THE FULL PLATE for which Bill Clinton is famous usually consists of a jumbo order of McDonald's fries. The full plate that he has left for George W. Bush may prove less easily digestible.

The new president's first order of business will be "the economy, stupid," probably bringing the first smile to the face of James Carville since he found that the Constitution does indeed include a role for the Supreme Court. Bush surely knows that if he can't head off a serious recession, the Republicans will pay the price in 2002 and 2004, just as his father did in 1992. Contending that he inherited the mess from Clinton won't wash: Voters will remember only that times were sweet under Clinton-Gore and turned sour under Bush-Cheney.

Which brings us to the main plank in the Bush platform -- a large tax cut. Never mind the precise amount, or how the benefits will be distributed. Those are details that will be hammered out in negotiations with the Democrats, who would rather spend the money than give it back to those who earned it, and with the Republicans in Congress, who would rather dole out "targeted benefits" to married couples, or to inheritors of substantial wealth, than go for a large, across-the-board cut. Al Gore should permit himself a wry smile when he hears House speaker Dennis Hastert urging caution and "targeting" on the new president, and attempting to take credit for the increased spending on education reflected in the new budget.

Bush's tax cut plan had its roots in the sensible notion that taxpayers deserve some relief from a burden that has risen steadily as a share of national income, and that unless that relief is granted, the bipartisan coalition to spend and spend would get its grubby mitts on the surplus, and scatter it across congressional districts and various constituencies.

Alas, the spenders beat Bush to the trough. Congressional Republicans united with Bill Clinton and congressional Democrats to approve a massive budget that includes record spending for education and social services, and about $ 1 billion in "economic development initiatives," better known in the trade as "pork" (or whatever meat from reindeer is called; Alaska's Reindeer Herders Association got $ 176,000). The final total exceeded Congress's own spending ceilings by $ 37 billion and President Clinton's original spending proposal by some $ 15 billion. Washington spendthrifts have thus already disposed of perhaps 40 percent of the projected surplus.

Still, the Bushies say there should be a large enough surplus -- almost $ 5 trillion over the next decade, according to Clinton -- to give room for tax relief. Really? Put aside the accuracy of budget forecasts notorious for their past inaccuracy. The economic slowdown will probably lead to as many and as large downward revisions in the estimates of the surplus as we have seen upward revisions during the economic expansion. Bush's own spending plans, including substantial increases for the starved military, $ 50 billion for universal preschool education, some form of prescription drug benefit, and a program to encourage fatherhood (cheap, at $ 2.9 billion), will sop up more. Then there are the ongoing spending commitments signed off on by Clinton. These will extend beyond this year's budget, as far ahead as the budgeteer's eye can see, and include such difficult-to-repeal items as the new lifetime health care program for military retirees and their families. Probable cost of this one item: $ 60 billion over the next ten years.

And then, sitting in the counting room, are the two 800-pound elephants everyone is pretending not to notice -- the pending deficits in the Social Security and health care programs. If the government used any sensible accounting scheme that gave weight to future liabilities, it would have to have huge reserves in these pay-as-you go accounts to provide for the retirement of the baby boomers and the mounting costs of their medical care. Or it would be planning to fund these obligations with large tax increases when the bills come due. It is doing neither. It is acting rather like the householder who feels really rich for three weeks because he refuses to recognize that a mortgage payment is coming due at the end of the month.

Until a few weeks ago all of this made it unlikely that Bush would get much of what he wanted by way of a tax cut. And many thought that Federal Reserve chairman Alan Greenspan put the final nail in the tax-cut coffin when he cut interest rates sooner and by more than anyone expected, and hinted that still further cuts are in our future. This enabled those who oppose a tax cut to say that prudence dictates waiting to see what the effect of the lower interest rates will be -- a position supported by most academic economists, who in conclave solemnly assembled in New Orleans pronounced "the manipulation" of taxes an unsuitable instrument for controlling the business cycle.

