Equity key to Clinton's reform plan

April 17, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- Gov. Bill Clinton's blueprint for a renewed America is as much social engineering as it is economic reform.

The core elements of the plan, a middle-class tax cut and improved education, have as much to do with equity as with the economy. But its overall aim is clear: to boost productivity, investment and growth, energizing recovery.

There is considerable question among experts whether, in its present form, it would do that, but it is expected to be refined as the Arkansas governor's hold on the Democratic nomination strengthens and the prospect of challenging President Bush looms closer.

His approach grows out of the conviction that the Bush-Reagan years have been economically disastrous, that the lingering recession was worsened by White House economic mismanagement and that Mr. Bush's policies have compounded two decades of substandard economic growth and are still largely based on tax breaks for the rich.

Using that indictment as a starting point, Mr. Clinton and his advisers have crafted a reform program, but critics say it is in the old tax-and-spend Democratic tradition.

"It's the same old looter's mentality that you find among many people on the left, in other words, we have to steal from one group to give to another," said Edward L. Hudgins, a fellow with the conservative Heritage Foundation.

Robert J. Shapiro, director of economic studies at the Progressive Policy Institute and coordinator of the Clinton economic program, said, "This is not just about blame.

"The real question is, who has a strategy for re-creating the kind of growth that was routine in this country in the 1950s and '60s, the kind of growth that generates upward mobility for most people."

To get that growth, a Clinton administration would spur public and private investment in industry and seek to open productive opportunities for workers through education.

"You cannot get growth without increasing the access of all people to the means of being more productive," said Mr. Shapiro, a Baltimore native.

Mr. Clinton's plan calls for total reform of the education system, including national achievement standards for students, freedom for parents to select their child's school, and teacher pay linked to classroom performance.

He would introduce an apprenticeship partnership between high schools and local industries to get students not bound for college into job training. For college students, he would offer financial aid for anyone willing to repay the government, either through withholdings from their eventual pay or through two years of national service.

"This is not interest-group politics. This is fundamental reform of the entire way we educate and train young people, based on the presumption that our fundamental capacity to compete in the world economy depends on it," Mr. Shapiro said.

Mr. Clinton's emphasis on education is matched by Robert D. Reischauer, director of the Congressional Budget Office. Mr. Reischauer told a congressional panel recently that, after deficit reduction, his next priority for promoting economic growth would be improving education, particularly at the elementary and high school levels. He said his third priority would be to improve worker training.

Mr. Clinton would also reinforce the skill levels of the current work force. He would sponsor legislation to mandate that all but the smallest companies earmark 1.5 percent of payroll for ongoing training to be shared among all workers. It is esti

mated that this would give most workers $300 to $350 a year to spend on further education.

"The point about this is it is systematic and it is continuous. Every year everybody's skills are upgraded a little," said Mr. Shapiro. "In an economy in which you are competing against other advanced economies, the single most important factor in economic success is the ability to innovate.

"That requires a constantly training work force, and a work force that is very flexible because it has a broader range of skills."

The Heritage Foundation's Mr. Hudgins said: "It's mistaken to assume it is a lack of training that is the source of many of our problems and if you indiscriminately say we are going to spend X number of dollars that this will lead to increases in productivity and so forth. How does he determine what is proper training?

"If you look at the record of these kinds of programs, there is no indication the government can handle it particularly well. It is not as if there is nothing going on. There is a lot going on in training."

For existing companies, Mr. Clinton would introduce a permanent research and development tax credit and an incremental investment tax credit geared to encouraging the purchase of new equipment. All savings from defense-related research would be earmarked for civilian research.

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