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Introduction: Can America Survive Clintonomics?
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10275 |
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CURRENT ISSUES
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12 / 1993 |
577 Words |
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After nearly one year, it is fair to pose the question. What is Clintonomics doing to the U.S. economy?
When President Clinton took office, he inherited an economy recovering strongly from recession. The gross domestic product was expanding at 4.7 percent, productivity had surged to 2.8 percent, and unemployment was dropping toward 7 percent. Ten months later, GDP growth has slowed to about 2.5 percent (about $6.14 trillion a year), productivity has declined, and unemployment has leveled off at about 6.7 percent.
Corporate America is pleased because of lower interest rates and labor costs, but consumer America remains skeptical about the future because it doesn't believe Clinton's deficit reduction plan will work any better than President Bush's plan in 1990--which produced a recession.
Other factors like the Consumer Price Index, presently an unsettling 3.2 percent per annum, and the trade deficit, running at an unacceptable $100 billion annually, offer scant encouragement.
Clintonomics' true impact must be measured in three different sectors--small business, big business, and the consumer.
More than 35 million people work in America's small businesses and produce about 40 percent of all U.S. goods and services. Unfortunately according to Paul G. Merski of Citizens for a Sound Economy, a large part of the $250 billion in new tax hikes will be paid by small businesses. In addition, the Clintons' health-care reform proposal, with its mandatory coverage for all employees, will increase the financial burden on many fragile small companies.
At a macro level, Clinton faces the difficult task of trying to raise the growth rate when the economy is burdened with a massive debt, overbuilding in real estate, and slow growth overseas. Gordon R. Richards of the National Association of Manufacturers believes that, given the manifold problems, economic improvement may depend only minimally on what the administration does.
Real growth, says Richards, will be determined by the performance of the world economy and the willingness of the Federal Reserve to adopt a looser monetary policy.
Clintonomics, argues Grover Norquist of Americans for Tax Reform, is a throwback to
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