These are selected portions from an article in the current Newsweek. I think it's a well-done objective look at Clinton's economic plan. Some of the material is debatable, but I think for the most part its right on track. Statistics just out show that the economy grew at an spectacular rate of 4.6% in the fourth quarter of 1992 before Mr. Clinton took office. The question now becomes, do we need Clintonomics and can we afford it? Many economists have lately demonstrated their concern by pointing out that this is absolutely the worst time to be raising taxes. Although many American's like to think of corporations as these big, evil, greedy, heartless entities, they are still the lifeblood of the economy -- and if you raise taxes on corporations it will directly impact not only economic growth and development but every American consumer as well. America could use a more intelligently designed corporate tax structure, but certainly not a higher one. I'm all for sacrifice and cutting the deficit (if Clinton can keep spending under control) but it needs to be done without suffocating the economic growth spurt that has just begun. As long as the economy grows faster than the deficit, we are on the right track. But should we now be raising taxes and risk suffocating the economy and high inflation rates for Clinton's new spending agenda? That's just one of the questions this article deals with: Even if all Clinton's investments were highly productive, their impact on economic growth would be tiny. It's more important that most businesses achieve small gains in efficiency than for a few showcase projects or industries to succeed spectacularly. Consider this bit of arithmetic: we now have $10 trillion worth of business plants, machinery and buildings. A negligible 0.2 percent increase in the return on this investment would raise the nation's production by $20 billion. To have the same impact on production, new government spending programs (or tax breaks) of $20 billion would have to achieve a 100 percent return on spending. That is, every dollar spent would have to create a dollar of new production. Few investments have such returns (The same thing incidentally, is true of spending on public schools and worker training. Spending better what we already spend is more important than spending a bit more). What we ought to be debating is the useful role of government. What can it do effectively -- and what should it do? Why? Who should pay? Why? How can we achieve these ends without unduly burdening the private sector? The real value of having a balanced budget as a principle of governance is that it forces us to face these questions. It requires politicians and the public to ask whether the expected benefits of new programs are worth the cost of higher taxes. But first we must drop the pretense that the budget is mainly a mechanism to promote faster economic growth -- as opposed to a framework of setting the boundaries between government and private responsibilities. Clinton hasn't accepted that proposition or its harsh discipline. To be fair, there are plenty of things to like in his program. He's correct that higher taxes are needed to curb the deficit, and well-off -- who benefit from the stable society government provides -- should bear a heavier load. (A caveat, though: Clinton's new tax increases should be imposed by curbing tax breaks -- for example, the mortgage interest-rate-deduction -- and not raising rates). His energy tax and the tax on more social security income are long-overdue proposals. Another good idea is cutting taxes on low-income workers by expanding the earned-income tax credit. As Clinton says, the best way to help the working poor is to let them keep more of their earnings. But otherwise, much of Clinton's program ignores his own rhetoric. "It is time for government to demonstrate...that we can be frugal as any household in America" is what he said -- but not how he as acted. He proposes a long list of new programs and tax breaks. Many merely reward favored constituencies or support faddish ideas. Between 1993 and 1997, Clinton wants to spend $646 million on high-speed rail research [there was an article on the front of today's Wall Street Journal that discussed the major problems with such industrial policy initiatives]. He proposes an Agriculture Department "tree-planting initiative" over the same period for $246 million. By 1997, his new spending proposals and tax breaks total $55 billion annually. Likewise, many programs that "don't work or are no longer needed" -- the White House's words -- escaped the ax. Farm subsidies (about $10 billion annually) are a relic of the 1930's. Government sponsored culture -- everything from the endowment for the arts to public TV subsidies -- costs about $1 billion annually and is a frill in an era of $300 billion deficits. In 1992 Amtrack cost $831 million and carried only a tiny fraction of the nation's inner city passengers. Are these truly compelling government responsibilities? A disciplined Clinton could have cut the deficits at least $50 billion more by chopping an extra $20 billion from spending and paring his own proposals by $30 billion. The idea that Clinton is heroically confronting the deficits is an illusion. By 1997, the deficit-- after five years of assumed economic expansion [a risky assumption considering Clinton's proposed tax hikes] -- drops to a low of 2.7 percent of GDP and then rises again. Hey, we've been here before. In 1989 -- after another long expansion -- the deficit was 2.9 percent of GDP. Clinton's failure is all the more glaring, because other items on his agenda (health insurance for the uninsured, welfare reform) would also require more spending and taxes. The statistics are dry, but consider their real world implications. Clinton's present program proposes tax increases equal to roughly 1 percent of GDP. Thus, the remaining deficit -- if closed entirely by higher taxes -- would require a tax increase about three times as large. We must ultimately decide what we want from government. Ever since the 1930's we have had expansive notions of its role. Government should ensure economic growth, help the needy and respond to all manner of social problems. The deficits are both the consequence and the symbol of this open-ended optimism. Clinton might have begun to reverse this cycle by focusing governments responsibilities. But the very ambitiousness of his proposals goes in just the opposite direction. Rather than dispelling our confusion, he deepens it.