ECONOMIC INTELLIGENCE NEW DEMOCRATS TRY AGAIN
By Joseph Spiers

(FORTUNE Magazine) – Anyone who wonders what the elusive ''new'' Democrats really think should read Growth With Equity, published by the Brookings Institution. The book raps Republicans preoccupied with the former and Democrats who sacrifice growth in their obsession with the latter. Authors Martin Neil Baily, Gary Burtless, and Robert E. Litan believe they have found a third way. Yes, it sounds like Bill Clinton the campaigner, if not President Clinton. Even so, there are some twists. The authors come down unequivocally for free trade -- no penalties against countries deemed to have open markets -- and advocate tort reform, on which the Administration has been silent. They don't share the Clintonite devotion to big new infrastructure projects. Spend modestly to upgrade, they say, and charge highway and airport users more to relieve peak-hour congestion. To stimulate private capital investment, the book calls for a permanent 5% tax credit for all businesses, vs. Clinton's two-year 7% credit that would apply only to a company's increase in capital expenditures. The authors argue that deficit reduction would accomplish still more, though they offer few specifics beyond taxing the rich harder. Not exactly fresh thinking. They also offer some familiar prescriptions for competitiveness -- national standards and testing for high school students not going on to college, stressing work-related skills like reading and mathematics. But their call for a mandatory training tax is a real job killer. It would total 2% of payroll, costing up to $46 billion a year, with no exemption for small firms. Clinton floated a similar idea during the campaign but has since dropped it. The book pushes for more research and development, including a government- sponsored board that would direct development of precommercial technologies. The economists acknowledge the potential problems of political and industry manipulation but still believe the government can help. Which, after all, is why they are Democrats.