Wrong Way Bill's Economic Touchdown

America is humming, but how much did Clinton contribute?

He's trying to evoke Harry Truman's "give 'em hell" campaign, but Wonk-in-Chief Bill Clinton still loves to give 'em a bunch of statistics. From the Midwestern towns along his Aug. 25-28 whistle-stop tour to the Democratic convention in Chicago, the President spouted the same recitation of his record: 10 million new jobs, 4.5 million new homeowners, 10 million households refinancing mortgages, the budget deficit at a 14-year low, 250,000 fewer federal jobs, a 30% jump in exports. And huge crowds cheered every boffo number.

As Clinton gears up for the general-election campaign, the honor roll of stats is more than just bragging: It's key to his reelection strategy. The President knows that his own $110 billion package of tax goodies can't match Bob Dole's $548 billion cut in income taxes for sheer heft and raw pocketbook appeal. So he needs to convince voters that the economy is so strong they don't need a federal freebie. "The country was in a ditch when the President took over," argues White House strategist Harold C. Ickes. "Now, people finally think the economy is going in the right direction."

But just how much did Clinton set that direction? Not as much as his partisans claim. In fact, throughout his term, the President has been denied policies he sought--and gotten better outcomes as a result. Aided by a favorable business cycle and a bravura monetary performance by Federal Reserve Chairman Alan Greenspan, Clinton's policy defeats helped spur an economy likely to carry him to victory. "Whatever the motivations, the Administration has ended up doing the right things, and it gets the credit," says Lehman Brothers Inc. chief economist Allen L. Sinai.

Take health care. Clinton's reform campaign crashed under its own weight and the unpredictable costs of trying to reengineer one-seventh of the economy from Washington. Yet the two-year debate prodded the private sector into reforms that have cut medical price hikes from 7.5% in 1992 to 3.4% so far this year. Clinton's legislation was "a huge wake-up call for our industry," says Eric D. Sipf, president of FHP Health Care of Colorado.

On fiscal policy, Clinton has been more adept at shifting with the political winds. As a candidate in 1992, he stumped for a big economic stimulus package. But when Congress rejected that, the President went to the mat for tax hikes and spending cuts that have since shrunk the deficit by 60% and helped lower interest rates. "That package was instrumental in keeping the economy growing," says Brookings Institution economist Robert D. Reischauer, a former director of the Congressional Budget Office. "But it wouldn't have worked if he had gotten his original package."

"ECONOMIC JUDO." The scenario was replayed last year. After Republicans took control of Congress, Clinton resisted their calls to balance the budget by 2002. But his reluctant conversion now allows him to campaign as the election's true proponent of fiscal responsibility.

The White House insists its latest spending plan will close the deficit by 2001, ahead of the GOP's schedule. It's a weak claim: Clinton's budget, like that of the Republicans, would require unlikely 30%-plus cuts in most agencies' spending. But compared with Dole, who insists he can cut taxes by 15% and still balance the budget, Clinton seems the model of fiscal probity. "I will not propose anything in this campaign that cannot be paid for," the President declares.

Clintonites admit that they've benefited from flexibility. The President "used economic judo, taking the force of what's going on and riding with it," says Commerce Secretary Mickey Kantor. But that doesn't mean Clinton shouldn't get credit, argues Kantor: "If this economy were in bad shape, he would get 100% of the blame." Treasury Secretary Robert E. Rubin insists that the President's success in slashing the deficit has sparked an economic turnaround. "Back in the Bush years, our economy was viewed as yesterday's news," he says. "That's changed dramatically."

Polls show voters agree. "I've got a higher standard of living," says Bob McKee, 45, a teacher in Van Buren, Ohio, who came out for the whistle-stop tour. "Interest rates are down; there are more jobs. I've been able to refinance my house." But many business leaders mainly credit the better economy to a GOP Congress that moderated Clinton's policies. "The balance of powers is working. What's come out of the process has been some pretty good legislation," says Phillip B. Rooney, CEO of WMX Technologies Inc. and a Democrat.

But most voters don't bother to follow Washington's inside game when evaluating the state of their economy. Presidents' political fortunes rise and fall with the economic stats. And as the Wonk in the White House will tell you, the numbers are looking good--whether he's responsible for them or not.

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