Clinton's eloquence eases budget crisis

Capitol triumph: President's masterful State of the Union message allays market fears and boosts his hopes for re-election

RUPERT CORNWELL

Washington

Hours after President Bill Clinton's widely acclaimed State of the Union Address, the Republicans and the White House moved yesterday towards compromise on a stop-gap spending bill to avert another government shut-down this weekend and on a formula to increase the debt ceiling, preventing a threatened government default next month.

In a speech that effectively began his re-election campaign, Mr Clinton urged the Republican Congress to join him in passing those parts of a balanced budget plan on which both sides agreed. After the Speaker, Newt Gingrich, responded by offering a measure to lift the borrowing ceiling "as early as next week", the White House professed its "encouragement" at Mr Gingrich's words.

An increase in the $4.9bn (pounds 3.1bn) ceiling, which Republican hard-liners have blocked in order to exert pressure on Mr Clinton to accede to a seven-year plan to balance the budget, assumed new urgency this week after Robert Rubin, the Treasury Secretary, warned the US would go into default on 1 March. The unprecedented move could cause turmoil on world financial markets.

Yesterday that prospect was receding, not least because Republicans were aware that Tuesday night unarguably belonged to Mr Clinton. Press and public reviews were overwhelmingly favourable. One instant poll afterwards registered 70 per cent public approval, while a two-to-one margin of Americans blamed the Republicans for the budget impasse.

The President urged Democrats and Republicans to put aside differences for a new "Age of Possibility" for America. By co-opting many Republican themes, from crime to "family values", he took dead aim at the crucial middle ground of US politics where the next election will be decided. Even Mr Gingrich conceded it was a "remarkably Republican speech".

"The era of Big Government" is over, Mr Clinton declared, in one of the few passages to draw cheers from Republicans. But, he added in an implicit dig at his opponents' heartless radicalism, "We cannot go back to the time when our citizens were left to fend for themselves."

Mr Clinton produced no important legislative proposals. Instead he peppered his speech with exhortations to "stand together" and seek the "common ground".

By contrast it was Bob Dole, the Senate majority leader and Mr Clinton's most likely foe in November, who came across as crabby and partisan as he delivered the Republican response. Anxious not to be outflanked by conservative rivals, Mr Dole accused Mr Clinton of "elitism" and of being "held back by outdated values".

Mr Dole's spirits would not have been lifted by new opinion polls, showing advances by his chief competitor for the nomination, Steve Forbes, the multi-millionaire magazine publisher. In New Hampshire, where the first primary takes place on 20 February, one poll puts Mr Dole ahead by only eight points. In Arizona, which holds its primary a week later, Mr Forbes is leading by a solid 39 per cent to 27 per cent.