It was the third straight year of increasingly bullish projections, and you’d think the legacy-hungry Clinton administration would spin the optimistic report as the latest evidence of the wisdom of its economic stewardship. Hardly. One by one, the Clinton-appointed trustees stepped up to the podium of the steamy Treasury Department conference room Thursday to warn that when it comes to “saving Social Security,” this is no time for complacency

Enter politics. Too much good Social Security news is useless to congressional Democrats and their presumptive presidential nominee, Vice President Al Gore. Without a crisis, what scare tactics do the Democrats have to convince senior citizens that if they vote for George W. Bush this November, their monthly checks will disappear?

And it goes without saying that a more solvent Social Security system isn’t favored by Bush, who would love nothing better than a little chaos in the New Deal-era program that each month sends a cash reminder to 44 million Americans that Big Government is capable of getting some things right.

It was easy to imagine leading Bush economic advisor and Harvard professor Martin Feldstein gnashing his teeth over the report. Feldstein has devoted no small portion of his intellectual life to the increasingly dubious proposition that the system is going broke and its only salvation lies in privatization.

Social Security has long been America’s most popular social program. It’s universal, and it’s progressive: Low-income workers get a larger percentage of their final, pre-retirement income than do high-wage workers. But high-wage workers still draw a decent enough benefit from the system.

The program has transformed the country’s seniors, once the most impoverished group in society, into its most prosperous. It provides special benefits for the disabled and for widows — those gray-haired grannies who probably spent many years outside the workforce raising children or as homemakers and would, therefore, qualify for much lower benefits if they had to depend on their own contributions.

It’s no wonder, then, that threats to Social Security, both imagined and real, stir up a tempest of emotions. In recent years, there has been no shortage of demagogues eager to conjure up images that the system is on its last legs.

As recently as two years ago, the professional prophets of doom were predicting Social Security would go broke the minute the oversize baby-boom generation entered its golden years. The White House even took its Social Security doomsday show on the road with town-hall-style meetings across the country to discuss the “crisis.”

Investment banker turned gray-wave expert Peter Peterson secured a regular gig on the talk-show circuit with his book “Will America Grow Up Before It Grows Old?” which issued a less-than-stirring call for boomers to stay in the workforce as long as possible and accept cuts in retirement benefits in order to save the supposedly beleaguered institution. With so much gloom in the air, it wasn’t surprising that polls of Gen X-ers showed the majority of that undersize cohort believes it will never see a dime from the system.

The hype drowned out how minor the problems of the Social Security system really are. Even under the previous conservative estimates of the trustees — who as actuaries are compelled to make conservative assumptions — it would take only a 1 percent payroll tax hike (which would be matched by employers) to fully cover every current worker and future worker now alive, with no reduction in benefits, for the next 75 years. And according to the latest report, it would take a hike of only nine-tenths of 1 percent to sufficiently bolster Social Security.

Militant defenders of the current system — notably Dean Baker and Mark Weisbrot, authors of “Social Security: The Phony Crisis” — argue that increasing the payroll tax is a sensible idea. The real income of the average worker will rise at least 20 percent over the next 75 years. And workers’ incomes will rise even more if, as many analysts believe, the economy has entered a new era of high productivity growth fostered by the Internet.

Moreover, people will be living substantially longer in the 21st century. The average life expectancy will increase to 81 years for men and 85 for women by 2075, compared with 73.7 and 79.5 now. While that’s indeed good news, it stands to reason that if people are going to have higher incomes and live longer, they probably ought to set aside a larger share of their future earnings for retirement, both in the public system and in their individual savings.

But a willingness to enact a small tax increase doesn’t mean one will be necessary, according to Baker and Weisbrot. Solvency of the Social Security system will depend on how well the economy performs over the coming decades, and the most conservative Social Security trustees say the prognosis for an extended boom is not all that good.

The trustees project that the economy will grow at a rate of 2.3 percent over the next 10 years and then fall to a 1.75 percent average growth rate over the full 75-year period covered in the report — overly conservative estimates by any measure, but absurdly low when you consider the 7.3 percent growth rate for the past quarter.

