Business warms to Clinton's promise of a helping hand: Democratic proposals for a more interventionist industrial policy are meeting with approval in US boardrooms. David Usborne reports

IT IS the kind of manifesto that might normally have had America's chief executives chewing their knuckles - a reversion to the old days of government meddling; more regulation and more intervention. This time though, with Bill Clinton making the case, the boardrooms are listening, even applauding.

Mr Clinton, whose path to the White House seems more certain by the day, has never made any secret of his faith in government as a force of help, not hindrance, to people and business. It is a philosophy that sets him clearly apart from George Bush and one that is vividly reflected in his approach to regenerating American industry and the national economy. Mr Bush, who remains committed to the Reagan ethos of minimum governmental interference, has seen what Mr Clinton is suggesting and has called it 'social engineering'. In fact, the Arkansas Governor's programme is a mostly non- radical mix of targeted tax concessions, bolstered educational and research spending and increased federal investment in basic infrastructure.

In sum, though, it is an activist outlook that contrasts starkly with the laissez-faire attitudes of the Reagan-Bush years. Above all, it is that promise of action from Washington, at a time when all efforts to revive the economy through monetary means seem largely to be failing, that is attracting business leaders to the Clinton cause in surprising numbers.

They include Roger Johnson, president of Western Digital Corporation, who was among a group of 400 chief executives to endorse Mr Clinton last month. 'I'm here today,' he said, 'because my patience has worn thin. As a Republican, it has been an eye-opening experience to find that a Democratic governor from Arkansas has a far better understanding of what America needs than the Bush administration.' Last week, 600 economists banded together in Washington to give their blessing to the Clinton prescription.

The most visible departure by a Clinton White House would be the diversion of new federal money - dollars 20bn a year - to rebuilding the country's roads, railways and communication networks. As well as helping to reverse the degeneration of the already decrepit national infrastructure, such a programme would also promise at least a medium- term employment boost.

While aides to the Governor insist any industrial policy would not amount to picking winners and losers in the economy, Mr Clinton says he would do more to nurture so-called 'cutting edge' industries considered to offer most promise for America's future. He proposes creating a federal agency to fund research in such areas and a network of 170 regional centres to help and advise small businesses in adopting new high-tech procedures and hardware.

At the heart of Mr Clinton's approach is his pledge to tackle the country's education and training crisis. The philosophy is summed up in his published economic programme, Putting People First. It states: 'In the emerging global economy, everything is mobile: capital, factories, even entire industries. The only way America can compete and win in the 21st century is to have the best-educated, best-trained workforce in the world.'

Only with an educated and skilled workforce and with an efficient infrastructure, he argues, can the US expect either to attract fresh foreign investment or to dissuade manufacturers already in the country from shipping abroad.

Taking some lead from continental Europe, Mr Clinton says he would introduce a worker apprenticeship programme for those not going into higher education. For those who do enter college, a federal trust would be established to provide students with tuition loans, which they would be obliged to repay after graduation, either as a percentage of their eventual income or with a stint of community service. On top of that, all employers would be obliged to spend 1.5 per cent of their payroll on worker training. If they did not, they would be asked to give an equivalent sum to national training schemes.

Both Mr Clinton and Mr Bush offer varied tax favours, with, if anything, Mr Clinton's package being the less extensive. Rather than promising an across-the- board capital gains tax reduction for businesses, Mr Clinton says relief should be aimed only at entrepreneurs starting new businesses and keeping them going for a reasonable time. Like the President, Mr Clinton would also offer permanent research and development tax credits. In broader economic terms, taxation is the cleaver that separates the candidates, with Mr Bush still offering tax alleviation as the main elixir for economic recovery.

Mr Clinton is also promoting healthcare reform as an issue critical to wider economic policy. Health costs in the country now account for 13 per cent of gross domestic product, a burden that Mr Clinton says is intolerable if America is to be globally competitive. Rejecting Mr Bush's tenet that the answer still lies with competition between insurance companies, the Governor promises government regulation to cap treatment costs and to ensure coverage for all US citizens. Central to his plan would be an obligation on all companies either to pay for every employee's health insurance or to contribute the same per-employee sum into a federal medical care fund.

On trade, Mr Clinton, with at least one eye on his union vote on 3 November, was conspicuously slow to endorse the Nafta free- trade agreement initialled recently by President Bush with the leaders of Canada and Mexico. But Mr Clinton has repeatedly insisted that protectionism is not the answer to America's ills, and has now given the pact his blessing, with some caveats, notably that extra steps are taken to protect US jobs. A free-trade stance, laced with an interventionist commitment to make sure everyone plays fair - the Japanese especially - is what many US manufacturers want to see. Relations with Japan, Mr Clinton has said, should meanwhile be taken at least as seriously as, if not more so than, those with the Western European countries.

Critics question whether Mr Clinton, if elected, will in fact be able to deliver on his promises, especially if the present teetering recovery tips back into recession just as he enters the White House.

Specifically, they question his mathematics in claiming that he could simultaneously boost government spending, through selective tax increases and defence budget reductions, and begin the painful process of reducing the federal deficit.

But such is the frustration with the lack of economic recovery that increasing numbers of economists and businessmen are even beginning to play down the importance of doing away with the deficit straight away, arguing instead for deficit spending to give the economy one more boost.

'The basic view that is emerging is, 'Don't just stand there, do something',' Richard Hoey, chief economist of Dreyfus Inc, recently noted. In so far as he is promising to do things, Mr Clinton has, for many, emerged as the best bet.

(Photograph omitted)