Clinton's new direction President asks nation to build for the future Taxes increase

spending is cut CLINTON'S ECONOMIC PROGRAM

February 18, 1993|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,JEF DAUBER/STAFF GRAPHICWashington Bureau Staff writers John Fairhall, Richard H. P. Sia and Lyle Denniston contributed to this report.

WASHINGTON -- President Clinton laid out his plans to reverse the recent course of economic history and revitalize America last night, telling a joint session of Congress: "If we do not act now, we will not recognize this country 10 years from now."

After acknowledging a 3 1/2 -minute ovation from excited Democrats, he challenged those on Capitol Hill and throughout the country "to look into your own hearts, spark your own hopes, and fire your own imagination," to act boldly so that "our legacy will be one of progress and prosperity."

"This must be America's new direction," he said.

The four-year program of tax increases, program cuts, and investment incentives, Mr. Clinton said, was "ambitious" but "fair," and would cost an American family earning $40,000 a year less than $17 a month.

Seeking to minimize popular reaction, he stressed that 98 percent of taxpayers would not be affected by his new income tax on the wealthy, 80 per cent of Social Security recipients would not be affected by his proposal to tax a higher portion of benefits, and the costs to the middle-class of his energy tax would be "more than offset" by lower interest rates for home mortgages and credit card purchases.

"I ask all Americans to consider the cost of not changing, of not choosing a new direction," he said in a 60-minute speech that was interrupted 110 times by applause and drew 28 standing ovations.

"Unless we have the courage to start building our future and stop borrowing from it, we are condemning ourselves to years of stagnation, interrupted only by recession; to slow growth in jobs, no growth in incomes, and more debt and disappointment."

He challenged Congress to "scale the walls of the people's skepticism," saying: "If this package is picked apart, there will be something that will anger each of us. But, if it is taken as whole, it will help all of us."

His speech was watched from the House gallery by first lady Hillary Rodham Clinton, seated between John Sculley, head of Apple Computers, and Alan Greenspan, chairman of the Federal Reserve, a piece of symbolic positioning meant to show the commitment of the new Democrats to business interests and fiscal responsibility.

In an effort to ease stock market fears that his tax increases would stall the recovery, Mr. Clinton emphasized his support for private enterprise and small businesses, in particular. He noted that small businesses employ 40 percent of the work force.

Acutely conscious that his program of shared sacrifice will inevitably provoke opposition, Mr. Clinton and his Cabinet will immediately fan out across the nation today to enlist voter support for the short-term austerity that the administration claims will lead to long-term prosperity.

Mr. Clinton, facing a national television audience for the second time this week, said his plan has four fundamental components: reversing economic decline, honoring work and families, reducing the federal deficit and earning voter trust through fairness.

"It has been too long -- at least three decades -- since a president has challenged Americans to join him on our great national journey, not merely to consume the bounty of today but to invest for a much greater one tomorrow," he said.

Republicans, however, quickly accused Mr. Clinton of resorting to the tax-and-spend policies of past Democratic administrations.

"Tonight the president mentioned a number of new programs that inevitably will cost considerable sums of money," said House Republican leader Robert H. Michel in the formal Republican response to Mr. Clinton's speech.

"Laudable as they may be, how do we pay for them? The president's answer is: more taxes on everyone."

Mr. Michel recalled that during the campaign Mr. Clinton proposed taxing only the rich, but was now proposing levying new taxes of everyone earning more than $30,000.

"The American people would do well to remember: When you hear a Democrat call for taxes, do not ask for whom the tax rises -- it will rise for you," Mr. Michel said.

Mr. Clinton said the "heart" of his program was long-term investment, but he tied its success firmly to health care reform, promising to deliver to Congress a comprehensive cost-control plan offering universal coverage this spring.

"America's businesses will never be strong; America's government will never be solvent until we tackle our health care crisis," he said. He did not mention to prospect of another round of tax increases which many experts believe will be necessary to finance coverage for the 35 million Americans currently uninsured.

His wide-ranging speech, which had been through several drafts, ran twice the advertised length as he departed repeatedly from the prepared text. In it, he committed himself to strengthening the economy, creating jobs, reducing government, helping business, strengthening families, fighting crime, curbing lobbyists, reforming politics, and maintaining bTC national defense.

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