Good Economic News for Clinton

November 27, 1992

That sensational 3.9 percent jump in gross domestic product for the July-to-September quarter gives President-elect Clinton just the leverage he needs to keep big-spending, damn-the-deficit Democrats in check.

His first reaction was encouraging. By asserting this good news would allow him to rethink his short-term economic strategy while sticking to long-term plans, he seemed to be signaling caution on the size of an immediate stimulus package and greater focus on the more fundamental problem of keeping national indebtedness under control.

If Mr. Clinton follows up with the appointment of a secretary of the Treasury who is welcomed by the financial markets, he will be acting as the centrist we think he is. By downgrading the so-called "economic summit" proclaimed in the first flush of victory to a mere gab-fest in mid-December, he is lowering expectations and keeping key decisions in his private domain. An economic program is not due until January, leaving extra time to assess the latest economic data.

Republican Paul Coverdell's victory over incumbent Democrat Wyche Fowler in the Georgia Senate race is further evidence that Mr. Clinton has no ringing liberal mandate. Rather, it is a mandate to govern well as changing conditions warrant.

The stream of encouraging economic statistics that has come out since the Nov. 3 election is bitter-sweet vindication for President Bush, who long insisted that things weren't as bad as his critics alleged. Consumer confidence, retail sales, housing starts, bank lending, money supply, orders for durable goods -- all these are up.

After two false starts, the recovery finally may be on the way. But Mr. Clinton has to take care that the unexpectedly high GDP figure is not just a transitory blip. He was elected to get the economy moving again, and if it does not continue upward in the next two months, he will be under tremendous pressure to prime the government pump.

The question is how much. Investment tax credits, ready-to-go public works projects and an easing of the credit crunch are now taken for granted as key elements in the Clinton economic plan. If he keeps any temporary increase in the deficit under the $25 billion mark, such a gesture would be tolerable -- provided it is tied irrevocably to a deficit-reduction proposal kicking in with the 1994 fiscal year next October. Controls on health care costs and sacred-cow entitlement programs must be an essential element of his initiative.

One factor in any successful presidency is luck. If the economy is indeed poised to rebound from its long doldrums, this would solve a multitude of problems. The unemployed would be going back to work. Their taxes would swell the revenue flow to government. Government, in turn, would be better positioned to provide needed services and public improvements. Among all the holiday wishes Americans may want to extend to their next president, good luck should be near the top of the list.

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