Indeed, the trustees are essentially predicting that the U.S. economy will grow more slowly in the 21st century than at any time in American history. What ever happened to the Internet-driven, high-performance New Economy that all those people with dot-com stocks in their portfolios are expecting?

So given the conservative indications that Social Security is even healthier than expected, why the rhetoric of despair? Because a thinly veiled agenda fuels most of the Social Security crisis-mongers: privatization.

Virtually every think tank on the right, from the libertarian Cato Institute to the free-enterprise American Enterprise Institute to the conservative Hoover Institution, has made privatization of Social Security a centerpiece of its political strategy for over a decade.

These advocates of reform argue — correctly — that Social Security’s return on investment is lousy for many workers. They note that individuals would fare better if they could invest their payroll taxes in the stock market. The latest screed on this subject, “The Real Deal: The History and Future of Social Security,” was written by consultant Sylvester Schieber and John B. Shoven, Stanford University’s Charles R. Schwab professor of economics. Discount broker Schwab himself, who stands to make a killing if Social Security is privatized, wrote a blurb for the book jacket, calling privatization “good news for everyone.”

Schieber and Shoven also call for a 2.5 percentage point increase in the payroll tax, to be entirely borne by workers, which would go into individual accounts and be matched by funds from the regular payroll tax. These individual Social Security accounts, the argument goes, would be better for everyone, especially if they were kept at aggressive discount brokerages like Charles R. Schwab.

But a privatized Social Security program would disproportionately benefit high-wage workers. Low-wage workers, the disabled and any individuals who moved in and out of the workforce during their working years — societal segments dominated by women — could do worse, and in some cases, much worse.

Why wouldn’t full-time low-wage workers improve their lot under privatization? Here’s a simple explanation: Assume Worker A earns an average annual salary of $60,000 and Worker B earns $20,000 during the course of their working lives. Each year, they put a portion of their payroll taxes into individual accounts. Over the years, those accounts make similar investments and earn similar returns (a generous assumption, since poorer people tend to be more risk averse in their investment strategies and many avoid stocks altogether). At retirement, Worker A will draw three times the benefits of Worker B because his or her contributions were three times as large. Under the current system, the spread in benefits payments between high-wage workers and low-wage workers is only 2 to 1.

But won’t Worker B still draw more than he or she would have under the old system because of the relatively higher returns of funds invested the stock market? Not if the system continues to provide “unearned” benefits to widows, the disabled and people with spotty work histories as it does now.

And therein lies the dirty little secret of Social Security: At its core, it’s also a social insurance program, an income redistribution scheme that provides special benefits to the least well off.

Democrats who talk about saving Social Security avoid talking about the social welfare aspects of the system. There’s good reason for that: Many Americans, especially those whose operating philosophy is “me, myself and I,” would probably turn against the program if they actually understood how it worked. Meanwhile, Republicans talk of saving Social Security through privatization, but avoid mentioning that such proposals would overwhelmingly favor the rich.

So take heart from the fact that the booming economy has made the Social Security “crisis” fade. Do not lament its minor role in this year’s presidential debates. Who needs two politicians arguing over who is best suited to save a system that doesn’t need saving?

The Charlotte, N.C., company was quick to point out that the bulk of the package consists of stock options, which aren’t worth much in the short term, since Bank of America’s stock price has fallen by a third in the past year. Why? Despite wholesale layoffs, profits from the merger between San Francisco’s Bank of America and NationsBank have fallen below expectations.

But don’t weep for Hugh. Presuming the stock posts even modest returns over the next 10 years, he will eventually reap the bulk of his reward.

McColl isn’t alone in his ability to turn a disappointing year into a winning pay proposition. As the Wall Street Journal opined in its 1999 review of executive compensation, “Pay for performance? Forget it. These days, CEOs are assured of getting rich — however the company does.”

In Boston, last year’s merger of Fleet Bank and BankBoston was a financial bonanza for executives at both firms, if not for average employees and stockholders. A proxy filed last week showed CEO Terrence Murray of the combined FleetBoston Financial Corp. raked in $20.2 million last year in pay, bonus and stock options. President Charles Gifford got a cool $15.6 million, though he is reportedly giving most of that to an unnamed charity.

