Clinton Tackles $20-Million Budget Gap : Economy: A similar problem haunted Dukakis in 1988. But Democratic nominee says Arkansas’ trouble is common throughout the country.

While his campaign aides sought to give as good as they got from the Republicans so far this week, Democratic presidential nominee Bill Clinton spent much of the last two days trying to solve a $20-million shortfall in the Arkansas state budget that likely will require painful cuts in Medicaid payments.

The 1988 Democratic nominee, then-Massachusetts Gov. Michael S. Dukakis, faced a similar problem, having to cut millions of dollars from his state budget on the eve of his convention. The issue ultimately haunted him in his presidential campaign, helping the Republican ticket headed by George Bush raise doubts about Dukakis’ competence.

But Clinton and his aides insist that the budget problems he faces as governor of Arkansas will have far less political impact.

Clinton contends that at a time when states from California to Maine are having well-publicized budget difficulties, the problems in Arkansas do not stand out as much as Dukakis’ fiscal troubles did.

“These problems are rampant throughout the country,” Clinton said earlier this week. He noted that most of the Arkansas problems involve Medicaid bills, which have soared nationwide due to the rapidly rising cost of medical care and the overall effects of the recession.

“We’ve got a nationwide explosion of health care costs,” Clinton said. “This doesn’t have anything to do with partisan politics, except that we don’t have a national government that will provide health care for people.”

In addition, in sharp contrast to Dukakis, Clinton has not claimed any “miracle” status in his governance of his state, which likely would make him far less vulnerable to downturns in state government.

Still, the cuts needed to keep the state budget in balance could create problems. Because Medicaid serves the poor and elderly, any program reductions almost automatically will hurt members of key Democratic constituencies, who might be able to bolster the GOP charge that Clinton is the “failed governor of a small state.”

Clinton’s critics charge that he could have headed off the current budget problems had he not been distracted by his presidential campaign. He denies that charge, arguing that his Administration did as much as possible but has been a victim of the same problems plaguing other states.

Meanwhile, Clinton aides are trumpeting some good news about the state: the federal Bureau of Labor Statistics released figures Tuesday showing that Arkansas had the highest percentage growth rate in the country in private-sector, non-farm employment.

Arkansas’ 3% growth rate marked the second year in a row that the state topped the list in private-sector employment growth.