- The deficit. "The truth is you can't balance the budget in this kind of recession without doing things that will make the economy worse," [Bill Clinton] told the Washington Post recently. Clinton would get very little argument on that score. He is also part of a growing group of economic thinkers who feel closing the deficit should no longer be the country's priority. "Some of the investments we avoid making because of the deficit do more harm than the deficit itself," said Paul Krugman, a Massachusetts Institute of Technology economics professor. Krugman and others say spending now is essential to get the economy out of its slow-growth mode.
That said, most economists still believe that over time the deficit has to come down if the United States is to generate the capital it needs for future investments. Clinton's effort at deficit-reduction is something less than a profile in courage. His cuts come under nebulous headings like "reform Defense Department inventory system," and "Resolution Trust Corp. management reform." His only effort at curbing the growth of entitlements such as Social Security and Medicare is a proposed hike in Medicare payments for those earning more than $125,000 a year. "In his willingess to ignore the deficit, Clinton is a typical Democrat," said Nancy Kimelman, chief economist with Technical Data in Boston, expressing a view likely to be heard on Wall Street.
- Business incentives. Paul Tsongas ran for president on the proposition that the way to stimulate the economy was to give the business community a host of new incentives. "I would like to have seen more of Tsongas in Clinton's plan," said David Jones, chief economist at Aubrey G. Lanston, a New York investment firm. Clinton does make a nod toward business with promises of tax credits for new plants and equipment, tax breaks for small business and a credit for research and development, but there are no dollar signs attached to the proposal. Economists don't like Clinton's program here for the same reason they don't like his deficit strategy: Both fail to build up private savings and private investment. "We can't have only public investment," said [Isabel Sawhill]. "We need a balanced portfolio."