Clinton to accept more budget cuts

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IN AN effort to secure the support of conservatives in his own party, President Bill Clinton signalled yesterday that he is ready to do a deal on his economic package and accept deeper spending cuts than he originally proposed.

After criticism, not just from Republicans but also from many Democrats, that the Clinton package was too short on budget cuts and over-long on new taxes and job-creation programmes, Democrats in the House of Representatives have asked for an additional dollars 63bn (pounds 45bn) in spending cuts over five years.

The President is almost bound to accede, if only because without the support of all Democrats in Congress, his whole package, aimed mainly at taming the federal deficit, could fail. Republicans are united in their determination to oppose the programme.

Budget experts have already warned that his proposals would fall far short of their target of reducing the deficit from about dollars 300bn to dollars 200bn by 1997. The new cuts being proposed would put them back on track.

However, a second plan put forward by Democratic senators - calling for new cuts worth dollars 90bn - probably goes too far for the President. He told a group of the senators yesterday that assaulting government spending over-zealously could harm the nascent economic recovery. The original package called for dollars 177bn in cuts over the same five years.

A pact on further savings may clear the path for Congress to pass a budget resolution early next month, which would represent the first stage of enacting the Clinton package. A full budget, incorporating the President's tax increases, would only come up for adoption in the autumn.

The only obstacle in the way of the resolution's passage is lingering uncertainty among some Democrats about Mr Clinton's investment provisions, notably dollars 16bn in spending to create jobs. The White House is hoping that by accepting the new spending cuts it will blunt opposition to the jobs spending.

The President's wife, Hillary, who is leading the White House search for ways to reform the health care system, has indicated that while tobacco and other 'sin taxes' may be raised to fund the effort, she has ruled out any direct increase in taxes on the middle class. 'It's just not going to happen,' she said. The New York Times reported that options under consideration include new legislation to put a cap on the fees doctors could charge for health services and additional legislation to try to limit the costs to doctors of legal action taken against them for alleged malpractice.