Clinton to Nudge Enlightened Capitalism Along

TIMES WASHINGTON BUREAU CHIEF

Both nettled and intrigued by Patrick J. Buchanan's unexpected strength in the Republican primary campaign, President Clinton and his aides are debating how to appeal to voters angry about stagnant wages and corporate layoffs--and whether to propose new programs to encourage good "corporate citizenship."

Paradoxically, their answer so far is: Let the GOP's Pat Buchanan run against Wall Street. Democrat Bill Clinton would rather run as a champion of enlightened capitalism.

So although some Democrats--including his own secretary of Labor, Robert B. Reich--have proposed a novel corporate tax break for firms that treat their workers well, Clinton is keeping the idea at arm's length for now.

In an interview with The Times, Clinton said he had "encouraged" Reich to explore tax breaks and other means of encouraging good corporate conduct, but added carefully that he has not decided whether to pursue the idea.

"We have a capital gains [tax] differential now . . . to encourage the investment of money," he said, echoing Reich's argument. "So to look at other kinds of incentives to invest in labor like you invest in money, . . . that's an entirely legitimate thing."

But he noted: "I have not worked it through enough to have a specific position."

Instead, Clinton said, he plans to "highlight" companies that pay their employees well, share their profits, provide good benefits and offer retraining for laid-off workers--in hopes of inspiring other firms to follow suit.

"How do you keep the good things about this economy and still try to restore some sense of common obligation, some sense of the social compact, some sense that there is a covenant between the working people of America and those who employ them?" he asked rhetorically.

"There are many successful companies in our country that share the benefits as well as the burdens of these volatile markets with their employees," he said.

"There are many successful companies that go out of their way to give their employees continuous education and training so that if anything ever should happen to them, they'll be more prepared to get a good job if they have to change jobs.

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"One of the things I ought to do is to try to bring together a critical mass of these companies--so that America can see that while they may only read about the downsizing, . . . that there is another way to do business and that it is possible to do right by your employees and to do very well economically.

"I really do believe that Americans are good modelers," he added. "They like to copy things that work from one another."

As a result, White House aides said they are preparing a series of visits by the president to companies with exemplary benefit and training programs--including United Technologies Corp., the Connecticut defense contractor that has funded large-scale retraining for displaced workers, and Starbucks Corp., the chic Seattle coffee roaster with an innovative employee stock-ownership plan (called, naturally, "Bean Stock").

And Clinton is likely to invite chief executives to a White House conference on "corporate citizenship" later this year, patterned loosely after his meeting with television executives last week to discuss ways to reduce violence in children's programming.

"We're going to take a page from the social conservatives' book and see if we can arouse a sense of shame," a senior official said.

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These plans for a high-toned jawboning campaign fit in with similar hortatory efforts the president has undertaken recently on issues ranging from entertainment to school uniforms to teenage pregnancy.

The issues also share another factor: In an era of budget-cutting, Clinton is looking for actions he can take without spending federal money. In the case of job retraining, a central part of the president's original economic program, he is asking corporations to spend more of their money because the Republican-led Congress cut his request for $5.2 billion in funding this year almost in half.

But aides said Clinton is reluctant to move beyond jawboning too quickly, for several reasons.

One is a desire to avoid any hint of "corporate bashing," which the president sees as a sure political loser for a Democrat trying to capture the political center. "Corporate bashing doesn't take you anywhere," warned Sen. Christopher J. Dodd (D-Conn.), general chairman of the Democratic Party. "It doesn't broaden your base. It's bouncing the rubble"--an Air Force phrase meaning hitting a target that's already been hit.

Another is concern that by responding too visibly to the wave of blue-collar anger that has buoyed Buchanan, the president might appear to give the Republican credit for a theme that Democrats--including Clinton--have sounded for years.

"What Pat Buchanan is finding out is that there are Republicans who are economically insecure just like there are Democrats who are," Clinton said in the interview. ". . . I believe that I gave my first speech in 1987 on [the] increasing inequality of incomes in America. I believe that's a long time before I started to run for this job."

Moreover, the president emphasized, he has already proposed a set of policies to address wage stagnation and layoffs--in his State of the Union address in January.

In that speech, Clinton called for a higher minimum wage, better education and training programs, more portable private pension funds and health insurance reforms to make sure employees don't lose coverage when they change jobs or a family member becomes ill.

"Those are the things that I want us to focus on," he said.

But that hasn't been enough for Democrats such as Sen. Jeff Bingaman of New Mexico, Sen. Edward M. Kennedy of Massachusetts and Rep. Richard A. Gephardt of Missouri. They are pushing for a new system of "most favored companies," under which firms that create jobs and avoid layoffs would be given both tax breaks and preference for government contracts.

Indeed, the issue has laid bare among Democrats a division that is similar, if somewhat less intense, to the split troubling the Republicans: Can a party represent both the workers and the bosses?

Some White House aides were privately furious that Gephardt and the Rev. Jesse Jackson publicly praised Buchanan for raising the issues of income inequality and economic anxiety in statements that implied the administration had virtually ignored the problems.

And some admitted to annoyance that Reich had proposed his corporate tax break idea in public. "He's off on his own," a White House aide grumbled.

The Treasury Department, in particular, was miffed that the Labor secretary was suggesting changes in tax policy, normally the Treasury's domain. And Treasury Secretary Robert E. Rubin has been a leading voice for Wall Street's concerns within the administration.

"Secretary Rubin appreciates the initiative that Secretary Reich has taken on this," Treasury spokesman Calvin Mitchell said a mite starchily. "But I am not aware of any efforts to change the president's tax proposals."

But Reich has pressed on, meeting with top corporate executives to ask them what they would consider acceptable and effective incentives for better training and benefit programs. ("They haven't come up with much," an aide said.)

And, undeterred, he offered a word of advice for his colleagues running the Clinton campaign.

"Maybe the swing vote isn't Volvo drivers in the suburbs," he said. "Maybe it's a much larger group that includes the Reagan Democrats, a group that is united by nervousness about their jobs."

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