And there won’t be any shortage of charity cases in the Boston area seeking his largess: The day before filing the proxy, the company waved goodbye to 4,000 workers — about 7 percent of its workforce. Since the merger, FleetBoston’s stock has fallen over 20 percent.

Much like the current stock market, executive pay is no longer based on traditional benchmarks of value or equity. Historically, chief executive pay often reflected a reasonable ratio to that of average workers. In 1960, for instance, that ratio stood around 40 to 1; and by the end of the go-go 1960s, it had risen to about 80 to 1. Though the downbeat 1970s knocked the ratio back to 40 to 1, the chief executive pay ratio soared during the “Me” Decade of the 1980s, peaking at 85 to 1.

While Michael Milken’s $600 million one-time haul in 1986 is still an eyepopper, his 1980s peers were pikers compared with today’s corporate paymeisters. By 1998, according to Business Week, the average CEO compensation package, including bonuses and stock options, had multiplied to 419 times the average worker’s paycheck.

And if, when that information is disclosed this month, the 1999 increases are comparable to the 28.5 percent hike of 1998, that figure will reach 538 to 1 by the time this proxy season is over. To see today’s executive compensation packages, you would think the Dow was already trading at 36,000.

Disney CEO Michael Eisner’s salary history was typical of the bloating that occurred during the 1990s. In 1988, Eisner earned $40 million from the show-business giant and was the highest-paid executive in the land. By 1998, he was pulling down $576 million a year.

As Bob Dole once famously asked, “Where’s the outrage?” For the 50 percent of Americans who own stock, no matter how small their holdings, the gains of the late 1990s have been nothing to sneeze at, and there has been barely a murmur of complaint about exorbitant executive pay. And among the half that has no stock at all, wages for most have been rising faster than inflation. So, who’s left to complain?

Graef Crystal, for one. The one-time compensation consultant became so disgusted with executive greed that he now regularly hurls broadsides against his former clients. In a recent Bloomberg column, Crystal pointed out that even General Electric’s Jack Welch — who has arguably done as much for his stockholders since 1981 as any CEO in the land — had lifted his salary and bonus in the 1990s at a rate (45 percent a year) higher than the return on G.E.’s stock (32.2 percent). And that figure doesn’t even count the $800 million in stock options he received.

The problem, Crystal argues, is what you might call the “Welch effect.” Other Fortune 500 companies feel they must compensate their executives at the peer group average, which gets lifted to obscene heights by the likes of Welch. “That those other CEOs are running smaller and much less successful companies is conveniently overlooked,” he wrote.

Smaller and less successful is a good way of describing Raytheon, the defense contractor with plans, approval pending, to produce the Clinton administration’s scaled-down, and probably unworkable, Star Wars anti-missile defense system this summer. The company slashed 14,000 jobs in 1998 and an additional 3,800 last year. Raytheon’s stock plunged from a 52-week high of $72 to $22 last Friday.

But a stock that’s fallen like a failed test missile hasn’t done much damage to company chairman Dennis Picard’s paycheck. In 1998, Picard raked in a combined salary, bonus and stock option package worth $9.5 million, up from $7.7 million the previous year.

But the latest and, arguably most absurd, chapter in executive excess is now being written in the dot-com world. In its latest issue, Forbes hails the arrival of the $100 million CEO. Like No. 1 basketball draft choices who pull down multiyear, multimillion-dollar contracts, these are second- or third-ranking executives at established companies who are being lured in the hopes that they will parlay their management accomplishments at blue-chip brands into start-up success. According to Forbes, at least three dot-com executives have received $1 billion compensation packages: George Conrades of Akamai Technologies ($1.8 billion), Richard Braddock of Priceline.com ($1.1 billion) and Margaret Whitman of eBay ($1 billion).

Of course, the $100 million CEO is a paper phenomenon — built on stock options and equity stakes that may turn out to be worthless. But as the New Economy continues to grow, it’s certain that at least some of these pay packages will set a new standard for jackpots in the casino society of today’s business world.

Where will it stop? Each year, shareholder activist groups like United for a Fair Economy file resolutions seeking to cap executive pay. And bills currently under review in Congress would limit corporate deductions for bonuses and stock options — legislation that extends an existing law limiting salary deductions to $1 million.

