Clinton Pump-Priming Recalls Carter Strategy : Recovery: Some see risk of inflation if President pushes economic stimulus despite business rebound.

It all seems strikingly familiar. A new President is elected against a backdrop of recession and promises to stimulate the economy after taking office. The economy then begins to recover on its own, but the White House insists on priming the pump anyway.

Many of the circumstances are different, of course. But some analysts argue that President Clinton’s decision to stick with his short-term economic stimulus package in the face of mounting evidence that the economy is rebounding recalls the risky, and ultimately flawed, strategy followed by the last Democrat in the White House.

During the 1976 presidential campaign, Republican President Gerald R. Ford was criticized for doing too little to help a nation seemingly mired in recession. His replacement, Jimmy Carter, stubbornly stuck with his economic stimulus package long after it became clear in 1977 that the economy was on the mend.

Critics later complained that the decision to proceed with a $31.2-billion stimulus plan contributed to the soaring inflation of the late 1970s--and to Carter’s defeat in 1980.

The Clinton Administration made it clear Friday that it will hold fast to its $30-billion stimulus plan, despite a new report showing that the nation’s unemployment rate fell in February to 7.0%, its lowest level since November, 1991, and that the economy generated 365,000 new jobs during the month.

Few economists think that Clinton’s decision to proceed with his stimulus plan runs the same kind of risks that Carter did in 1977, when his budget policies helped overheat the economy.

The American economy is far bigger today than it was 15 years ago, so a $30-billion infusion will have a much smaller effect. In addition, the risks of an inflationary surge are far lower than they were in the late 1970s. Carter’s stimulus plan was followed by the Iranian oil crisis, which led to soaring energy prices.

Now most economists believe that the inflation rate will remain near 3% for the foreseeable future and that long-term interest rates are still at their lowest levels in a generation.

What’s more, unlike the Carter program, the Clinton stimulus is part of a larger deficit-reduction package of tax increases and spending cuts, which should more than offset the effect of the stimulus.

Yet Clinton’s decision not to drop the stimulus is still encountering growing resistance. Leading Republicans in Congress attacked Clinton for his refusal to drop the stimulus idea in the face of Friday’s upbeat job report. They complained that Clinton’s program is little more than wasteful government spending at a time when the White House is asking Americans to sacrifice by accepting higher taxes.

Clearly, the stronger job figures created an awkward situation for the Administration. Clinton ran on a platform of job creation, and over the last few months his economic advisers made it clear that they would not back off the stimulus plan unless there were signs of robust employment growth in the economy.

But Administration officials are arguing that many of the new jobs being created are only temporary or part-time positions.

“The good news is that we do have good job creation over the last month,” Labor Secretary Robert B. Reich said. “The bad news is that we’re still 7% unemployed and the quality of the jobs is not what we would hope in terms of so many of them being part-time jobs. It is not yet cause for celebration.”

As a result, the Administration insists that the job outlook remains too uncertain for it not to go ahead with the stimulus package.

Clinton stressed Friday that he is committed to pushing for congressional enactment of his entire stimulus plan soon after Congress takes up his deficit-reducing tax-and-spending package. The first installment of the stimulus plan--$5.7 billion for a six-month extension of emergency unemployment insurance benefits--was passed by Congress and signed by Clinton on Thursday.

“The unemployment rate dropped one-tenth of a point,” Clinton said. “That is not an enormous drop. . . . I am very grateful for it, but it seems to me that, if anything, the continued persistence of relatively high unemployment is a good argument for the stimulus package.”

“There has been absolutely no plan to change the short-term stimulus package,” Reich said. “And the Clinton Administration continues to hold to precisely the same proposition. That is, it will do what is necessary to ensure that the jobs come back and that this is a robust recovery.”

But Senate Minority Leader Bob Dole (R-Kan.) declared that Clinton cannot accept the fact that the economy he inherited from President Bush isn’t so bad after all.

“The Bush recovery continues to steam ahead,” Dole said. He added that Clinton should not threaten the recovery by increasing the federal budget deficit with so much new spending.

Economists, meanwhile, are increasingly divided over whether Clinton should continue to push for the package.

“Certainly, the new spending will come too late to be a pivotal force in producing a recovery,” noted Sara Johnson, an economist at DRI-McGraw Hill, an economic forecasting firm in Lexington, Mass., who opposes the stimulus.

“I think the job numbers were inflated, and so the stimulus might do some good,” countered Allen Sinai, chief economist at the Boston Co. Economic Advisers.