Seeing tsars over spending

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The Independent Online
GOVERNOR Bill Clinton's desire to be the next US president is unquestioned, though whether he actually has a plan to run the country once in office is a matter of great conjecture among the policy professionals. This is not the case, however, with regard to economic management.

Even now, there are scores of advisers in and around Mr Clinton's camp working on a radical programme to revamp the economic bureaucracy in Washington, encompassing everything from the Treasury to the White House. There are as many variations as there are advisers, but the central task is to create a White House based Economic Security Council, designed along the lines of the National Security Council but broader in scope and mandate.

Most plans propose an Economic Security Adviser based in the White House and available to the president at all times. He or she would play a role slightly more important in a Clinton administration than that of the current National Security Adviser, Brent Scowcroft.

Beyond the creation of an 'economics tsar', the various proposals seem to diverge on to two tracks. One plan is based on a lean but powerful White House Economic Security Council that would have authority to set policy for the dozens of federal agencies, including the Treasury, that now oversee economic and trade policy.

The other track is far more radical and is based on the assumption that the US federal bureaucracy is much too big, inefficient and lethargic to oversee a national economic revitalisation plan.

The intention is to break down the bureaucracy by cutting its size and revamping its myriad parts.

The goal would be to create a US counterpart to Japan's Ministry of Industry and Trade that would reinvigorate US industry and technology. This might be complemented by a National Infrastructure Corporation, similar to that proposed by Senator Daniel Moynihan to oversee public works investment.

Last week, while Mr Clinton prepared for his second presidential election debate, small teams of advisers were meeting to put flesh on the bones of his strategy to invest in people and infrastructure. The aim would be to announce an ambitious 100-day economic revitalisation plan, complete with details, the day after inauguration.

Of course, it is too early to say whether Mr Clinton will be elected or if he will actually implement these programmes. But it is fair to say that he was thinking along the lines of an economics tsar well before President Bush announced that he would appoint James Baker to play such a role if re-elected.

Last week, following the first presidential election debate, Mr Bush effectively tossed out his entire economic team in a desperate attempt to re-energise his policies and distance himself from past mistakes.

Passing around the blame for dismal US economic performance has been a favourite Washington sport for months, but Mr Bush's call for wholesale resignations was the culmination. Taking the most criticism was Richard Darman, the director of the Office of Budget and Management, who has been virtually disowned by the new Bush White House, becoming something akin to the 'Darth Vader' of policies gone wrong. Even Mr Baker, a former supporter, has turned against the once-powerful budget director, who is now little in evidence.

Some time before the third and last presidential election debate on Monday, Mr Baker is expected to unveil a new second-term economic strategy for President Bush that would have enough weight and substance to counter Mr Clinton's proposals. He has already delayed the announcement once, amid speculation that there will be a second delay as Mr Baker's team struggles to pull something new and dramatic from the hat.

Up to this point, the Bush Administration's strategy has been to play up sound programmes that the President has been unable to push through Congress, and to ask for four more years to implement them. The rabbit from the hat was meant to be an 'October Surprise': a formal agreement in principle on agricultural reform between the US and the EC. This would allow the Uruguay Round of trade talks to go forward, so demonstrating Mr Bush's strong foreign policy skills. This may still happen, despite French reluctance and thanks to the British presidency, which has worked closely with the Bush Administration. But it is unlikely to be enough, so Mr Baker has a formidable task.

The one certainty in either a Clinton or Bush presidency is that domestic matters will be the priority in the first year. Healthcare, education reform and ways to jumpstart the sluggish domestic economy are the issues that a new president will have to tackle. The one issue that is most likely to lose steam in the first year is deficit reduction. Neither camp is now convinced that the economy is strong enough to withstand the harsh medicine that is required.