But just as Reich is poised to release his re-employment program, new studies suggest that U.S. workers are widening their lead in productivity over their European rivals, while at least holding their own against the Japanese.
Germany's post-World War II "catch-up" with America ended in the early 1980s, and the United States has increased its productivity advantage over Germany since then, according to a new study by the Brookings Institution.
As a result, "Japan and the United States are likely to share productivity leadership in manufacturing for some time to come," German economist Bart van Ark said.
Separate studies show that the United States now enjoys some of the lowest manufacturing costs of any advanced industrialized nation; BMW and Mercedes-Benz are setting up shop in the South to escape the high costs of doing business in Germany.
Administration officials argue that much of the improvement in productivity has come at a high price: bankruptcies, layoffs and corporate restructurings that have left millions of Americans outside the economic mainstream looking in.
"Productivity is not the only measure of economic well-being," said Laura D'Andrea Tyson, chairman of the Council of Economic Advisers. "The United States has had stronger growth in the past year, but you still see that wages and incomes have been growing very slowly."
Still, the unemployment rate--6.4% in December--has fallen nearly one full percentage point over the past year, and monthly job creation in 1993 was double the pace of 1992.
"People are not as scared as they were a year ago. . . . People are feeling better, that looks to be dramatically true," said one White House official.
While the sense of urgency underlying Clinton's campaign proposals may be absent this year, the budget constraints that are facing the Administration remain very real.
Stringent new spending limitations imposed by Clinton's five-year, $500-billion deficit-reduction package are already threatening Clinton's ability to finance his legislative agenda.
White House Budget Director Leon E. Panetta warns that unless the Administration is successful in persuading Congress to cut spending on existing programs, there will be little money available to fund many of Clinton's initiatives.
Already, the Administration has cut proposed outlays for Clinton's new programs for 1995--from $29 billion to about $16 billion--and only five Cabinet departments received funding increases for next year.
Panetta had no choice but to slash funding for the new agenda to comply with a hard freeze on discretionary spending in next year's federal budget, which will be unveiled Feb. 7.
The freeze will remain in place at least through 1998, raising questions about Clinton's ability to fully fund his plans.
From a political perspective, the good news about the economy and health care is arriving nearly three years too soon. For Clinton, the state of the nation in late 1996 matters much more than its performance in 1993.
In fact, fast growth today could increase the probability that the economy could be hitting the skids again during the next presidential election campaign.
But good news, after all, is better than the alternative. So, aides say, Clinton will use his address to claim credit for the positive developments: low interest rates, rapid job growth, increasing business investment in factories and equipment, and a significant decline in the federal deficit.
Administration officials say he will stress that his deficit-reduction package is responsible for a sharp reduction in long-term interest rates, making it easier for consumers to spend and businesses to expand.
"I think he will tell the public that he has done wonderful things for them over the past year," said a sardonic Martin Feldstein, a conservative Harvard University economist and former Ronald Reagan Administration official. "He will take credit for the business cycle."
Countered Robert E. Rubin, chairman of the Administration's National Economic Council: "How will we take credit for the economy? Easily."
