Economic-Policy Advisers Line Up for Cabinet Roles CEOs, Bankers, and Liberal Economists Are Setting the Tone of Clinton's Economic Proposals, Which Promise a Real Break with the Low-Tax Policies of the Reagan Years

Article excerpt

AT the Clinton-Gore campaign's Little Rock headquarters, economic policy director Gene Sperling holds the dubious distinction of putting in the longest and most frenetic day.

Mr. Sperling has to move fast during his 19-hour workday to pull together the steady stream of proposals from the dozens of economists and businessmen advising the Clinton organization.

The Arkansas governor draws from a diverse pool of advisers, Sperling says, running down a list that includes Wall Street bankers, CEOs, and economists, some of whom have long supported more government intervention in the marketplace, such as would result from industrial policy that helps business compete aggressively in global markets. Some of them see the immediate need to contain government costs and bring down the burgeoning deficit while others put the highest priority on added government spending.

Just about the only common denominator in this group is the view that government should be more active in promoting the private sector and public financing - or as Clinton says, to address the "investment deficit."

The candidate's plans range from federal mandates on employers to cover workers' health insurance costs (or submit to a commensurate federal tax) to investment tax credits that encourage businesses to invest in their own development and expansion. They say Uncle Sam should pour more public funds into education, job training, and infrastructure projects such as transportation.

Advocates of Clintonomics see it as an attempt to bridge the widening divide between America's rich and poor by creating the conditions for business development and more jobs. For starters, the Clinton plan calls for $219 billion in new government spending for education, worker training, and other programs to enrich the country's "human capital resources."

Where's the money going to come from?

Robert Shapiro, vice president of the Progressive Policy Institute, the think tank of the Democratic Leadership Council, says it won't come from higher income taxes, although Clinton's plan includes raising the tax burden on the rich and trying to crack down on foreign firms that avoid US taxes. "The bottom line ... is that every dollar of new spending will be offset by a dollar of savings elsewhere in the budget."

Mr. Shapiro, who contributed to Clinton's economic plan and is a likely candidate for budget director in a Clinton administration, says "the problem is not sim-ply that we don't spend enough money. The problem is also the way we spend money." Clinton would reduce growth in government spending to curb the deficit and cut funding for defense and discretionary programs. "Ultimately it's got to come out of entitlements," Shapiro says.

Harvard economic policy professor Robert Reich, whose association with Clinton dates back to their days as Rhodes scholars at Oxford, disputes the view that deficits, by definition, are dangerous. If anything, he says, the US economy is stalled because government refuses to devote enough resources to building a better educated, more competitive work force.

Mr. Reich identifies two primary reasons why worker productivity and the US economy is slackening. First, wealthy individuals and businesses have failed to invest a sufficient portion of their windfall from the fat Reagan-Bush years into US factories, machinery and equipment. At the same time, government is in a debt stranglehold, and cannot muster adequate funding for human and physical resources: education and training, early child and health care, roads, tunnels, and bridges. …