Clinton swings into his stride with 'new deal' on welfare

AFTER a bumpy first fortnight in power, President Bill Clinton's economic and social policies began to take shape yesterday, as his aides unveiled plans for a dollars 31bn (pounds 21bn) short-term boost for the economy, and the President sketched out sweeping changes in the country's ossified welfare system.

In his most innovative domestic initiative yet, President Clinton yesterday laid out a blueprint for welfare reform that included income tax credits for low wage earners, more rigorous child support rules and guaranteed health care for the poor - all designed to 'get Americans off welfare and back to work'.

On Capitol Hill, meanwhile, the Treasury Secretary, Lloyd Bentsen and other top administration officials gave congressional leaders the first details of Mr Clinton's long-awaited economic package. It will consist of dollars 16bn of spending increases in the fiscal year to 30 September 1993 - mainly on public works - and dollars 15bn of investment tax credits, balanced by measures to reduce the dollars 300bn federal deficit.

Building on a campaign theme, Mr Clinton told a meeting of the National Governors' Association that welfare, from which some 25 million Americans benefit, 'should be a second chance, and not a way of life'. Under normal circumstances, he made clear, people should not stay on welfare for more than two years.

His ideas, a departure from traditional Democratic thinking on aid to the poor, aim to to build on a growing national consensus that the present system does not work. Strikingly, they were welcomed by the conservative Heritage Foundation: 'I heard what I wanted to hear,' said the group's social policy expert, Robert Rector.

The Clinton philosophy is that people should be helped to help themselves, breaking today's bleak pattern whereby little incentive exists for people to search for a low-wage, unskilled job, usually without health care cover, which would leave them worse off than when dependent on welfare.

The President made three promises yesterday. The main one is an increase in tax credits on earnings, to boost incomes of the working poor - a step that would come close to a rise in the guaranteed minimum wage, currently dollars 1,117 a month for a family of four. The second is guaranteed medical coverage for all, a central goal of Mr Clinton's intended reform of the country's bloated and inefficient health care system.

Thirdly, he repeated his campaign pledge to fight the collapse of family values at the root of the plight of America's poor, especially in the ravaged inner cities. He plans a clampdown on 'dead-beat dads' who abandon their children and provide no maintenance support. Mr Clinton said he would set up a data bank to track such cases, and use the tax authorities to clamp down on persistent offenders.

Only half of those on welfare were people the system was designed to help, he said. Half of all beneficiaries stayed on welfare more than two years, one-quarter of them for eight years or more. But, he said, 'the country should give a hand up, not a hand out'. But the problem is to create millions of lower-paid jobs that will be needed, just when many state budgets are stretched to breaking point and the government's own deficit is inexorably gowing.

'Given the right economy, it can be done,' Mr Clinton said, hinting he would examine ways of revamping some of the public works programmes that featured in President Roosevelt's New Deal 60 years ago - possibly to be paid for by the dollars 60bn of infrastructure spending over the next four years, which Mr Bentsen discussed on Capitol Hill.