But let’s get real. The bills and resolutions have no chance of passing — at least not as long as the most popular show in television remains “Who Wants to Be a Millionaire.”

This week’s inflation report showed prices rising at a 2.6 percent annual clip, up nearly a full percentage point from a year ago. But what was happening a year ago?

Many of the East Asian countries had just watched their currencies collapse in global financial markets, sending their local economies over a cliff.

The result was a sharp plunge in the price of oil, copper, imported parts and other industrial commodities, since what were once called the “Tiger economies” suddenly had to severely curtail their demand.

U.S. business had a field day scarfing up these critical resource inputs at unrealistically low levels. That, in turn, provided low prices for consumers around the world, and higher profits for business — the best of all possible worlds, unless, of course, you happened to be an Indonesian laborer in a shoe factory.

Which reminds us of the other big benefit for consumers in the rich world from last year’s already forgotten global financial crisis. When currencies plunged, so did the price of local labor, as measured by the global market. To the extent that consumers in the developing world purchased foreign-made goods, they suddenly became poorer in real as well as in relative terms.

But the suffering of local peasants turned day laborers in the global economy has been good news for Circuit City shoppers here, because the prices of VCRs, television sets, stereos and cellular phones — many of which are assembled in China, Malaysia, Indonesia or Mexico — have gone down.

More than one economist has likened the series of currency collapses that occurred among some of our larger trading partners to a massive tax cut for U.S. consumers.

But now East Asia is on the mend, and these one-time effects from the crisis of ’98 are gone. So does a return to slightly higher annual price increases mean the dreaded beast of inflation is back?

For Fed officials and aging Baby Boomers who remember the 1970s as more than the age of disco, inflation raging out of control is truly something to be feared, of course.

Fortunately, there’s very little evidence from the latest inflation report that rising prices are about to become a serious problem for this economy. “Inflation is not coming back in any significant way,” flatly states Stephen Roach, chief economist at Morgan Stanley & Co.

Indeed, if you remove the volatile energy and food prices, which are now returning to pre-crisis levels, the overall inflation rate over the past 12 months has been just 1.9 percent.

Even the much-dreaded cost of medical care, which has been the most consistently inflationary item in most household budgets for a while now, rose at just a 3.4 percent clip over the past year. While that is higher than most other items in the index, it is still far below the double digit health care increases we experienced in the late 1980s.

Major contributors to last month’s jump in prices were the rising costs of transportation (at 0.6 percent) and apparel (at 1.2 percent). But the long view is again in order here.

Over the last decade, the cost of transportation, which includes oil, has gone up just 29 percent, an annual inflation rate comfortably within the 2-3 percent range.

Clothing prices have risen less than 10 percent in the decade, and if one uses 1991 rather than 1989 as the comparison point, apparel costs have not risen a dime.

Now let’s turn to the high-growth areas of the economy. Here it is the same new story. The cost of communication fell another 0.3 percent last month, continuing the decade-long trend. Leading the way was a 2.4 percent drop in the price of computers and peripheral equipment. Notice what’s been happening to long distance telephone rates lately, despite the massive merger recently announced between MCI and Sprint?

The Bureau of Labor Statistics, which compiles the inflation data, confirms that telephone services fell 0.2 percent last month.

Economists are having a hard time explaining this benign inflation picture despite eight years of economic growth and near full employment. Traditional economic theory suggests that full employment inevitably leads to higher wages as employers vie for the limited pool of workers. This. in turn, leads them to raise prices to recoup costs, which eventually forces the Fed to raise rates. Only then does the economy cool and slow inflation. It’s the economics profession’s version of the domino theory.

Yet “the inflation picture is surprisingly good, particularly in the area of service prices,” said Pierre Ellis, a senior economist at Primark Decision Economics Inc. “It was assumed that this would be the first place where tight labor markets would drive prices higher.”

Indeed, despite the tame inflation picture, the majority of the economics profession is still convinced the Fed will raise interest rates when it meets on Nov. 16. The bond market, where investors bid down prices (which move inversely to rates) at the hint of inflation, continues to signal a major market move into bear territory.

Bond traders have already priced in another quarter point increase and are now signaling they expect the Fed to eventually move rates up toward 6 percent (the target rate for the rate the Fed sets for banks that borrow from each other is now at 5.25 percent).

