Clinton vows to eliminate 100 programs, cut spending for another 300 STATE OF THE UNION

January 26, 1994|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- What a difference a year makes. Twelve months ago, President Clinton had only one thing on his mind when he made his first speech to a joint session of Congress -- the ailing economy.

Last night it couldn't even make the Big Three in his State of the Union address.

Mr. Clinton did claim much of the credit last night for the nation's improving fortunes, noting that the economy is growing and unemployment is shrinking.

But the focus of his speech was clearly on his 1994 policy priorities: overhauling the health care system, combating violent crime and reforming welfare.

"We replaced drift and deadlock with renewal and reform. The naysayers said our plan wouldn't work. Well, they were wrong," said Mr. Clinton, promising to continue what he called "our journey of renewal" by submitting to the legislature next month "one of the toughest budgets ever presented to Congress."

It would, he said, cut spending on more than 300 programs, eliminate another 100, and reform the federal system of buying goods and services.

"We have proved we can bring down the deficit without choking off recovery, without punishing seniors or the middle class, and without putting our national security at risk.

"If you will stick with our plan, we will post three consecutive years of declining deficits for the first time since Harry Truman lived in the White House."

That was a bit of gilding the lily. The deficit was last reduced for three consecutive years beginning in 1972.

Though he initially advocated new government spending to stimulate economic growth, Mr. Clinton eventually reversed course and attacked the budget deficit.

His conversion to deficit reduction worked, impressing the financial markets and pushing long-term interest rates lower.

Last January the 30-year Treasury bond rate was 7.25 percent. Yesterday it was 6.34 percent. The drop has made loans and mortgages cheaper, helping to revive the economy by stimulating spending, particularly on housing.

The lower interest rates also restrained the enormous cost of servicing the $3.2 trillion national debt, helping to reduce the deficit for fiscal 1994 to $253 billion and an estimated $183 billion for fiscal 1995.

In fact, the deficit projection for next year is now 43 percent lower than the $300 billion originally predicted.

Even as Mr. Clinton rehearsed his speech in the White House earlier yesterday, the good economic news kept pouring in -- consumer confidence up, sales of existing homes up, costs of employment fringe benefits down.

It has been like that for some time now, with most of the major economic indicators pointing in a favorable direction. As a senior White House official observed yesterday: "What should be up is up, and what should be down is down."

The most troublesome spot remains creation of well-paid jobs carrying full benefits.

Unemployment over the past year is down from 7.1 percent to 6.4 percent, but many of the 2 million new jobs created were low-paying service jobs without any health coverage or other benefits.

Maryland was one of only six states that actually lost jobs in 1993 with 7,500 jobs, or 0.37 percent of the work force, disappearing.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.