Bush's Economic Present for Clinton

Signs of strength raise second thoughts about stimulus

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Secretary of Commerce Barbara Franklin called the figures "a good present for us to leave to the new Administration." And there really were indications that the economic upturn George Bush had so often promised had finally begun -- just in time for Bill Clinton to reap the political benefit. Gross domestic product leaped up at an annual rate of 3.9% in the third quarter, returning total output of goods and services to the pre-recession pace of mid-1990. Strong increases were registered by consumer spending, business investment, orders for durable goods, sales of existing houses and consumer confidence, while new claims for unemployment compensation have been showing a consistent decline. Any one of these figures might be a fluke. But it seems unlikely that they would all flash misleading signals.

While Clinton may now find it easier to fulfill his No. 1 campaign promise -- revving up the economy -- the good news also poses a sharpening dilemma for him. How much stimulus does he need to inject, in terms of new spending and investment tax credits, and how big a price does he dare pay by increasing, however temporarily, the federal deficit? The President-elect allowed that the news "could have some impact on short-term judgment." Aides asserted, though, that they are still sure the economy will need jazzing up; the question is how much and how fast, and Clinton may not decide that until mid- January, after seeing how Christmas sales and other year-end figures go.

Shorter range, the transition continued to proceed cautiously. Clinton designated heads of nine "cluster groups" that will look into the operations of government departments; the most widely recognizable name was that of former astronaut Sally Ride. He also began what one aide called "job interviews" with a few Democrats -- former Arizona Governor Bruce Babbitt, Senators Tim Wirth and Lloyd Bentsen among them -- who have been mentioned for Cabinet-level appointments.

The President-elect got an unwelcome indication that his political clout is still less than overpowering. He campaigned hard for Georgia Senator Wyche Fowler, even playing the saxophone at a rally on the eve of a runoff election last week. But Fowler lost to Republican Paul Coverdell, ensuring that the Democrats will not increase the 57-to-43 edge they hold in the Senate.