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Gore Is Betting Government Can Sustain the Good Times

Economy: His budget plan reveals a more activist role for Washington, but some experts are skeptical that policy decisions would have much effect.


WASHINGTON — What Vice President Al Gore did in rolling out his economic agenda Wednesday was not announce new programs; there were almost none in his much-ballyhooed speech in Cleveland.

What Gore did was make explicit what has been largely only implicit so far this campaign season: that the Democratic presidential contender fervently believes that government can help cause, sustain and shape economic growth, and already has.

In setting out some very ambitious benchmarks for the coming decade--like expanding family income by one-third and slashing poverty to its lowest level in several decades--and in ticking off proposals to help the economy meet those goals, Gore played to one of the voters' most dearly held hopes: that there's somebody out there who can keep the good times rolling.

In the process, he sought to put his Republican rival, Texas Gov. George W. Bush, in a bind. A few caveats aside, Bush thinks the best thing government can do for growth is get out of the way. But selling a policy of getting out of the way could prove tough at a time when Americans have recovered some of their can-do confidence.

Still, say economists, it could well be Gore, not Bush, who ends up boxed in. For having already presided over eight years of growth, the vice president is effectively promising what few analysts think likely: another eight years of even more spectacular growth.

"Politicians make all sorts of economic claims, but their record of delivering is decidedly mixed," said Edward F. McKelvey, a senior economist with Goldman Sachs & Co., the New York investment bank.

President Bush's Expansion Plan Cited

One telling example offered by McKelvey: the 1988 pledge of then-Vice President George Bush, the current GOP candidate's father, that the country would add 30 million jobs in eight years of his leadership. It had added only about 3 million by the time he was defeated four years later.

Neither candidate this year has shied from touting his economic bona fides. With prosperity quickly adding to the ranks of American millionaires and seeming to help with everything from crime to welfare, each seeks to be seen as the better economic steward.

Gore has spent much of the campaign tarring his rival's proposals as budget-busting threats to growth. On Wednesday, he denounced Bush's call for a 10-year, $1.3-trillion tax cut as "cross-your-fingers economics."

Bush has responded by portraying Gore and President Clinton as having failed to take advantage of the boom. "We're still waiting for them to deliver on the promises they made in 1992 to give a middle-class tax cut, provide a prescription drug benefit for seniors and pass a patient bill of rights," Bush spokesman Ari Fleischer said Wednesday.

What each man has studiously avoided is asserting that what Washington does is the key to the economy's performance. Even Gore, the bigger believer in government, has carefully hedged his claims, saying that he and Clinton cleared the way for the growth of the last decade, rather than single-handedly causing it.

"Together, we changed things," Gore declared in his convention acceptance speech in Los Angeles last month, but he quickly added "to help unleash your potential, and unleash innovation and investment in the private sector, the engine that drives our economic growth."

Many Economists Increasingly Skeptical

In portraying Washington's role as comparatively modest, the two candidates are following the lead of mainstream economists who have grown increasingly skeptical of government's ability to guide growth.

"Government policies can and do have powerful effects," said J. Bradford DeLong, a former Clinton administration Treasury official who now teaches at UC Berkeley, "just not always the ones that are anticipated."

But although Gore continued to sound the theme of a comparatively modest government role in the economy, analysts examining the 200-page economic plan that accompanied his speech said it implies much more government activism than in the recent past.

That's because growth alone--even at the feverish pace of recent years--would not be enough to ensure the economy hits some of the targets Gore has set for it.

For example, Gore said that he wants to boost median family income by one-third over the next decade. But that would require growth rates not seen since the golden age of income expansion in years immediately after World War II.

"God bless them, it's a great goal," said Jared Bernstein, an economist with the Economic Policy Institute, a liberal Washington think tank. But it's going to be difficult to reach, he added, without maintaining high rates of productivity growth and more evenly distributing the benefits of greater output per hour worked, something only the government can ensure.

Or other examples: Gore wants to double the number of families with $50,000 or more of savings and he wants to reduce the number of Americans in poverty from 12.5% of the population to below 10%. "Economic growth alone is not going to hit those goals," said Robert E. Litan, an economist with the nonpartisan Brookings Institution in Washington. "You're going to need some help from the government."

Gore would offer targeted tax breaks to redistribute the benefits of growth and increased spending on education and research--which contrasts sharply with Bush's most prominent proposal, an across-the-board cut in tax rates.

Even so, said analysts, Gore's economic plan remains fundamentally cautious and, in one important respect, strikingly similar to that of his opponent. Although little-noticed, the single most expensive growth policy of each candidate is eliminating the $3-trillion-plus public debt, by 2012 in Gore's case and 2016 in Bush's.

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