadlines: His 1994 fiscal-year budget is due; he will have to grapple with Congress and reach a decision on whether to burst through the country's debt ceiling, now at a staggering $4.1 trillion; and he will have to choose between increasing the 1994 deficit and enacting sweeping cuts in government-funded programs.
Exacerbating the strain on the federal coffers is the ongoing need to spend huge sums on the savings-and-loan debacle. Clinton has promised "to devote a lot of attention to the condition of the S&L bailout." During the summit he will likely seek advice on whether to ask Congress for the $50 billion more that may be needed to complete the taxpayer-funded cleanup.