WASHINGTON, D.C.--"They can fight with each other from now till November as far as I'm concerned," Bill Clinton said of Ross Perot and George Bush last week. He was trying his hardest--at least for once--to stay out of the political slime-slinging, although NBC News reported that his advisers had been phoning reporters to point out negative stories about Perot.

The Official Clinton campaign Line is that while the two good ol' boys were fighting the geek with a policy was talking issues with his new economic plan, called "Putting People First." As Democratic consultant Tony Podesta put it, "the news about Clinton is substantive and future-oriented--and about the others guys, it's about shady transactions."

But Clinton's new plan, while clearly better for the country than Bush's tired gaggle of capital gains tax cuts and Perot's empty posturing, contains some shady elements of its own. Most disturbing, perhaps, was Clinton's attack on foreign investment in U.S. companies. Under Clinton's plan, Washington would tax that investment by between $9 billion and $13.5 billion a year for an increase of what he hopes is $45 billion over four years.

The foreign investment tax is part of a larger revenue-swelling program involving a 10 percent marginal tax hike on the wealthy and some cost-cutting--all in the hopes of slicing the budget deficit in half during his first term. Much of the plan is exactly what America needs: to move away from the borrow-and-spend Reagan-Bush years; to rebuild crumbling roads, bridges and other elements of the infrastructure; to provide tax credits for new investment, small businesses and research and development.

These programs, along with his plans for education and urban renewal, will begin to reverse the disaster of the last decade. But the foreign investment part of the plan is just plain wrong.

Foreign investors' dollars sustained an otherwise declining capital pool during the 1980s. The U.S. can--and has--used those dollars to invest in its own companies, increasing its productivity and, ultimately, its wages. All of this is basic Ec 10. So why is Clinton targeting foreign investment?

Because when you're running for office, you have to hunt where the ducks are. And the ducks believe foreign investment hurts America. One 1990 poll revealed that 86 percent of those Americans surveyed said they would rather see slower growth in both Japan and U.S. and than faster growth in both countries with Japan in the lead.

And 75 percent of the respondents in a 1989 poll said they favored limitations on the level of foreign investment in the U.S. In a separate 1989 poll, only 10 percent of those questioned said they want to encourage Japanese investment.

Many economic observers and politicians fuel these beliefs by charging that foreigners invest in American companies--particularly high-tech, high-profit companies--and then ship either the jobs or the technology overseas, depending on how devious they are. Most of the jobs apparently come from bread-and-butter industries like auto-building. Most of the technology apparently comes from the electronics or weapons industry.

Clinton is not alone in highlighting concerns. Last week, the Investigations Subcommittee of the House Armed Service Committee held hearings on the proposed sale of the missiles and aircraft divisions of Texas's LTV Aerospace and Defense Company to a couple of companies controlled at least partially by the French government.

Some committee members worry that the French will gain access to American missile technology of the sale goes through. Admittedly, this should generate some uneasiness. The French might well use this knowledge to build advanced weapons and sell them to Third World nations like Libya. Keeping the technology secret keeps such weapons from some of the world's nut cases.

But others are using the proposed sale to ignite unnecessary fear that we are selling off our security--to the French, of all people. During the hearing, Rep. Joel M. Hefley (R-Col.) actually said. "We are not dealing with a friend country here. We're dealing with a friendly country, but even though we've saved their bacon time again, they have not always been a friend."

The potential for demagoguery on this issue is huge. Again and again, high-profile foreign investment cases spark new rounds of foreigner-bashing that all too often teeter on the edge of racism. Previous cases such as the sale of the Rockefeller Center to Japanese real estate moguls and the more recent purchase of the Seattle Mariners by Japanese investors come to mind.

But the figures tossed about in these debates over foreign investment are usually wildly overstated--or, more often, quietly overlooked. The Commerce Department reported last week that in 1987, foreignowned U.S. companies employed just 3.7 percent of the American work force and paid only 4.7 percent of Americans' wages.

The rest was all American. And the Commerce Department defines "foreign-owned" as "a U.S. business that is owned 10 percent or more by a foreign investor." By this absurd measure, companies with almost no foreign control are defined as "foreign-owned."

In 1987, for the first time ever, the Commerce department broke down the foreign investments by specific industry. The figures indicate clearly that foreign investors do not specifically target high-tech American firms. Levels of foreign investment in these firms were relatively high, but the levels were also high in some low-tech, mundane industries.

For example, the industry in which foreigners employed the largest percentage of American workers (61.2 percent) was cement manufacturing. By comparison, only 39.7 percent of American workers in household audio and video equipment manufacturing worked for foreign-owned companies. Foreigners do control 12.5 percent of the sales in electronics manufacturing, but they also control 16.8 percent of the sales in mining.

The point is, foreign investors make no broad attempt to target one segment of the American economy. Like all investors, they seek to make money wherever they can.

Finally, the statistics reveal that Japan is less involved in the American economy than the Japan-bashers charge. The rate of growth in investment in U.S. companies was higher for Japan than for other nations from 1979 to 1988. But in 1987, Japan's share of American industry was less than half of Britain's and only slightly larger than the Netherlands'.

Of course, Americans should not use foreign dollars as am investment crutch that allows them to consume more and invest less. This is precisely what happened during the Reagan years, and Clinton wants to fix it. But the answer cannot be to punish foreign investors. Instead, we should concentrate on another element of the Clinton plan: providing tax credits for Americans to invest in U.S. companies.

Clinton says he is simply trying to "prevent tax avoidance by foreign corporations." He couches his tax increase on foreign investors as a plan to begin collecting taxes foreigners have been avoiding for years. But the net effect is still an increase in the real tax burden for these investors. And anyway, many economists deny that foreigners have been cheating as much as Clinton charges.

We probably shouldn't be too hard on the governor. After all, he's the only one who's found the wherewithal to release an economic plan. And this is not intended to echo the charge that Clinton merely panders to voters according to poll numbers. His willingness to anger some of his most dependable voters--however calculated it may be--should be enough to dismiss the idea.

But in this case, Clinton has let the tendency to foreigner-bash influence an otherwise solid plan. He would be better to leave the xenophobic idiot vote to Ross Perot, who will win it anyway.

Editorial Chair John A. Cloud is an intern at The Wall Street Journal this summer.