Point-Counterpoint : AT ISSUE: Is Clinton Preying on Fear of Foreigners?

The Charge: President Bush says Gov. Bill Clinton is preying on “fear of foreigners” by seeking increased tax revenues from foreign investments here, and by failing to support enthusiastically the free trade pact with Mexico. “Gov. Clinton hopes to exploit the darkest impulses of this uncertain age, fear of the future, fear of the unknown, fear of foreigners,” Bush said, adding that “he should understand what’s at stake here. . . . Those are American jobs he’s playing games with.”

The Response: Clinton said: “I have supported expanding trade and investment. The fact is, middle-class people had their incomes go down and their taxes go up. Foreign companies in America had their incomes go up hugely in the last 10 years and their taxes go down because they have been evading their fair share.”

The Analysis: Clinton contends he is not proposing a new tax on foreign investments in the United States, but would collect taxes that some foreign firms now are avoiding by artificially inflating prices for transactions between units of the same company. He says increased IRS efforts would raise $10 billion or more a year. Such collections could come at a price of some job losses at home and retaliation by other countries against American firms that enjoy similar tax exemptions abroad. Regarding the free trade agreement with Mexico, Bush is an unequivocal supporter and wants it adopted by Congress without alteration. Clinton has refused to give a direct endorsement. Instead, he says it may be necessary to amend the trade treaty before it is ratified by the Senate to boost wage protections and environmental standards.