Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 19, 1993 TAG: 9302190393
SECTION: EDITORIAL PAGE: A-8 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Long
BOLD LEADERSHIP ON THE ECONOMY
FINALLY, brave leadership and fiscal responsibility from an American president. That's what Bill Clinton delivered in his address to Congress Wednesday night. It was one of the most sensible and powerful speeches in a generation, and it offered a remarkably realistic and coherent plan for righting the U.S. economy.Here was a fully engaged president imbued with a sense of mission, seizing the moment to define his presidency. Here was a leader staking his political fate on a struggle against the past decade's fiscal dragons: public disinvestment and soaring deficits.
Whatever fault one may find with the details of Clinton's plan - and everyone (this newspaper included) is sure to find some - it is clear that his is a credible effort to do more of what the government hasn't been doing enough of (investing in the American people and their future), and less of what government has been doing too much of (deficit spending, bureaucracy bloating, numbers faking, favoring the rich).
There are four questions to ask about the plan:
Would it work?
It would work considerably better, by all appearances, than any other plans presidents have put forward recently. Clinton has focused beam-like on economic reality, and has fashioned his package accordingly.
The big problem with the American economy, almost everyone agrees, is that there is too little savings and investment. This hurts the average American household because investment is what produces productivity growth, and productivity growth is what produces rising incomes.
Clinton's plan would address this problem - and thereby help American families - in two ways. First, it would increase public investment in transportation and communications infrastructure, in the education and health of children and in the training of workers, etc., while offering tax incentives to private investors and small businesses.
Public spending can be called investment if it boosts economic productivity and competitiveness, or if it can prevent the need for greater public expenditures down the road. (For example: The extension of Head Start to all eligible children, as Clinton urged Wednesday night, is an initial expense promising eventual productivity enhancements and government savings.)
Second, Clinton's plan would stimulate investment by cutting the federal deficit. Not with faked projections - a favorite ploy in the past, but with several hundred billion dollars of spending cuts and tax increases. As it is now, the government's huge appetite for accumulated debt is crowding out both public investment and private borrowing (and therefore private investment).
In this case, too, initial costs of deficit-reduction promise later paybacks. If, for instance, the government didn't need to spend so much to service its debt, funds would be freed up for other purposes. Also, deficit-reduction reduces pressure on funds available for borrowing, thereby lowering interest rates. As Clinton pointed out Wednesday night, lower interest rates would mean savings for anyone borrowing money - in many cases offsetting the impact of a new energy tax.
Is it fair?
Assuredly. The plan is fair, in the first place, to the electorate that hired Clinton. He was voted into office above all to change economic policy, to reverse course from the failed economic policies of the past. He was elected because Americans now reject business as usual and sense the need for new leadership on the domestic front. Clinton's package is faithful on all these counts.
It is fair, also, in that it neither asks the middle and working classes to shoulder an inordinate share of new burdens, nor adds to the income disparity between rich and poor - both of which were demonstrable effects of tax changes during the 1980s.
Under Clinton's proposal, income-tax rates would rise only for those with taxable income over $140,000. His energy tax would broadly affect every region of the country, and it would be offset for lower-income families by a much-needed increase in the earned income tax credit.
Is it honest?
This depends on whether the numbers add up: particularly, on whether the deficit would be reduced to the extent promised. It also depends on whether Clinton and the Congress follow through on the details, and on Clinton's stated desire to change the way government does business.
Clinton's plan promises to match every dollar in increased tax revenues with a dollar in spending cuts. Congress will betray the public's clearly expressed mandate if it approves the tax plan only to subsidize more profligate pork barrel and wasteful deficit-spending.
The public will have been betrayed, too, if Clinton and the rest of the government give no more than lip service to the need for reform, efficiency and innovation in government behavior.
Clinton says he wants reciprocal responsibility from those who benefit from taxpayers' largess; he wants programs to empower people, not bureaucrats; he wants to spend money - on education for example - only where there is accountability, and evidence of results. He said Wednesday that he wants government to learn how to stop programs as well as start them. He also wants campaign-finance reforms, so moneyed lobbyists will not so easily shut out the public interest.
It is not right to ask taxpayers for more money unless the money is spent more effectively, in the service of their interests.
Is it politically doable?
This also remains to be seen. Clinton has probably enhanced the plan's chances by including a $30 billion short-term economic stimulus package. This is not easily justified on economic grounds, given the current recovery, but it could lubricate the plan's enactment by spreading goodies among congressional districts.
The president has picked an awful number of fights with a powerful array of special interests. The energy tax, extended taxation of Social Security benefits, military spending cuts, cuts in Medicare payments to doctors and hospitals, trims in farm subsidies - all of these and more in his plan will arouse intense lobbying that will try to break the whole into pieces and test Congress' fragile responsiveness to the public interest.
On the other hand, efforts to enact Clinton's proposals have on their side an asset that's long been missing: strong, responsible presidential leadership. If Congress and the nation can respond to his plan with as much boldness and clear-headedness as Clinton has shown in proposing it, the package stands a good chance of going somewhere. If it is enacted, not just Clinton's presidency but Americans now and in the future will be better off.