Clinton to press economic plans in speech tonight Move to airwaves suggests wariness over public reaction

February 15, 1993|By Los Angeles Times

WASHINGTON -- Intensifying an extraordinary campaign to sell his economic plan to the nation, President Clinton will make a prime-time television speech tonight to explain the program he will unveil Wednesday, the White House said yesterday.

Thus, Mr. Clinton will appear on the airwaves twice this week to talk about the same subject -- the need for all Americans to sacrifice and bear some of the costs of deficit reduction and new investments in his domestic agenda. Details of the long-awaited economic plan will be spelled out in his address to Congress on Wednesday.

The president's decision to speak tonight about the thinking that went into his plan suggests just how sensitive the White House has become to the public reaction to the higher taxes and spending cuts that will be proposed. The administration seems especially concerned because Mr. Clinton is certain to break a key campaign promise -- not to raise taxes on the middle class to finance his programs.

He will propose saddling the middle class with a 5 percent consumption tax on most major forms of energy usage. Moreover, he will seek to impose taxes on 85 percent of Social Security income -- up from the current 50 percent -- for retired couples earning more than $32,000 a year and for individuals earning more than $25,000 a year.

Overall, Mr. Clinton's massive economic package seems likely to include some of the largest tax increases ever sought by a president. Its tax hikes and spending cuts will total as much as $500 billion over five years.

The taxes are just one part of a seemingly contrary plan that Mr. Clinton will present to Congress.

The other key element is a short-term stimulus plan to create jobs and spend even more federal money, albeit temporarily, to make sure that the national upturn does not slip out the door as surprisingly as it slipped in.

The two approaches amount to "giving with one hand and taking away with the other," observed Stephen S. Roach, a senior economist at the Morgan Stanley investment firm.

Moreover, the giving and taking are certain to create winners and losers, with uneven effects on regions, industries and classes of workers.

Equipment manufacturers are likely to gain from an investment tax credit that will prompt a wave of machinery orders, analysts say. New public works spending on the nation's infrastructure could benefit transportation and engineering firms.

Defense contractors will continue to bear the burden of cutbacks. Health care employment, which grew right through the depths of the recession, could be hit by spending controls. Paper, aluminum and other energy-intensive industries may suffer from higher energy taxes.

To stay one step ahead of an expected barrage of criticism of his proposals, the president sent out many of his key advisers over the weekend to prepare the nation for his agenda.

Appearing on various television interview programs were Vice President Al Gore, Office of Management and Budget Director Leon E. Panetta, Council of Economic Advisers Chairwoman Laura D'Andrea Tyson and White House communications director George Stephanopoulos.

Mr. Stephanopoulos even suggested on NBC's "Meet the Press" that the president may appear before members of Congress Thursday to take questions, just as Britain's prime minister goes regularly before the House of Commons.

The public relations effort is designed to convince Americans that the wealthy and the corporate community will bear the heaviest burden in financing Mr. Clinton's plan, even though the president now has decided to hit the middle class as well.

Mr. Panetta said yesterday that the Clinton plan will come close -- but still may fall short -- of meeting Mr. Clinton's promise of reducing the federal deficit by $145 billion a year by the end of his four-year term.

Appearing on CBS' "Face the Nation," Mr. Panetta acknowledged that the administration will be unable to live up to its goal of cutting $2 worth of government spending for every $1 in tax increases that it proposes.

The former California congressman said that Mr. Clinton will seek $34 billion in cuts in administration and government overhead over four years. Officials also said that the White House plans to seek $35 billion in cuts in the Medicare program over four years through new limits on payments to doctors and hospitals.

Mr. Panetta said that the health care cost controls to be announced Wednesday would represent a "down payment" on Mr. Clinton's massive health care reform package due in May. But he refused to say exactly how the president will square a circle that has bedeviled Mr. Clinton's advisers for weeks -- how to count those Medicare cuts toward deficit reduction and also use the same savings to finance health care reform and universal access to medical insurance for the nation's 36 million uninsured.

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