Clinton Unveils New Blueprint for Economy

Bill Clinton issued a new economic manifesto for his presidential campaign Sunday, scaling back his earlier pledge to cut taxes for the middle class, reiterating his intention to raise levies on the wealthy and outlining a host of ideas that he said would cut the federal deficit in half over the next four years.

Clinton, the presumptive Democratic nominee, also called for revising the welfare program and for creating a “Rebuild America Fund.” The fund, made up of $20 billion in seed money from the federal government, plus other contributions from state and local governments, would be used to build or improve communications, transportation, roads, bridges, environmental technology and low-income housing. It would be intended to improve the nation’s infrastructure and create jobs, he said.

The Arkansas governor released the 22-page document to reporters in Little Rock before traveling to Atlanta for a televised “town meeting” with undecided voters, where he formally unveiled the plan. It would spend an average of $50 billion a year on domestic needs--$200 billion in four years.

Clinton touted his revamped ideas as “the most dramatic economic growth program since World War II.”

“I feel good about it,” he said as he left church services. “I think it’s a realistic program. It’s the only one out there and I hope the American people will review it and support it.”

Clinton hopes to use the plan to gain an advantage over expected independent presidential candidate Ross Perot, who has promised to make the federal budget a cornerstone of his campaign but has yet to reveal any specific economic proposals. He also hopes to highlight his differences with President Bush, who has been criticized for lacking a domestic agenda.

In its basic outlines, the revised plan differs only slightly from the economic suggestions Clinton made in October as his campaign began to take shape.

The biggest difference is in Clinton’s backing away from the middle-class tax cut, which he had promoted earlier in his campaign. Rivals for the Democratic nomination had contended that the tax cut would worsen the federal deficit, which is expected to approach $400 billion this year, and they derided it as being worth about a dollar a day to taxpayers.

Clinton had de-emphasized the tax cut as the primaries wore on and had signaled his intention to back away from it by permitting the Democratic platform-writing committee to omit it at a recent drafting session in New Mexico.

The new plan allows middle-class taxpayers to choose between a tax cut and a bigger tax break for having children. Campaign aides said the new proposal costs about half as much as the earlier one.

“The choice is the biggest change,” said George Stephanopoulos, the campaign’s communications director.

Stephanopoulos said the potential $12-billion savings would be used “to invest in the infrastructure needs of the nation and to reduce the deficit.

“There are two deficits: an investment deficit and a budget deficit. You have to address them both.”

Stephanopoulos denied that the new plan was a retreat from the middle-class tax cut. “It’s not a retreat at all. You’re moving forward on a more ambitious program, and that’s not a retreat at all.”

As he has before, Clinton proposed raising taxes for the wealthiest 2% of Americans--or those with household incomes of $200,000 a year or more. At the town meeting, he said that families with annual incomes of $80,000 or less would be likely to receive some tax relief.

Clinton also would end tax breaks for U.S. companies that close their domestic plants to take advantage of cheaper labor overseas. He would crack down on foreign firms doing business here by attempting to make them pay more taxes. And he would encourage U.S. firms to curb excessive executive pay scales by eliminating corporate tax deductions for that portion of a salary above $1 million.

After the town meeting, Clinton said his manifesto includes something from each of his Democratic rivals, then cited a proposal from each of them that he had incorporated--including some campaign-finance reforms from his only remaining active rival, Edmund G. (Jerry) Brown Jr.

“I listened to them all and listened to the debate, and I learned something,” he said. “So all of them can say that part of them is in this plan.”

Asked how he would respond to President Bush’s accusations that his tax hike on upper-income Americans and corporations amounts to a massive tax increase, Clinton said: “All I’ve asked is for people to pay their fair share.”

The new plan also offers more specifics on which federal programs Clinton would cut from the federal budget. The deepest trims would come in defense, exceeding President Bush’s proposed cuts of $37.5 billion over four years. Clinton would also trim another $15.5 billion in that time by improving defense procurement and inventory systems, he said.

He would cut 100,000 jobs in the federal bureaucracy, trim administrative costs of the savings-and-loan bailout and, if Congress gave him a line-item veto, eliminate pork-barrel projects.

Clinton would also revise the welfare system. He would provide education, training and child care for recipients for up to two years, but after that, those able to work would have to get a job.

And, as he has before, Clinton said he would increase funding for Head Start, give parents a choice of public schools for their children and permit college students to borrow for their education and allow them to repay the loans either by community service or with a percentage of their salary when they graduate.

The plan Clinton unveiled Sunday is the result of weeks of meetings with his key economic advisers. Staffers say the plan is not a complete federal budget for a prospective Administration, saying that is unlikely to emerge during the rigors of the campaign. But they stressed that the plan is the only one that aims to solve domestic problems, provide fairness in the tax structure and reduce the deficit.

“The point is Bush doubled the deficit and Bill Clinton can halve it,” said Stephanopoulos.

Clinton’s Economic Program

Here are the highlights of Democratic presidential contender Bill Clinton’s economic program:

* Economic Investment: Creates a Rebuild America Fund, with $20 billion in federal funds and additional contributions from the states, local governments and other sources.

* Tax Increases: Imposes higher taxes on those making more than $200,000 a year. Also calls for taxing profits made in the United States by foreign corporations.

* Tax Cuts: Gives middle-class taxpayers a choice between an income tax cut or a higher children’s tax credit. Provides investment tax credit for new plants and equipment.

* Welfare: Provides education, training and child care for recipients for up to two years. After that, they must take a job if they are able.

* Education: Increases funding for Head Start and gives parents a choice of public schools for their children. Permits college students to borrow for their education and repay through a portion of their post-college earnings or community service.

* Health Care: Institutes cost controls and mandates universal coverage with basic benefits phased in as the costs drop.

* Deficit Reduction: Calls for cutting the deficit in half over four years. The biggest cuts would come from defense.

* Medicare: Imposes higher costs on those with incomes of more than $125,000 a year.

Source: Associated Press