Administration cuts back on economic stimulus

January 27, 1993|By Los Angeles Times

WASHINGTON -- The Clinton administration, seeking to balance its campaign pledges to create jobs and to curb the deficit, plans to propose a modest, short-term economic stimulus package as part of a larger, long-term deficit reduction program, according to administration officials.

The administration's key economic advisers are urging a one-time package of between $15 billion and $20 billion that is likely to be dominated by new federal spending on such programs as public works and education. That amount would be less than one third of the $50 billion to $60 billion stimulus plan that many Clinton aides originally advocated.

The White House said yesterday that both the temporary stimulus plan and the longer-term investment and deficit reduction program would be unveiled during President Clinton's first State of the Union Address on Feb. 17.

Secretary of Labor Robert B. Reich, fresh from a meeting Monday of Mr. Clinton's top economic advisers, said yesterday that the stimulus package was likely to be in the range of $15 billion to $20 billion.

House Public Works and Transportation Committee Chairman Norman Y. Mineta, D-Calif., meanwhile said that he was told last week by White House chief economic adviser Robert Rubin that the administration was considering a slightly higher figure of $24 billion for a stimulus package. It would be divided roughly into three equal segments: $8 billion for health and environment, $8 billion for transportation and infrastructure, and $8 billion for education and training.

While White House communications director George Stephanopoulos confirmed that the administration was planning a stimulus package, he insisted yesterday that its size had not yet been determined. The sudden flurry of discussion about economic stimulus followed a steady drumbeat by Clinton advisers on the need for economic sacrifice to achieve serious deficit reduction.

A series of grim layoff announcements by major corporations in recent days also has reinforced the idea among Clinton advisers that the country's economic recovery has not had a significant impact on employment. And economists are warning that the recovery, which began to gather steam after the November election, may be faltering.

More signs of sluggishness came yesterday: A new private report showed that consumer confidence leveled off in January after a big two-month gain, while the government said the pay and benefits of U.S. workers grew by only 3.5 percent in 1992, the slowest rate of annual growth in more than a decade. While most forecasters now believe that the economy grew by about 3 percent in the final three months of 1992, they expect growth to slow to about 2.5 percent in the first quarter of 1993.

Such a slowdown could stymie the administration's efforts to focus on long-term deficit reduction instead of short-term recovery.

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