Worth the Price? : Clinton’s victory seems almost certain. But he could be headed for trouble. : Economy May Be Clinton’s Vietnam

Even as euphoria spreads within the Clinton campaign that victory is almost within grasp, a somber recognition is taking hold among some of his top advisers that--as incredible as it seems--winning may be the easy part. The hard part could start the day after the election.

For more than a year, Bill Clinton and the talented team he has gathered around him have driven themselves as no other Democratic campaign in recent history. Their operations in Little Rock are humming 24 hours a day, as one group works all night and then passes on the baton to a second group that arrives for a 7 a.m. meeting. Weeks before the presidential debates, Clinton advisers were reviewing tapes from past performances by both George Bush and their own man.

Exquisite attention to detail, elaborate strategies, an intense hunger for power--all these patterns in the Clinton campaign are an exact replica of the way Republicans used to play the game before they held office for a dozen years and became a little too comfortable. And the Clinton team has been so good at what it does that, nine days before the election, it’s hard for anyone to see how it can lose. No wonder smiles have broken out all over the campaign plane.

But one step removed from the inner circle of political advisers, a view is growing among Clinton’s policy advisers that if victory does come on Nov. 3, a different monster is waiting just around the corner. It’s the economy--and it could be Clinton’s Vietnam.

The Clinton team has long assumed that by the time of the election, the economy would be on the mend and would not require much in attention in the short term. His whole economic plan is based on that notion. Nearly all Clinton’s programs are aimed at rebuilding the country over the long haul: investments in job training and education pay off over a period of years, not in a few months.

This fall, however, it has become apparent that the nation’s economic difficulties may be much deeper and more prolonged than anyone first thought. To some, the economic outlook is beginning to sound like a trip to Baskin-Robbins. First we had a single dip, then a second dip. Could we be heading for a third dip?

Bush advisers say the economy is poised for recovery, and Clinton no doubt hopes they are right. While some signs of life are emerging, however, there is no evidence that animal spirits are reviving. Most consumers are still staying out of the malls, and many companies are still hung over from their debt binges of the ‘80s. The Bush Administration had hoped for a surge in exports, which would set wheels turning here, but conditions overseas have turned sour. U.S. business leaders coming back from Europe say they have rarely seen spirits so low and they worry not only about a collapse of the Russian government of Boris N. Yeltsin but a crises of confidence throughout Europe. Nations across the Pacific are mostly doing better, but the Asian spark plug--Japan--is running low on energy. International trade talks stalled last week.

What does this mean for Clinton, should he win election? “We are inheriting a terrible economic mess, worse than anyone understands,” says a senior policy adviser. It’s a mess that could not only confront him with some excruciating choices right after the election, but could plague him throughout a first term.

Richard M. Nixon faced a similar challenge when he was elected in 1968. Just as the economy is driving Republicans from office today, the Vietnam War was driving Democrats from the White House then. Just as Clinton had assumed that recession would soon disappear, Nixon assumed Vietnam would go away. Instead, Vietnam became all that mattered.

Nixon had successfully campaigned against “Johnson’s war.” Within a year of taking office, Vietnam became “Nixon’s war” and it nearly destroyed him. Within a year, this will be “Clinton’s economy,” and his advisers are beginning to see that it could be his undoing.

As the first Democrat to hold the White House in more than a decade, President Clinton cannot afford to sit idly by if layoffs continue to devastate the work force from California to Florida. The public will expect him to pump more stimulus into the economy than he has planned. And he’s already making preparations. The Times broke the story that Clinton is examining a series of proposals to increase public-works spending and fatten investment credits for business. Officially, the Clinton campaign tried to squelch the story, but some quietly insist that pump-priming will be necessary.

Proposing a short-term stimulus package places Clinton in a dilemma, however. Financiers here and overseas always worry that a Democrat is too promiscuous with the nation’s deficits--though God knows why they would be so skeptical of Democrats after the past 12 years of GOP rule. Since word spread that Clinton might go for short-term stimulus, long-term interest rates have shot up.

The message is clear: Should Clinton come forward with only a spending plan and no serious plan for curbing long-term deficits, he could get mugged by the markets. Long-term interest rates could rise, the bond market could plunge and the dollar could spiral downward.

Democrats will remember that in 1980, Jimmy Carter presented a budget that the markets rejected and, within 90 days, he had to throw it away and offer a new one. Clinton can’t afford such a mistake, especially in his early days.

Clinton is already focusing on the problem. A few weeks ago, he placed a private call to Paul A. Volcker, the former chairman of the Federal Reserve Board, asking how the markets would react if he proposed a stimulus package in the presidential debates. Volcker believes the markets would welcome some pump-priming next year, but he and others know Clinton must show he is serious about the deficits if he wants to maintain Wall Street’s confidence.

The best answer, say some advisers, is for Clinton to come forward in January--or before--with a two-part program, providing more stimulus in the early months followed by deficit cuts that would kick in as the economy grows. That makes good sense economically, but politically, it is more easily said than done.

Indeed, Clinton will face some awful choices. The deficit package he has proposed is a step forward, but it falls far short of what is needed--especially if Clinton wants to stimulate the economy in his early days. As Bush and Ross Perot rightly insisted in the debates, Clinton’s numbers don’t add up to a heck of a lot.

In Clinton’s economic plan, half the deficit reduction is expected to come from a healthy economy--growth of more than 3% during the next four years. The United States hasn’t seen that kind of growth in four years, and isn’t expected to see it anytime soon. The Clinton plan also relies on collecting $11 billion a year in unpaid taxes from foreign corporations; outside analysts say such revenues are unlikely to exceed $3 billion a year. This is a plan a David A. Stockman would love.

Privately, some outside advisers are fretting that Clinton must eventually face reality and prescribe tougher medicine. They speculate whether, as President, he could support caps on Medicare and Medicaid spending, an idea embraced not only by Bush but by Clinton’s friend, Sen. Sam Nunn of Georgia, and a number of other centrist Democrats. They also whisper about a possible gasoline tax, which Clinton has opposed in the past, and they wonder about a value-added tax (VAT), widespread in Europe but shunned here.

Clinton hasn’t agreed to any changes in his economic plan, yet. He has been especially resistant to new taxes. Long ago he told advisers he thought it would be unconscionable to raise taxes on the middle class when their incomes were falling. In the debates last week, he went further, pledging never to increase middle-class taxes to pay for his new spending programs.

Some economic observers wonder if Clinton could buy credibility in the financial markets by appointing a strong anti-inflation fighter as Treasury secretary. If he named Volcker, for example, financiers might be more convinced Clinton would not try to inflate his way out of the deficits. But Democrats tend to dismiss that notion, arguing that Volcker is too independent and that his economic policies helped to bring down Carter. A more likely Treasury choice is Robert E. Rubin of Goldman-Sachs.

Whoever goes to Treasury, however, Clinton will face a dilemma. If he decides that he must propose a bold, two-part economic strategy early in his presidency, he will almost certainly be forced to embrace deeper cuts in social spending and more taxes than he has discussed so far. Voters may well think he lied to them in the campaign and their trust in him, already fragile, could be shattered. If he waits on deficit cutting until the second year of his presidency, however, he risks serious trouble in the financial markets. By 1994, his power may have evaporated. If he decides to duck altogether, the deficit outlook for the late 1990s will be so poor that the economy may continue to bump along.

Some who have talked to Clinton lately say he is already thinking about what it will take to get reelected in 1996. In another era, Nixon realized that he had to fix Vietnam, a terrible challenge, before he could win again. Clinton must know that he has to fix the economy--and it could be just as hard.