Stimulus Package Redux
REPUBLICANS may have shoved President Clinton's plan to stimulate the economy onto a siding in April when a GOP filibuster defeated the measure. But that hasn't kept the White House from stoking the boilers with fresh plans.
The president's team reportedly is pulling together options to help specific industries, sets of workers, or regions of the country. Among the options: accelerate defense spending and other federal purchases, relax rules that cover bank and government lending to make loans more available, and adjust the timing of tax collections.
From the president's standpoint, the proposals are politically attractive: Most can be adopted without congressional approval and without affecting the overall budget package that squeaked through Congress earlier this summer. Implementing the proposals also would convey a sense of activism that could help revive lagging consumer confidence in the economy's prospects.
Those prospects remain clouded. The jobless rate nationwide in August slipped to 6.7 percent from July's 6.8 percent. But overall payroll employment fell, as did manufacturing employment, which has lost 239,000 jobs since February. Employers remain wedded to overtime to meet demand. Meanwhile, the government's main forecasting gauge, the index of leading indicators, declined modestly, prompting some economists to suggest that another recession could begin within 14 months.
The budget's discipline of tax increases, and reductions in the rate of increase in government spending, will have a modest cooling impact on the economy. Moreover, in the final days of the budget debate, the president held out the prospect of negotiating more spending cuts this fall.
Some form of stimulus measures could help the economy, even in the face of the budget deal. We would prefer a more bipartisan approach. Senate Majority Leader Robert Dole (R) of Kansas, who led the filibuster in April, is more open-minded now. When asked about the administration's tack, he said that it was fine, as long as Mr. Clinton's team didn't ``overreach.'' Read: No problem here; I and my fellow Republicans are insulated from the impact of failure.
The president's advisers note that the proposals' effect is likely to be slight and short-lived. Yet absent the votes to enact even the $15.4 billion stimulus package earlier this year, administrative initiatives may be the best alternative.