‘Clintonomics’ to Guide Economy : Policy: The strategy will aim to produce robust growth with private and government investment.

WASHINGTON —  A restless nation voted for change this week, and here it comes: Bill Clinton’s White House will seek to shower billions of dollars on down-to-earth assets like roads and bridges, pursue futuristic visions of high-speed rail and high-tech aircraft, improve the nation’s schools, retrain its workers--and create millions of jobs in the process.

But this sweeping list of new proposals, which will consume much of the federal government’s limited supply of discretionary spending, is more than just a massive program for pumping money into a stagnant economy. It reflects the basic philosophy and underlying principles that will guide the new President’s approach to national economic policy.

Call it “Clintonomics”--a strategy to ensure robust economic growth through a one-two punch of government investment, which Clinton would increase by $220 billion over four years, and private investment, which he hopes to spark through tax credits. From creating construction jobs to spearheading a nationwide information network, the Clinton Administration will try to do things that would be heresy under former President Ronald Reagan or President Bush.

At heart, Clinton’s approach--a sea change from the “Reaganomics” of the last 12 years--is based on a belief that government must play an active role in making the strategic decisions and the critical investments on which future growth and prosperity depend.

In the era now ending, Reagan and his followers sought to leave almost all basic economic decisions to the private sector. Through a sweeping policy of deregulation and other actions, the Reaganites tried to shut the government out of the process entirely.

Clinton agrees that the private sector should have a major part in economic decision-making, but insists that the government too must play a role--at times a guiding role. Only then, he and his advisers say, can the country revive its lagging productivity, rekindle its global competitiveness and return to the levels of growth essential to future prosperity.

“The first basic departure in Clinton’s approach is the very idea that the federal government can do something useful to put the economy on a more favorable growth path,” said Robert Pollin, an economist at UC Riverside.

Critics warn that Clinton’s ideas could overstretch the U.S. economy and send shock waves through financial markets, with damaging consequences for the country. In any case, the skeptics say, Clintonomics may fall victim to the lobbying, obstructionism and horse-trading that have characterized the legislative process in recent years.

But as the President-elect looks at the nation’s problems, close aides say, he believes that the greater risk is in failing to act. Future prosperity, he contends, will depend on new investment in America’s students and workers, the bricks and mortar of its infrastructure and the promise of high-stakes technologies.

“Unless we begin now to make these changes, our children can become the first generation of Americans to do worse than their parents,” Clinton declared on election eve. “It doesn’t have to be that way.”

Already, Clinton’s team is preparing an economic recovery program as the centerpiece of the Administration’s first days in office. More basically, however, the President-elect would transform the very relationship between government and business in his quest to re-energize the economy for the long run.

He wants to establish an economic security council, symbolizing the high stakes of international competition in the post-Cold War world. He also would establish a civilian research and development agency “to bring together businesses and universities to develop cutting-edge products and technologies,” Clinton’s campaign literature says.

In the short run, Clinton may feel compelled to do something about creating jobs. But in another basic departure from the Bush Administration, Clinton’s brain trust believes that key economic problems, such as stagnating wages, have become chronic. As a result, he seeks a strategy aimed more at arresting decades-old trends than in reversing the effects of a temporary downturn.

When Americans hear about the economy in the coming months, certain words and phrases are likely to be repeated, because the new White House team also will use a different sort of language than its predecessor. A guide:

* Economic strategy. The very words strike fear in the hearts of conservatives who believe that government should keep hands off the free market. Clinton, who maintains that the government should not pick winners and losers in private industry, nonetheless believes that it should take a more active role in enhancing U.S. competitiveness.

* Infrastructure. It used to mean roads, bridges, airports, railroads and sewer systems. Clinton’s aides have added a high-tech component, such as their proposed national information network “to link every home, business, lab, classroom and library by the year 2015.”

* Public investment. Many still call it government spending. Clinton prefers investment because it suggests the long-term benefits he seeks through improved education, technology and infrastructure. “To me, that’s the essence of Clintonomics--growth policy through investment,” said Alan S. Blinder, a Princeton University economist and informal adviser to the campaign.

* Training. In one of Clinton’s more controversial proposals, he would require employers to spend 1.5% of their payrolls to train their workers. The creation of a better-skilled work force is fundamental to his strategy.

* Government-business partnerships. As an illustration, he supports a new manufacturing extension program, modeled after the Agricultural Extension Service, in which government officials would inform private firms of advances in technology, materials and design.

