World Looks to New US Strength to Turn around Global Economy Domestic Popularity and Deficit-Cutting Plan Aid Clinton Policy Team

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WITH a renewed sense of direction for United States economic policy, Treasury Secretary Lloyd Bentsen and Federal Reserve Board chairman Alan Greenspan stepped confidently into this past weekend's London meeting of the Group of Seven (G-7) leading industrialized nations, where finance ministers and central bank governors from the US, Britain, Canada, France, Germany, Italy, and Japan met to discuss policy.

Armed with President Clinton's economic plan, as well as a strident trade position and the makings of a new US industrial policy, Mr. Bentsen and Mr. Greenspan found that the tables have turned from the past decade of G-7 meetings when the US economic position was relatively weak and its policies underwent constant attack.

Compared with its global partners - all steeped in recession and political turmoil - the US is rebounding, with private economists projecting over 3 percent growth in national output this year. (US rebound, Page 3.)

Washington's hand is even stronger because Mr. Clinton has proposed a domestic agenda of higher taxes and fiscal restraint, actions long called for by G-7 policymakers, who have viewed Washington's runaway government expenditures and constant borrowing as the major contributor to high interest rates and a drag on the world economy. Clinton also enjoys the strongest domestic support of any G-7 leader.

The US president has heightened European and Asian concerns about US protectionism through moves against unfair trade practices in steel and a threatened limit on European and Asian auto imports. US trade partners are also concerned about Clinton's protests against European industrial subsidies, and his call for greater US government assistance in developing key technologies that will help US industry compete worldwide.

Last week, Mr. Bentsen's self-described "casual comment" about the burgeoning Japanese trade surplus with the US, and the need for a higher yen and a lower dollar, caused the yen to rise precipitously. This had a stinging effect on Japanese officials, who view such talk as interventionist.

"We now know that Bentsen's basic philosophical premise is that the way to get at the trade deficit is with the weaker dollar," says Jay Collins, president of the G-7 Council, a private policy group of former finance and monetary officials. Clinton address

On the eve of the London meeting, Clinton delivered his first major address on the international economy. …