If the Fed does push rates higher, it will be a clear signal that Greenspan and company do not buy into the countervailing argument propounded by New Era economists. The New Era argument says, in short, that the higher productivity allowed by new technologies actually lowers prices, which makes the traditional domino theory as relevant to modern day economics as the geopolitical domino theory was to Vietnam.

“If you look at costs for sales and distribution over the internet compared to the cost of sales in a bricks and mortar environment, it’s one-third the cost,” said Brian Wesbury, a prominent New Era economist at Chicago-based Griffin, Kubik, Stephens & Thompson Inc., an investment advisory firm. “And we’re only at the beginning of that process.”

The test for New Era economists will come as this economic expansion continues to soar. (Next February, it becomes the longest in U.S. history, including those in wartime). If rising productivity allows the economy to maintain full employment and rising wages without generating inflation, then the computer and all its attendant technologies will have truly ushered in a new era.

But if the Fed raises rates and chokes off interest-sensitive sectors like home-buying on the fear of inflation (as opposed to its real presence), then it won’t have been a fair test.

Guess again.

A number of recent studies document that wealth and income are more concentrated now than any time since the 1920s. In fact, the fabulous new riches of the Information Age are concentrated in precious few hands — and that could spell bad news for those who dream of a “long boom” or a “36,000 Dow.”

While the top 20 percent of the population has seen its share of the national financial pie expand rapidly over the past two decades, the rest of the population has failed to benefit, and the bottom 20 percent has actually been losing ground.

Globally, the growing gap between rich and poor is downright scandalous. The wealthiest 400 Americans are now collectively worth over $1 trillion, which is more than the collective net worth of 1.2 billion Chinese.

The world’s richest man, Microsoft’s Bill Gates, with $85 billion, is worth more than all 75 million people living in the Philippines. Most economists shrug off this data. “Where’s the problem?” they ask. As long as the pie is expanding, there should be enough to give almost everyone (except the poorest) at least a slightly larger slice in the future, they argue.

But others are not so sure. They fear that the distribution of wealth and income has gotten so out of whack that it now threatens to undermine the nation’s current prosperity. Their caution is especially sobering now that the long-running bull market is starting to show its age.

This argument owes an intellectual debt to Karl Marx, although no one in this post-communist era would acknowledge it. Marx was one of the few thinkers to try to analyze the threat to capitalism represented by disparities in the distribution of wealth.

John Maynard Keynes, who saved capitalism from its Depression-era midlife crisis, also understood the problem in these terms. William Greider, in his recent book “One World Ready or Not,” analyzed the emerging global economic crisis in our time from a similar perspective.

The idea is simple: In eras of great innovation, like the one we are living through now, capitalism spawns new products and new tools, making most workers vastly more productive than they were before. These fabulous new tools (like the one you’re reading these words on) give the economy the capacity to produce more goods, more services and more information at lower and lower costs.

In the somewhat rarefied enclave of North America, Alan Greenspan may be worried about the danger of inflation, but look around the world to see what is actually happening to prices.

Oil is a third the price it was in the late 1970s. The price of a computer is cut in half every 18 months. I can easily buy a shirt sewn in Honduras or Malaysia at a downtown department store for the same price I would have paid 10 years ago. The cost of virtually everything is falling in China and Japan.

For a while, these trends seem great for consumers, who benefit from falling prices. But eventually all the innovations enhance the economy’s productive capacity to the point where it outstrips people’s ability to consume. Then, we get falling profits, layoffs and recession — or worse.

This is where the disparity of wealth becomes a factor. According to Greider, Keynes and Marx, the arrival of that terrible day of reckoning is hastened when wealth and income become concentrated in too few hands.

“The run-up to the 1929 financial crash and the Great Depression was also an era of robust industrialization distinguished by the same sort of huge imbalances between excess supply and inadequate demand,” Greider says. “Despite assurances from orthodox economics, the market did not arrive at an eventual balance; the market collapsed.”