If today is a time of dreaming for Clinton’s brain trust, tomorrow may be a time of trading. Even before the polls had closed, Republican leaders were claiming that Clinton had not received a true mandate because his popular vote total was less than 50%. And many economists say Clinton will have to pick and choose what he wants because of the significant costs; they dismiss his claim that the initiatives can be paid for through cost-cutting in other programs and collecting taxes from the rich and foreign corporations.

“It will certainly be a dramatic change from the Reagan-Bush rhetoric and the Reagan-Bush actions,” predicts Robert M. Solow, a Nobel laureate in economics at the Massachusetts Institute of Technology. “But it would be a mistake to give the impression that all of a sudden the federal government will be a visible presence everywhere you turn.”

But, if campaign promises often differ from official deeds, there should be little mystery about where Clinton’s sympathies lie. A 22-page document titled “Putting People First,” which Clinton released in late June, is chock full of clues about his goals for spending, cutting and taxes.

Clinton calls for $220 billion in new spending over four years, featuring $20 billion a year for infrastructure projects including roads, highways, bridges, high-speed rail, new environmental technologies and other research. He also supports such education efforts as expanding Head Start for young children, creating apprenticeships for the non-college bound and providing loans to college students that they could pay off with community service.

Clinton wants to overhaul the health care system, create a network of community banks to help the inner city, put 100,000 more police on the streets and add security for violence-prone schools.

And that’s just part of the list. “I know economic growth will be the best jobs program we’ll ever have,” he declared in “Putting People First.” “But economic growth does not come without a national economic strategy to invest in people and meet the competition. Today we have no economic vision, no economic leadership and no economic strategy.”

The foundation for much of Clinton’s thinking comes from Robert B. Reich, a political economist at Harvard University who has been pals with Clinton since they were fellow Rhodes scholars at Oxford in the late 1960s.

In his 1991 book, “The Work of Nations,” Reich put forth a theory that galvanized Clinton and provided an argument for new investment in education and infrastructure: National borders were becoming increasingly irrelevant in economic terms because factories, technology and money flowed so quickly around the globe.

In this unfolding, post-Cold War world, national prosperity would rely more than ever on the few assets that could not be moved.

“In a global economy, the only resources on which the future standard of living is uniquely dependent are people--their training, skills and insights--and the infrastructure that supports them,” Reich later explained in an interview. “All else is quite mobile.”

One key question early in Clinton’s presidency will be how the spending ideas survive in the legislative bazaar of Congress, a place where Bush’s proposal for urban enterprise zones recently became attached to a bill cutting luxury taxes for the rich. Already, special interest groups are plotting strategies to benefit from coming White House initiatives, arguing, for instance, that money invested in the environment could be a part of an economic recovery strategy.

On top of all that, financial markets could go haywire if they interpret new spending initiatives as a sign that Clinton is willing to widen the budget deficit.

“If Clinton wants to get $100 billion of useful expenditures, will he have to spend $300 billion to get it?” asks Allan H. Meltzer, a professor of political economy at Carnegie Mellon University in Pittsburgh, Pa.

To conservatives, Clinton’s assumption that government can play a helpful role in the private economy is suspect at best. Bush derided Clinton’s strategy as “trample-down economics” and sought to peg him as the latest in a long line of free-spending liberals who cannot resist hiking taxes and busting the budget.

But Clinton’s lieutenants insist that the rap is unwarranted. They argue that government can help improve conditions with incentives for private industry and by helping strengthen basic national resources--such as workers, technology and infrastructure--that should benefit all business.

“The Republican view of government for so many years has been ‘hands off the economy,’ ” said Roger Altman, a Clinton insider who is vice chairman of the Blackstone Group, an investment banking firm. “The Democratic view has been ‘hands all over.’ Clinton’s view is that government can be a catalyst.”

Unlike Reagan and Bush, who argued that the benefits of private investment would “trickle down” through society, “the Clinton philosophy is that you concentrate your benefits on the bottom and the middle--and let them ‘percolate up,’ ” Blinder said.

Already, Clintonomics is changing the terms of the economic policy debate after 12 years of Reagan and Bush. Even Arthur Laffer, Reagan’s supply-side guru and an adamant foe of tax hikes on the rich, is taking a wait-and-see approach to Clinton’s plans for a new jolt of public investment: ‘If it’s done well, I think it could pay off,” he said.