Clinton puts re-election hopes in the balance

In putting forward his own plan to balance the federal budget, President Bill Clinton has taken a hugely risky step - one that could give him the initiative in the dominating political issue of the hour, or prove a blunder that alienates key supporters and costs him the White House next year.

The nub of Mr Clinton's proposals, sketched out in a five-minute Oval Office speech on Tuesday evening was as expected: smaller cuts in federal health care programmes than proposed by the Republicans, coupled with scaled down tax reductions, and a balanced budget by 2005, compared with the more ambitious target of 2002 set by the Republican plans approved by the House and Senate.

Overall his package envisages $1.2 trillion (pounds 720bn) of cuts over 10 years, slightly more than the Senate but rather less than the House, which must also offset $350bn (pounds 210bn) of tax cuts prescribed in Speaker Newt Gingrich's 'Contract with America'. But far more important than the figures were the politics. And the initial fall-out has been mixed at best.

After weeks of discussion among his divided aides, the advice which ultimately prevailed was that Mr Clinton could no longer simply sit out the Republican-driven debate, hoping to capitalise on public disenchantment once the scale of the cuts became apparent and relying on his ability to veto the final package this autumn.

Instead, the President has put down a marker, and perhaps prepared the ground for a deal with Congress. This in turn would avert what Mr Gingrich calls the "train wreck scenario" of a Republican budget rejected by the White House, leading to a stand-off that would virtually shutdown the federal government when the new fiscal year begins in October.

No one knows better than Mr Clinton what happened when a similar deadlock arose in 1990. Then the roles were reversed, and a Republican President was obliged to go back on previous pledges and agree tax increases demanded by a Democratic Congress. That infuriated the Republican right and is widely believed to have cost George Bush the 1992 election.

By making an early bargaining bid, Mr Clinton seeks to have a say in events, and reduce the risk of such confrontation. But as with Mr Bush, the cost could be high - as a corresponding rebellion in Democratic ranks was already suggesting yesterday.

Even before the Tuesday broadcast, Tom Daschle and Richard Gephardt, the Democratic leaders in Senate and House respectively, vainly urged him to stay out of the fray, arguing their strategy of accusing the Republicans of slashing benefits for the poor to pay for massive tax breaks for the rich was starting to pay dividends.

By announcing his own balanced budget plan, Mr Clinton has given the Republicans cover. He has acknowledged it was possible in seven rather than 10 years, but "the pain we would inflict on our elderly, our students and our economy just isn't worth it".

The Republican response was favourable: "He's running to catch up but let's welcome him aboard," said House Majority leader Dick Armey of Texas. And although the Democratic response was furious, Congressman David Obey of Wisconsin took comfort in past experience: "If you don't like the President's position on a particular issue, you simply need to wait a few weeks." However, moderates were more sympathetic, Senator Bill Bradley of New Jersey saying: "You can't fight something with nothing."