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Many Clinton Goals in Peril, Panetta Warns

TIMES WASHINGTON BUREAU CHIEF

As things stand now, Congress appears likely to reject President Clinton’s Russia aid package and the North American Free Trade Agreement and only by aggressively fighting can Clinton win his major goals of economic growth and health care reform, Budget Director Leon E. Panetta said Monday.

In addition, Panetta said that he believes the President’s job-stimulating investment tax credit is in serious trouble and may be scaled back but not necessarily abandoned, while his proposed energy tax faces “a very tough battle” and could wind up being defeated.

In an extraordinarily candid assessment of the three-month-old Clinton presidency, Panetta said that his boss needs to focus on his major priorities and must do “a better job of picking and choosing the battles he wants to go through” if he is to avoid more defeats like the one he suffered when his $16.3-billion economic stimulus plan was defeated last week.

Senate Republicans forced the Administration to abandon virtually all of its stimulus package by mounting a filibuster that the majority Democrats could not overcome. As long as Congress fails to pass some kind of domestic jobs bill, Panetta said, legislation that would provide benefits to other nations stands little chance of approval.

For that reason, Panetta said, he holds out little hope for passage of the President’s request for nearly $3 billion in additional appropriations to help Russia in its rocky transition to a market economy. He said that members of Congress will oppose the Russia aid package until something is done to address unemployment in their own districts.

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The outlook appears even more bleak for the North American Free Trade Agreement, which would remove trade barriers between the United States, Mexico and Canada, Panetta said. “There’s not much support for NAFTA,” he said, “and you could get Russian aid before you get NAFTA.”

Clinton, who came into office vowing to focus on the economy “like a laser beam,” has been criticized for taking on too many issues at once and squandering his political capital. His performance is being subjected to unusually close scrutiny this week as he nears the 100th day of his Administration, which will be reached Thursday.

To mark the event, Clinton is expected to introduce a national youth service bill. “After that, there’s a lot more coming,” the President is quoted as saying by U.S. News & World Report. The list of planned initiatives includes legislation for urban empowerment and reform of lobbying, welfare and campaign finance.

Panetta, who is considered a deficit-reduction hawk within the Administration, said that he thinks the President’s focus must now be on the massive budget “reconciliation” bill that soon will begin taking shape in Congress. The bill, which reflects Clinton’s long-term economic agenda, calls for reducing the federal deficit by about $519 billion over the next five years through a combination of tax increases, spending cuts and new restraints in mandatory “entitlement” programs, such as Social Security and Medicaid.

Clinton will complicate an already tough battle over the budget if he adheres to his May 17 target date for unveiling his health care reform package, said Panetta, who favors completing the budget process first to maintain “a clear focus on reconciliation.”

In a similar assessment, House Speaker Thomas S. Foley (D-Wash.) suggested Monday that the President may be moving too rapidly to produce a health care package that he will have difficulty selling to Congress. “I think it’s more important to get it right than to get it on time,” Foley told the annual meeting of the Associated Press in Boston.

Congressional leaders do not expect to finish work on the budget bill until August. Thirteen House committees and 10 Senate committees began working on different parts of the bill this week and they will meet to reconcile their differences after the Senate committees make their recommendations, which are due by June 17.

Panetta, who expressed his views in a luncheon session with reporters, repeatedly said that the President should not back away from his major goals but should focus carefully on them and take his case directly to the American people to pressure Congress to support them.

A veteran California congressman who served as chairman of the House Budget Committee, Panetta agonized over whether to leave that position of power to become Clinton’s budget director. Associates said he was concerned that Clinton might stray from his commitment to significant reductions in the deficit and that, as budget director, his own voice might not be heard in the Oval Office.

Asked if Clinton can win congressional approval of his health care reform program after losing the economic stimulus fight to a Republican filibuster, Panetta said that the President has to make a case to the American people that it is fair. While the task is formidable, “he ought not to shrink from moving ahead with a bold plan,” Panetta said.

The President would be in greater trouble, Panetta said, if--after hitting a “rocky road” in recent days--he were to back away from his ambitious legislative agenda and begin trying to gauge what he could get through Congress, using “the lowest common denominator.”

The success of Clinton’s agenda “rests largely with the President,” Panetta said. “He has the ability to convince people of what he wants to do. . . . If he can aggressively battle for what he believes in, the American people will respond. He ought not to back away from what he believes in.”

Clinton’s battles, Panetta said, will be complicated throughout his term by continuing criticism from Texas billionaire Ross Perot, who mounted an independent bid for the presidency last year and who continues to criticize the new Administration’s agenda. Panetta said that he believes Perot has decided that, to remain viable as a candidate in 1996, he must oppose Clinton’s programs “no matter what we suggest.”

Perot, who polled 19 million votes to finish third behind Clinton and former President George Bush in last year’s election, has sent strong signals that he will run again. He has kept up a steady drumbeat of negative critiques of Clinton’s initiatives, including a 30-minute paid “infomercial” broadcast by NBC-TV Sunday night.

Panetta said that Clinton can minimize Perot’s impact by persuading Congress to pass his deficit-reduction plan and campaign finance reform and by helping Vice President Al Gore improve federal operations through his “reinventing government” project.

But he said that Clinton, who recently has engaged in several sharp exchanges with Perot, “ought not to be flailing away on Perot’s daily criticism.”

Panetta also provided a bleak assessment of the state of the nation’s economy, saying that he is “very nervous” about what he called “a shadow of a recovery” in which economic growth remains sluggish and unemployment remains uncomfortably high. The closing of military bases has compounded the problem, he said, especially in California where “working people” complain to him that the economy is in bad shape.


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