THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 8, 1994 TAG: 9407080032
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 75 lines
President Clinton actually asked last year if he could skip the G-7 summit in Tokyo. It was hard to blame him really, given that these junkets by top Western leaders rarely accomplish much of anything. But the summit that convenes tomorrow in Naples, Italy, doesn't have to be like the others. President Clinton's, and by extension, America's, world leadership is in some serious question. The summit could be a useful occasion on which to reassert that leadership.
The president arrives at the summit in a weakened condition. He has reversed course on so many foreign-policy issues that he has called important - most-favored-nation trading status for China, nuclear weapons in North Korea, the eternally evolving policy on Haiti - that his fellow summiteers rightly wonder what he really stands for. They don't know how far he will go to back up his word.
That unease is reflected in the jittery world financial markets. When President Clinton took office in January 1993, the dollar stood at one to 126 Japanese yen. The dollar has now fallen below 100 yen with no real bottom in sight. Part of this decline has been a deliberate effort to drive down the value of the dollar in the hope it will boost U.S. exports and stem Japanese imports. But such beggar-thy-neighbor trade policies never work. The trade deficit with Japan was $50.5 billion in December 1992. It is around $59 billion today.
Long-term interest rates are now higher than they were before the passage of the president's economic package last year, which was specifically designed to bring down interest rates. The price of gold is up nearly 20 percent since the inauguration, and the stock market has been on a downward trajectory. The president has confessed he is ``puzzled'' at these events. He shouldn't be. The markets are turning thumbs down on the United States as a place to invest with confidence.
Tax increases and further government regulation in place of tax cuts and deregulation betray an attitude that has little innate understanding of the roots of economic risk-taking and job creation. The White House's efforts to nationalize one-seventh of the U.S. economy in the form of health-care reform also displays anti-growth prejudices.
If anything, however, the president should be grateful. United States unemployment is 6 percent. That's historically elevated for this country, but puny compared with France's 12.7 percent. And analysts say that if those employed in French government make-work projects are not counted, the real rate is probably closer to 20 percent. Spain's rate is 23.9 percent. The average in Western Europe is more than 10 percent. Economic growth in the G-7 countries in the past year has averaged an anemic 1.5 percent.
These are numbers that the current modest economic recovery cannot substantially reduce. Everywhere, the weight of government is preventing the creation of jobs and new industry.
The president still has time to reverse course and get the U.S. and world economies back on track. His strong support last year for NAFTA and for the new GATT treaty show that he has some understanding of the importance of world markets.
Perhaps the president might want to sit down at some point with his host, newly elected Italian Prime Minister Silvio Berlusconi. He won office on a tidal wave of anti-tax, anti-government fever in a country that has had a bellyful of both for decades. He is slashing the bloated civil service and cutting taxes and regulation, and his popularity is rising, in contrast to Clinton's stagnant poll numbers.
The Naples summit is thus an opportunity for the president to shore up his standing as a world leader by tackling the international problem of truly reinventing government. If the president chooses to simply shake hands and pose for photo ops, however, the problems facing the world economy - and the Clinton presidency - will continue. ILLUSTRATION: Photo
MR. CLINTON
by CNB