These distinctive problems largely rule out further tax cuts or expansionist spending policies, because short-term increases in demand would inexorably be offset by higher interest rates and rising imports. Instead, the Clinton administration has opted for a more restrictive fiscal policy designed to reduce the federal deficit, coupled with a systematic reform of the health-care system.

       The effects of the latter program will depend in large measure on the final legislation enacted by Congress, which is likely to be considerably less ambitious than the administration's proposals. In evaluating an administration's economic performance, it is important to distinguish between what was actually wrought by its policy initiatives and what would have occurred anyway. In this respect, relatively little that has taken place in 1993 can be directly attributed to Clinton.

       The slowdown in the first half was caused by the fact that consumption spending had increased more rapidly than real incomes in 1992, forcing consumers to retrench, and by the fact that the recession overseas had dampened demand for American exports. In other words, the slowdown would have taken place irrespective of who had won the election.

       The only major change in economic conditions that has resulted from Clinton's initiatives so far is that long-term interest rates are lower than they would be otherwise. Since the start of the year, long-term rates have declined by about 150 basis points (1.5 percentage points).

       It is not immediately clear how much of this decline reflects the response of financial markets to tighter fiscal policies, because long-term rates are also affected by other factors: the slower growth rate in 1993 and diminished inflationary expectations. At most, the administration can be credited with about half the decline (75 basis points); at least, with less than one-third (40 basis points).

       To compare the Clinton administration's program with what would have occurred in its absence, I have used an econometric method. A model of the economy was simulated for the period 1993-96, with all the Clinton initiatives removed. Then the model was rerun for the same period, this time including the Clinton policies. The difference between the two simulated paths measures the impact of the Clinton program on the economy.