Quayle Paints Democrats as ‘Economic False Prophets’ : Politics: Clinton camp calls assertion that their plan would cost taxpayers $220 billion and eliminate up to 2 million jobs ‘a desperate package of lies.’

Vice President Dan Quayle on Friday claimed that Gov. Bill Clinton’s economic plan would cost taxpayers $220 billion, add $1 trillion to the national debt and eliminate up to 2 million jobs in its first year, but the Clinton campaign and congressional Democrats derided the assertions as groundless.

Calling the Democrats “economic false prophets,” Quayle told a group called Citizens for a Sound Economy that “despite the Democrats’ new rhetoric, the American people know the substance. They remember it well from that golden era known as the Carter-Mondale era--that time of double-digit inflation, double-digit unemployment and interest rates approaching 20%.”

Gene Sperling, Clinton’s economic adviser, said Friday night that Quayle’s accusations were based on misrepresentations of Clinton’s plan and misleading assumptions of how his proposals would affect the economy. “It’s a desperate package of lies by an Administration whose only hope is to distract attention from their own dismal economic record--the worst on almost every major economic category since Herbert Hoover,” Sperling said.

Quayle based his estimates of tax costs and job losses largely on a still-unreleased analysis of a number of Clinton proposals by the Republican staff of the Congressional Joint Economic Committee.

The items include the governor’s defense cuts, health care reform program, family and medical leave proposals, worker training program, infrastructure improvements and environmental plans.

Also factored in was the cost of indexing the federal minimum wage for inflation and the imposition of a “carbon tax” on petroleum and oil products to ease pollution--something Clinton has never proposed.

“I’m sure that during their slick bus trip through the area, our opponents never mentioned their idea to put new taxes on everything from gas and coal to paper and packaging,” Quayle said. “Well, what about all the jobs and money these plans will cost? What about the Ohio steel worker, the West Virginia coal miner or the Michigan auto worker thrown out of work?”

Clinton officials said the Republican staff report was riddled with inaccuracies. The economic committee’s Democratic staff agreed, and issued a critique concluding that the GOP document “relies on erroneous statistics” and “fabrications.”

Among the key issues under dispute:

--The draft Republican report, obtained by The Times on Friday, says that Clinton would impose a new tax on fuels that produce carbon dioxide--and cost the economy 195,500 jobs in 1993 alone. Quayle on Friday cited one consultant’s study that concluded that the “carbon tax” would cost 33,000 jobs in Ohio alone.

But Clinton has never proposed the tax. Ed Gillespie, the Republican staff director at the Joint Economic Committee, said Friday night that the report assumed Clinton would have to impose such a tax to meet his promise to limit U.S. emissions of carbon dioxide in an attempt to combat global warming.

--Quayle maintained Clinton’s programs would cost business $70 billion a year in taxes, including about $50 billion for a 1.5% payroll tax designed to raise revenues for job training. The 1.5% payroll tax would cost 175,000 to 350,000 jobs over five years, he said.

But Clinton’s plan does not impose an across-the-board payroll tax for job training; it says that any company that does not currently spend an amount equivalent to at least 1.5% of its payroll to train its employees would have to increase its own spending to that level or contribute to a public training fund. Many companies already spend at least that much on training and would face no additional expenses from the proposal, Clinton aides said.

Gillespie said the report’s authors took that factor into consideration in estimating the costs. But Sperling said their calculations ignore the increased productivity and economic growth that enhanced training would provide.

--Quayle contended Friday that Clinton’s “play or pay” health care program will require a new 7% payroll tax and “cost some 710,000 Americans their jobs.” The jobs would be lost as the higher taxes drove marginally profitable companies under, an aide said.

Under the health care plan Clinton has proposed, all employers would either have to insure their workers or buy into a public plan; contrary to claims by some Clinton aides, that means companies not now providing insurance would face what amounts to a new tax.

But even so, Clinton advisers say, Quayle’s figures are inaccurate.

First, Clinton has not specified how much employers not providing insurance would have to pay to buy into the public plan. Second, the job loss estimate assumes that all employers would be required to provide insurance immediately in 1993; Clinton has said he would phase in universal coverage along with cost controls.

