Clinton shifts ground over balanced budget

After a year of bitter sparring, signs are multiplying that President Bill Clinton and the Republican-controlled Congress may be able to clinch a deal to balance the federal budget well before the next midterm elections in 1998.

The clearest pointer yet came at the first post-election meeting between the President and top Republicans, at which Mr Clinton said for the first time that he could "live with" a constitutional amendment requiring a balanced budget - a move he previously denounced as a "gimmick" which might only serve to tie the government's hands in dealing with a recession.

In large part, of course, the President's change of tone reflects simple congressional arithmetic. When the measure last came up for a vote, in mid-1995, the White House pulled out every stop to thwart it: but even so the amendment sailed through the House and failed by a single vote in the Senate to secure the required two-thirds majority. Now, not only have the Republicans increased their overall Senate majority, but two Democrats who opposed the measure have been replaced by ardent supporters.

And whatever its intrinsic merits, the amendment's passage would increase momentum for a budget accord in the first and invariably least confrontational year of a presidential term - following an election in which voters, by sending Bob Dole to defeat, signalled they did not believe in the major tax cuts touted by the Republican candidate.

With the tax-cut issue no longer obscuring the picture, both sides acknowledge that the gap between them is relatively small, even on the hyper-contentious question of Medicare and Medicaid, the two federal health programmes which must be reined in if the budget is to be balanced. In the last exchange of proposals before the elections, Mr Clinton offered "cuts" of $183bn (pounds 114bn) over seven years, the Republicans $253bn (pounds 158bn). "This disagreement can be bridged," Mike McCurry, the White House spokesman, said.

Meanwhile Mr Clinton is hoping to make a start on rebuilding his Cabinet before he leaves for Asia at the end of the week, with the announcement of a new Secretary of State to replace Warren Christopher next January. The favourite is former senator George Mitchell, who has been chairing the Northern Ireland peace talks, but other candidates, notably the United Nations Ambassador, Mad-eleine Albright, and former Georgia Senator Sam Nunn, are in the running. An outside possibility is retired General Colin Powell, who hinted in a weekend newspaper interview that he would not turn down the job if Mr Clinton offered it.