But an amazing change in business sentiment is working in Bush's favor. The CEOs who attended his Texas economic summit were uniformly gloomy. They warned that Dick Cheney is right that we are on the edge of a recession, and concluded that Greenspan's move was a reflection of the Fed monetary policy wizard's panic at the rapid deterioration in the economy. Bush quickly added the anti-recession argument to his arsenal, contending that his proposed tax cut is necessary to "make sure that our economy does not go into a tailspin."

Dick Armey and others added another ingredient to the mix: They would have Bush change his back-loaded tax cut to one that concentrates relief in the here and now, which the new president's top economic adviser, Larry Lindsey, would accomplish by organizing the cut so that it allows an immediate reduction in payroll withholding taxes, and therefore adds immediately to current disposable income.

Forget about whether the surplus will materialize as forecast; forget about meeting future obligations. We are all fiscal Keynesians now, and we will all be dead -- at least politically -- in the long run. Everyone, but everyone -- at least everyone who matters in the new administration -- knows that tax cuts stimulate demand, which stimulus will assure a soft landing rather than a teeth-jarring recession.

So Bush may get what he wants, or much of it, especially if Greenspan decides not to oppose a tax cut, and not to threaten to forgo further interest rate cuts if Bush goes forward with his plans.

But the problems of rationalizing Social Security and health care will remain. And if Bush doesn't find these daunting, there are plenty more. In an orgy of executive order and regulation-writing, Clinton put 29,000 pages of regulations on the books in the last 90 days of his stay in the White House. Bush will have to decide which of these measures, many of them adding billions in costs to businesses already suffering from a profits squeeze, he will ask Congress to rescind. Surely he will have to try to roll back those that interfere with his plans to open up portions of national nature preserves to oil and gas exploration.

Which brings us to another issue that Bush will have to face, and soon. Throughout his campaign he called for a "national energy policy." Never mind that previous such policies -- by Richard Nixon, who promised independence from foreign sources of oil, and by Jimmy Carter, who promised that all would be well if only we substituted woolen sweaters for warm houses and perspiration for air conditioning -- have been disasters. Or that the OPEC oil cartel is about to welcome Bush to Washington by cutting back on production so as to shore up prices that have fallen by about $ 10 per barrel to "only" two-and-a-half times what they were a few years ago, and ten times the price that would yield a reasonable profit to the sheikhdoms from which the oil flows.

Bush will have to come up with a program that increases the domestic supply of energy, is sufficiently threatening to the world's oil producers to cause them to open the valves wider, and eliminates uneconomic consumption of energy. No small chore for Spence Abraham, who has bravely put his reputation for intelligence and political nous on the line by agreeing to serve in the Bush cabinet as secretary of energy -- the political graveyard of many of Abraham's predecessors.

With a tax cut and a solution to the energy problem under his belt, Bush can then turn to such minor economic matters as promoting a new round of trade-opening talks, which Supachai Panitchpakdi, the incoming head of the World Trade Organization, says will proceed only if the new American administration "quickly confirms interest" in such negotiations. If it does, new U.S. trade representative Bob Zoellick will have to deploy his vaunted negotiating and persuasive powers against an increasingly protectionist European Union. The Europeans, led by unreconstructed French dirigistes, are determined to continue discriminating against America's major exports -- films, music, and other media output; airplanes; and agricultural products. They have limited the broadcast of American products to 50 percent of air time, regardless of what television viewers want to see and radio listeners want to hear. They have decided to subsidize the construction of a new aircraft aimed squarely at the markets now served by Boeing. And they continue to discriminate against U.S. farm exports, from bananas to beef, often in violation of World Trade Organization directives.

There are more economic issues that Bush will confront -- but why throw cold water on the inaugural festivities by listing them. After all, it was only a few weeks ago that it seemed almost impossible to get a tax cut through Congress; now, times have changed and success is more likely. Bush's combination of good luck -- if you can call an impending recession good luck -- and policy foresight has come to his rescue. And may well again, and again, and again, as one of his predecessors was wont to say.



Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD and director of regulatory studies at the Hudson Institute.

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