Clinton, Dole Quarrel Over Economy's Health

By Irv Chapman/CNN

NEW YORK (Oct. 29) -- Retailers can count the reasons they're better off now than they were four years ago. Overall, sales are up, and consumer confidence in the economy is high. Millions more people are at work, yet inflation remains low. U.S. exports are at a record high, and so is the number of new small businesses.

It's a long litany for presidential boasting. "It is a fact that we have ten and a half million more jobs," says President Bill Clinton, "the lowest unemployment rate in seven and a half years, almost four and a half million more homeowners. The deficit going down for all four years of an administration for the first time since before the Civil War in the 1840s."

"We have the worst economy in a century," responds GOP nominee Bob Dole. "We have the slowest growth, about 2.5 percent." (256K WAV sound)

On the down side, incomes have barely begun to inch higher four years after a recession. Corporations have cut tens of thousands of white-collar and middle-management workers. Low-skilled workers are in a permanent rut. All this has been fodder for Dole's campaign themes.

Both candidates claim the route to improving the economy is balancing the federal budget and eliminating the deficit.

But there's an essential difference. "In the Dole scheme of things, it doesn't matter how much you reduce the deficit," says Julie Sedky, vice president of Capital Insights. "It matters how you do it, too. And the way that Clinton chose, which is largely a tax increase on upper-income taxpayers, is anathema to most Republicans and businessmen and investors."

After spending much of his Senate career as a deficit hawk and an ardent balanced-budget advocate, Candidate Dole staged a political reversal. Saying he wanted to stimulate more robust economic growth, Dole called for a universal 15 percent income tax cut, and other tax breaks that would cost the U.S. Treasury a half-billion dollars.

"I don't want to see us blow a big hole in the deficit with a tax program we can't pay for," says Clinton. Dole replies, "Cutting taxes and balancing the budget are just a matter of presidential will and if you have it, you can do it, and I have it, and I will do it." (160K WAV

Many analysts say it's not that simple. "He seems to have put defense, Social Security, Medicare, Medicaid, maybe veterans off limits," says William Niskanen of the Cato Institute. "That makes it more difficult to both cut taxes and balance the budget."

Dole has been hitting Clinton hard for walking away from his promised middle-class tax cut, and for raising taxes instead. Clinton did it by first taking a bigger bite from those in the upper-income brackets, then by bumping up the gasoline tax, which hits practically everybody.

But Clinton also promised to cut federal deficit in half. He's done better than that; the $290 billion deficit he inherited has plunged to an estimated $109 billion. However, "the projections are the deficit will continue to rise and start to go back up next year without further action," says Stanley Collender, managing director of Burston Marsteller. "So while Clinton hasn't promised very much on the deficit, he's going to have to deal with it if he gets re-elected no matter what happens."

Nevertheless, Clinton has resurrected his family tax cut of four years ago, adding a promised $1,500 credit for two years of higher education and elimination of the capital gains tax for all homeowners. The price tag: $100 billion.

Voters are now sorting through both candidates' promises. Polls suggest the voters don't trust either candidate to deliver, especially when it comes to delivering a tax cut and a reduction in the deficit at the same time.

Clinton, Dole Quarrel Over Economy's Health

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