If the maldistribution of wealth and income does in fact contribute to the development of inadequate demand to sustain growth, then the latest data from the Federal Reserve Board suggests we are now heading down precisely the wrong road. According to Edward N. Wolff, an economics professor at New York University who tracks this data, the top 1 percent of U.S. households owned 42 percent of all stock in 1997, the last year for which figures are available. The top 10 percent of households owned 82 percent of all stock-market wealth. In fact, the majority of Americans have not even been invited to this decade’s stock-market party. Only 27 percent of households held more than $10,000 in stock in 1997, and that included all of their holdings in 401(k)s, Individual Retirement Accounts and Employee Stock Ownership Plans. Meanwhile, 57 percent of Americans didn’t own any stock at all. This extreme concentration of wealth simply mirrors what’s going on with income distribution. According to a recent analysis by the Center on Budget and Policy Priorities, a Washington-based think tank, the top fifth of households saw their income rise 43 percent between 1977 and 1999, while the bottom fifth saw their income fall 9 percent.

The annual Census Bureau report on income and poverty in America that was released Thursday shows the booming economy of the past few years has done nothing to reverse that trend. Since 1973, every group in society except the top 20 percent has seen its share of the national income decline, with the bottom 20 percent losing the most. They have just 3.6 percent of national income, down from 4.4 percent a quarter century ago.

Indeed, the top fifth now makes more than the rest of the nation combined. Rebecca Blank, who recently left the President’s Council of Economic Advisors, pointed out, “We’ve gone back to levels of income and wealth inequality that this country hasn’t seen since the teens and 1920s.” I asked a number of Wall Street strategists and economists what they thought of the growing gulf between rich and poor. None mentioned that it might create economic instability. Their big fear was that if too many people felt left out of prosperity, it would lead to a political movement for (heaven forbid!) the redistribution of wealth, or the enactment of policies like trade protectionism that could undermine the current good times. Political instability, in their view, might ride into next year’s primaries on a horse named Pat Buchanan.

But there are a few economists who have seen the ghost of Keynes and worry that the maldistribution of wealth and income itself may jeopardize prosperity. Exhibit A in their brief comes from recent Fed data that shows that wealth-poor U.S. households, as well as, curiously enough, businesses, have been piling up extraordinarily high levels of debt — precisely what you might expect when incomes lag behind the propensity to consume.

On the household side, consumers have been refinancing their mortgages in record numbers. But not many are doing it to lower their monthly mortgage costs. Instead, they’ve been using the cash to finance home additions, buy new cars or retire credit card debt — a one-time fix that can only be repeated if home values continue to rise and interest rates continue to stay low.

On the business side, corporations have been buying back stock by issuing bonds. Why? To keep their stock prices up. This fuels consumption among the stock-owning public through the so-called wealth effect. High-income folks go out and buy Lexuses and take exotic vacations because the stock market is doing their saving for them.

The combined effect has been a domestic debt level that has risen at a better than 9-percent clip over the past 18 months, while the national savings rate has fallen into negative territory. Debt-fueled consumption “represents the Achilles heel of the U.S. economy,” says Jane D’Arista, an analyst at the Fed-watching Financial Markets Center. “Servicing debt for households is now 20 percent of disposable income after taxes, up from 17 percent in the early 1990s.”

The growing inequality in wealth and income — a long-term secular trend — makes it more difficult for debt-laden households in the bottom half of the population to repair their tattered balance sheets. They will escape their personal debt traps only if the economy continues to grow, unemployment stays low, the government passes another increase in the minimum wage and they post real wage gains. In that regard, yesterday’s income report showing solid gains for every income group was welcome news.

If, on the other hand, the stock market takes a tumble and upper-end consumption slows, that could trigger layoffs in many of the high-flying service businesses that employ so many people on the bottom half of the income ladder. This would then expose the ugly fact that the final years of our consumption-driven economic expansion have been built on a shaky foundation of debt.

Clinton’s trip is designed to make a political and social point: Nationwide unemployment may be down to 4.3 percent, but in the rubble-strewn lots of America’s older inner cities, and even in the downtrodden parts of its fast-growing Sunbelt ones, too many neighborhoods continue to suffer from substandard housing, high unemployment and the growing concentration of the nation’s dwindling but hardest-to-employ welfare population.

