Warnings sounded at Clinton economic summit HARD REALITIES, VARIED SOLUTIONS

December 15, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Staff Writer

LITTLE ROCK, Ark. -- If the nation needed a cold shower of economic reality, it got it yesterday. If it wanted to know who and what was to blame for its problems, it was told. And if it was looking for solutions, it was offered plenty.

At President-elect Bill Clinton's economic conference, the "greatest nation on earth" was given shock therapy on its economic shortcomings even as it was reassured that it still had the potential to be great again.

Rarely has a nation seen such a public bout of economic self-examination on national TV and radio. Rarely has a national leader so engaged himself in such a process.

In quick order, the roots of the economic problem, its extent and its solution were laid bare by a series of speakers praised by Mr. Clinton as "the most distinguished and diverse group of Americans ever to meet to discuss our economic promise as well as our problems."

From gavel-to-gavel, Mr. Clinton led the questioning, seizing on ideas, contesting assumptions, and displaying an impressive command of economic issues.

He was given a new warning that the federal budget deficit was likely to be $100 billion worse than expected by 1996 because of weak growth. It came from John White, who crafted independent presidential candidate Ross Perot's deficit reduction program.

"The deficit problem is growing worse and must be dealt with," Mr. White said.

On health care, Mr. Clinton noted the "incredible downward spiral" that was depriving 100,000 Americans of coverage each month as small businesses were increasingly unable to pay the costs. He wondered aloud whether "any market-oriented" approach, including his own proposal for managed competition, could provide for health costs for retirees.

Even as he spoke, the Arkansas legislature was meeting to consider a tax package to finance a "breathtaking explosion" of enrollment in the state-funded Medicare problem.

"This is an irreversible thing unless we find a way to address the cost and coverage problem," Mr. Clinton said.

In his opening remarks, Mr. Clinton said that recent encouraging economic statistics did not match up to the personal experiences of many Americans. "We must never let the blizzard of statistics blind us to the real people and the real lives behind them," he added.

He set five "key areas" for long-term economic strength: investment in education and training; increased private and public investment to create jobs; replacement of the "borrow-and-spend" cycle with one of "borrow to invest;" new approaches to energy and the environment; and increased personal involvement in government.

"I want my administration to celebrate ideas from the first day to the last," Mr. Clinton said. "I want and need your ideas. We are in this together, and let's not kid ourselves about it, these are hard decisions."

Inevitably, most of what he heard from a group selected and invited by his transition advisers was in line with his own broad pro-growth, more federally activist approach to the economy.

"This is like a paid advertisement for my campaign," he said at one point. At another he joked with Yale economics professor Alan S. Blinder, who advocated "percolate up" policies to replace the Reagan-Bush formula of "trickle down."

"You are preaching to the choir when you make these remarks to me," he said.

But not everyone in the diverse group of conference participants was ready to join the chorus.

One frustrated participant charged that by avoiding discussion of cuts in entitlement programs, such as Social Security, Medicare and Medicaid, the meeting was "nibbling round the edges of the problem." Another worried about the emphasis on increasing investment rather than raising additional revenues. She urged consumption taxes.

A business executive opposed the Clinton proposal for an investment tax credit because it would "distort" corporate spending. A toy company representative, worried about the pressure Mr. Clinton may put on China over human rights, asked him not to withdraw most-favored-nation trade status, which would jeopardize her company's supply of toys.

Perhaps the most challenging statements came from Thomas Donahue of the AFL-CIO, who expressed the insecurity of workers as layoffs continue and foreign competition becomes fiercer.

"They [workers] are asked now to participate in an experiment to make the nation more competitive, and nobody is offering them a great deal of stake in that, nobody is offering them a great deal of security," Mr. Donahue told Mr. Clinton.

"You need to try to engender a new spirit of cooperation -- among labor, management and government -- and engender the sort of economic patriotism that talks about keeping jobs in America."

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