Leading Article: Clinton begins a long march

BILL CLINTON has put aside the peripheral issues that plagued his first weeks in the White House and taken up the central challenge of his presidency. The programme that he announced for cutting the budget deficit and restructuring the economy will make or break him. If he pushes it through, he will become the strongest domestic president the country has known for a long time, with the power to set his agenda for a second term. If he falters, temporises, or compromises too much, his authority will crumble to such an extent that he will be defeated on other issues and become ineffective abroad.

He embarks on the long struggle with many advantages. The economy is already showing signs of revival, which will ease his task. More importantly, the country has signalled strongly its desire to face up to reality after a decade of 'voodoo economics', phoney figures, false promises and paralysed relations between the president and Congress. During the election campaign, Mr Clinton's support leapt upwards when Ross Perot pulled out, transferring to his shoulders the mantle of the honest, plain-speaking apostle of change. Although his overall margin of the popular vote was not large, the country is clearly looking for new approaches to its domestic problems.

The end of the Cold War has left Americans feeling depleted, disoriented and impatient for revival. Average real wages have barely risen since 1973; the flagships of American industry, such as IBM and Ford, are in trouble; jobs lost in the big industries are no longer being replaced by new start-ups in small business; foreign competition seems increasingly threatening; the malaise of

the inner cities appears to be spreading.

Not all these perceptions are entirely accurate. In many areas American industry is remarkably lean and competitive, while Germany and Japan, the models for the Eighties, are hampered by rigidities and rising costs. But the huge and steadily growing budget deficit of the United States has become a burden that contributes dangerously to the misallocation of resources. The purpose of the President's package is, therefore, not just to save money, but also to shift it to better use - to investment, infrastructure, research and social reform.

The package is, on the whole, well conceived within the limits of what is possible, but Mr Clinton will have to fight for it every inch of the way. Broad popular support will not protect him from sectoral opposition to practically every tax increase and spending cut, and the far-too-modest energy tax will provoke cries of pain across the board. There may even be more resistance than expected to making large savings in the defence budget, not only because of the effect on key industries, but also because the world after the Cold War is proving a dangerous and demanding place. In addition, reform of health care, which forms the other main plank of the presidency, is bound to be costly.

We shall learn a lot about Mr Clinton in the extended struggle that lies ahead. He has a reputation for avoiding confrontation and trying to please too many different interests at the same time. If he vindicates that criticism, his programme will be slowly whittled away until it loses its central purpose. He himself may have to change if he wants to change his country.