The president has dragged along high-powered executives like Richard Huber of Aetna Insurance and former budget chief Franklin Raines, now at Fannie Mae, to highlight the central motif of the tour: that the most impoverished areas of America’s cities should really be seen as emerging markets, a kind of Indonesia within our own borders. With a few well-chosen tax breaks and government help programs (they’ve even dubbed one the American Private Investment Corp., modeled on the Overseas Private Investment Corp.), townhouses, warehouses and shopping malls will soon be blooming on urban plots that now contain only the graffiti-scarred walls of abandoned factories.

It’s an enticing vision, and there is no shortage of recent anecdotes to back up its proponents’ claims. New townhouses are sprouting in downtown Chicago, and there’s a flowering of small businesses and single-family homes in the South Bronx. And then there’s the comeback of downtowns across America as entertainment destinations for bored suburbanites looking for something beyond the thrill of another day at the mall.

Those signs of urban life have led many politicians and inner-city advocates to embrace the ideas of Harvard Business School professor Michael Porter, whose Initiative for a Competitive Inner City has tried to get the nation to think of poor neighborhoods as big, untapped markets, rather than as cesspools of dysfunction best served by social service agencies. Porter’s ideas, combined with the signs of urban revival evident around the country, have convinced Clinton that the best hope for inner-city renewal lies with the private sector.

That would be nice, but it isn’t true.

First of all, the nation’s celebrated urban turnaround is uneven at best. True, Sunbelt sprawl cities — those with expanding borders or vast tracts of undeveloped land on their peripheries — are posting large population gains. But between 1990 and 1998, geographically constricted Philadelphia saw its population decline by 9.4 percent; Baltimore lost 12.3 percent of its people; Detroit had a 5.6 percent population decline; and Milwaukee watched 7.9 percent of its people depart.

New York, Chicago and Los Angeles bucked the trend, with small population increases near the decade’s end after a downturn earlier in the ’90s. But the nation’s three largest cities have been the entry points for hundreds of thousands of new immigrants. Without that influx, these cities, too, would have posted population declines.

And in both Sunbelt and Rust Belt cities, many blighted urban neighborhoods have refused to revive. Even healthy cities have seen their populations polarize, with a wealthy elite on top, pockets of concentrated poverty on the bottom and almost no middle or working class.

What will the New Markets Initiative do about that? Sadly, very little. The new program will give a 25-percent income-tax credit to businesses that invest in cities. It will also provide more technical assistance to would-be inner city entrepreneurs, and offer matching equity capital for start-up businesses.

But this is providing more of the same tax incentives that have failed to reverse decline over the past three decades. Given the failure of enterprise zone tax breaks, outright tax abatements and tax-increment financing to make much difference, there’s no reason to believe these new goodies will be the “incentives” that finally convince major corporations to relocate in the inner city.

To be fair, the New Markets Initiative should be viewed as part of a package with the administration’s “Smart Growth” plan to curb suburban sprawl, introduced in January. In recent years, an intriguing coalition of environmentalists, traffic-weary suburban politicians and inner-city advocates have joined to discourage sprawl by creating incentives for businesses to locate in or near the inner city, instead of in the outer suburbs.

Unfortunately, the Clinton administration’s anti-sprawl program, rolled out in various budget proposals over the past several months, doesn’t pose a serious challenge to the sprawl lobby, and it certainly doesn’t offer a realistic program to reverse decades of urban decline. The centerpiece is a $10 billion bond program to help local communities save open land from the relentless tracks of developer bulldozers, plus $50 million for “smart growth” planning. It also offers more shopworn tax breaks for attracting business to the city, although these have not been successful in the past because the same incentives — and then some — have always been available in the suburbs.

Like most of the smart growth initiatives around the country, the Clinton plan is doomed to fail because it doesn’t reckon with the powerful development interests that have a stake in sprawl — most notably the home builders and road construction lobbies, which dominate every state capital and are already mobilizing to oppose smart growth plans.

Where there are powerful and long-standing anti-sprawl forces, like Portland, Ore., there’s hope for turning back sprawl and directing investment to the inner city. But in states like Maryland, where Democratic Gov. Parris Glendening sought to salve suburban voters frustrated by sprawl with a smart growth law, the movement will accomplish little. Maryland’s law allows developer-beholden county executives, for instance, to designate almost any area for “smart” development — but government-funded greenbelt creation in the suburbs isn’t going to create jobs downtown.

