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Democrats Pursue Social Gains Via Mandate Route : Government: With the Treasury broke, private sector is being targeted. A striking example is in health plan.

September 26, 1993|RONALD BROWNSTEIN | TIMES POLITICAL WRITER

WASHINGTON — Squeezed between expansive ambitions and crimped resources, the Clinton Administration and Democrats in Congress are increasingly pursuing their social goals by seeking to mandate actions by the private sector.

The most vivid example is President Clinton's proposal that all employers be required to pay for health insurance for their workers. But ideas under discussion in the Administration and Congress extend well beyond that--requiring all companies to establish labor-management committees to monitor workplace safety, for example, and mandating that financial institutions such as insurance companies and mutual funds invest in blighted urban areas.

"Government has basically three ways of achieving social objectives," said Thomas E. Mann, director of governmental studies at Washington's Brookings Institution. "They can spend money to buy it. They can offer incentives by forgoing tax revenues. Or they can issue commands. Insofar as the Treasury is broke, that limits the first two options, and I think government is increasingly stuck with third option of issuing commands."

Alarmed business groups--especially groups representing small business--are already arguing that a new wave of mandates will cost jobs and weaken the economy.

"Congress has already bankrupted the federal government with entitlements it can no longer afford to pay," said Mike Roush, chief Senate lobbyist for the National Federation of Independent Business, a small-business lobbying group. "And now it is trying to shift entitlements to employers."

Fearful of being tagged anti-business, Administration officials are skittish about any suggestion that Clinton is too eager to impose new mandates on employers, and the Administration is proceeding cautiously on several such proposals.

While Clinton has proposed the health insurance mandate and signed legislation requiring employers to provide workers with unpaid family and medical leave, he has quietly shelved a campaign proposal that would have required all businesses to spend at least 1.5% of their payroll on worker training.

In regulatory policy--as opposed to social policy--the Administration has displayed interest in alternatives to mandating business action. A plan it will release shortly to reduce the emission of gasses that contribute to global warming, for example, is expected to rely almost exclusively on voluntary measures rather than mandates.

"There is a balance," said one White House economic adviser. "Whether it is an economic balance is another question. But there is definitely a political balance."

But the same logic that attracted the Administration to the employer mandate as a centerpiece of its health care plan may inexorably force it to move in that same direction on other issues.

During the 1980s, Republican Presidents Ronald Reagan and George Bush preferred using the tax code to achieve their goals. Bush proposed tax credits for businesses that granted family leave to new parents, and he asked for tax credits and deductions to help uninsured individuals purchase health insurance.

Democrats, by contrast, are generally quicker to put new burdens on business. Bush twice vetoed family-leave legislation sent to him by the Democratic Congress; Clinton signed it as one of his first acts in office.

Two larger forces--the gigantic federal budget deficit and the declining importance of labor unions and big corporations--are pushing in the same direction.

The federal government's financial squeeze has made new federal spending and tax cuts increasingly difficult to defend. In some instances, mandates can directly replace federal spending.

Health care is a prime example. Some health policy analysts argue that the government should pay for universal coverage--either because they believe such a system would be more efficient or because they consider it more equitable to pay for a broad social need publicly.

Administration officials, joined by many large employers, reject those arguments. An employer mandate, they argue, would eliminate the kinks in the current system that effectively compel firms that provide insurance to subsidize those that don't.

But it is also true that a government-financed health care system would require a huge tax increase that few in Washington are willing to consider. By demanding the contribution from employers who don't provide insurance, Clinton and Congress may be able to expand coverage without an unpopular general tax hike.

The same pattern of substituting private for public dollars runs through a developing debate over how to revive the inner cities. Inside the Administration and among Democrats in Congress, there is a growing consensus that the key to reviving inner cities is not so much inaugurating new social programs as attracting investment capital for small business and housing.

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