Third, Clinton has promised government assistance to initially help uninsured businesses meet the cost of providing insurance; that does not appear to be included in the Republican staff analysis. Finally, says Sperling, the GOP staff ignored the savings that companies that do provide insurance would realize from Clinton’s cost containment proposals and from the elimination of the implicit subsidy they provide to companies that do not now insure their workers.

Richard Porter, counselor to the vice president, acknowledged Friday that the analysis of the health care plan did not take into consideration the savings Clinton says Americans would realize in their health care expenses through cost containment.

--Quayle said the Democrats’ regulatory initiatives would also hurt the economy. “They want to increase fuel efficiency standards by 17 m.p.g., meaning a loss of a quarter of a million jobs,” he contended. The vice president said the environmental cleanup efforts mentioned in Sen. Al Gore’s recent book “Earth in the Balance” would also be steep.

Gore has argued that environmental cleanup and the development of ecologically sensitive technologies could provide major new employment opportunities. On Friday, he responded to Quayle’s charges by saying: “Bush and Quayle know they’re in trouble on the environment. They know that the American people just don’t buy their excuses. So, after driving America into a ditch, they’re reaching down for handfuls of mud and trying to convince us all there’s some sense to their thrashing.”

--Quayle said the new taxes called for under the Clinton plan “would swamp Gov. Clinton’s so-called middle-class tax cut,” which was proposed to shift the tax burden from middle earners to Americans with the highest incomes.

Clinton adviser Sperling said Clinton’s plan would raise $91.7 billion from upper-income taxpayers and $58.3 billion from corporations over the next four years. But he said that the tax hike would be offset by a $60-billion tax cut for middle-income families, a $12-billion increase in a tax credit that benefits the working poor and over $27 billion in tax incentives for business.

--Overall, the draft GOP study estimated that Clinton’s plan would cost 1.7 million jobs--although Gillespie said the final report, to be released Monday, will revise that number up to 1.8 million.

But Clinton aides and the Democratic staff of the economic committee insist the Republican report overestimates the job losses from higher taxes and environmental regulations and understates the employment benefits of Clinton’s economic plan.

In their critique, the Democratic staff said the report assumed, for example, that every $1 billion cut from defense spending would cost almost 22,000 jobs; but the document assumes that every $1 billion Clinton spends on infrastructure would produce just 12,000 jobs.

Sperling said the study also assumes just $6 billion in new spending on infrastructure and environmental cleanup in 1993, when Clinton has promised a $20-billion annual plan for the next four years. Studies done for the Congressional Budget Office suggest that every $1 billion of such spending on infrastructure would create 50,000 jobs, not the 12,000 the GOP study assumes, he added.

Taken together, these two factors mean that Clinton’s “rebuild America” proposals would create 1 million new jobs in 1993--not the 72,000 the GOP plan assumes.

The same kind of computational dispute marked their clash over the deficit. Quayle’s assertion that Clinton’s plan would add $1 trillion to the national debt contrasted sharply with Clinton’s own estimate, which claimed the plan would cut the annual deficit from $330 billion to $140 billion by 1996. The malleability of such figures shows the difficulty of accurately assessing the kind of competing claims that flashed between the White House and Little Rock, Ark., Friday.

Porter, the Quayle aide, conceded that the estimates were based on economists’ models, and were “rough.” But, “most important is the direction of the effects, and their magnitude. . . . You’re talking about a lot of people losing a lot of jobs,” he insisted.

As Quayle jabbed at the Democrats, he also sought to find bright spots in the current economic picture.

He hailed the small drop in the monthly unemployment rate, announced on Friday, as a positive development.

And he said that during the past 12 years of the Ronald Reagan and George Bush administrations, median family income rose by 8.4% after inflation. At a press conference, Quayle said median family income had risen not only over the 12 years as a whole, but during the recession-marred 3 1/2 years of the Bush Administration as well.

But later Friday morning, Porter clarified that the evidence from 1989 and 1990 suggested that median family income has in fact been “about flat” during the Bush Administration.

Richter reported from Columbus and Brownstein from Los Angeles.