What’s the alternative? David Rusk — the former mayor of Albuquerque, N.M., who is now a traveling salesman for metropolitan solutions to urban problems — thinks Clinton and Vice President Al Gore will have to be much more courageous about discouraging growth in the suburbs, steering it to cities and helping the inner-city poor move out into other neighborhoods.

To Rusk, one of the biggest barriers to urban revival is the fact that families with children are continuing to flee cities, leaving only the nation’s hard-core impoverished families living there. “Even where there is gentrification and housing is getting built in cities, it’s not for people who are putting kids in the schools,” said Rusk, whose new book is called “Inside Game, Outside Game: Winning Strategies for Saving Urban America.” “It’s for empty nesters and singles.”

Rusk says federal, state and regional authorities have to be more aggressive about channeling investment back into the city and inner-ring suburbs. At the same time, he adds, officials must develop incentives to help the urban poor move out from the inner city. That will not only spread the social-service burden more equitably, but bring the last frontier of the nation’s jobless pool nearer employers who are increasingly desperate for people who want to work.

But there’s little evidence Clinton and Gore are serious about such an agenda. For one thing, suburban sprawl and urban disinvestment are supported by massive government subsidies at the federal, state and local level. If they wanted to curb sprawl and foster urban development, they would cut off EPA subsidies for sewer plants in far-off suburban housing developments. Then they’d go after Pennsylvania Republican Bud Shuster’s Transportation and Infrastructure Committee in Congress, which doles out endless pots of federal gas-tax money to build highways whose sole purpose is to open up land for development.

They might even move to impose federal taxes on the massive state subsidies for suburban development, especially those that go to lure factories and office towers away from urban sites. Alabama just gave Honda Motor Co. hundreds of millions in subsidies for a new assembly plant, just as it did Mercedes-Benz a few years ago. Both plants are in rural areas, far from the inner-city poor. A decade ago, Illinois showered Sears Roebuck & Co. with $60 million in state and local tax breaks to build a suburban campus far from its easily accessible downtown tower. Every state has similar examples that dwarf the new subsidies now being offered to cities.

The administration cites its “brownfields” initiative — which helps cities clean up environmentally hazardous abandoned industrial sites and offers incentives for new development there — as a crucial piece of its urban strategy. But again, “incentives” aren’t enough to encourage businesses to take the plunge, especially when they have readily available “greenfield” sites in the suburbs. In this era of budget surpluses, why not offer cities a $10 billion grant program to clean up the scars of deindustrialization, so they will have what the suburbs and ex-urbs have in abundance: vacant, clean land?

Finally, Clinton and Gore are even less ready to take on the issue of dispersing the urban poor — which is a critical step in breaking up concentrated urban poverty and economically reintegrating the city. Rusk and others argue that the middle class will never return to cities in sizable numbers until urban schools are at least as good as suburban schools, and that won’t happen as long as city schools remain disproportionately filled with children of poverty. Studies have shown that dispersing poor kids helps them educationally, too.

But white suburbanites — actually, NIMBYs of every race — oppose proposals to build low-income housing in the suburbs. Many minority political leaders aren’t much friendlier to the idea, since they don’t want to see their constituencies dispersed. So as Clinton travels around the country this week, don’t expect to see him visiting the well-to-do suburbs to encourage them to accept their fair share of poor kids into their school systems.

Seven years into a presidential term notably lacking in bold initiatives to deal with America’s enduring poverty pockets, it’s fair to ask: Why now? It’s easy to interpret the New Markets Initiative as a pre-election-year gambit designed to appeal to what remains of a core, if shrinking, Democratic Party constituency. Al Gore has to come up with something for inner-city inhabitants, who still represent major voting blocs in big states with key primaries like California, New York, Illinois and Ohio.

But the administration’s commitment to linking urban poverty to suburban sprawl, and fighting both with more tax incentives, is destined to fail. “What’s fueling anti-sprawl sentiment is that life out in paradise is feeling less convenient and more harried,” says David Rusk. “Linking that to urban problems isn’t going to be a winning argument for anyone in the 2000 election.”