Under Fire, Clinton Looks to Future

In a moment both awkward and electrifying, President Clinton put aside his own political travails Tuesday night and challenged the nation to help him “shape this global economy, not shrink from it” while building “a new kind of government for the Information Age.”

Clinton, speaking in a crowded House chamber with the pall of a presidential crisis in the air, used his annual State of the Union address to launch a national debate on Social Security, urging Congress to dedicate money from expected budget surpluses to shoring up the giant retirement program for the long haul.

Indeed, Clinton’s speech of more than an hour, televised to a national viewing audience numbering in the millions, was dominated by proposals intended to enhance America’s ability to prosper in an era of rapid-fire technological and economic change--”a truly new world” in the president’s words.

“Let us say to all Americans watching tonight--whether you are 70 or 50 or just beginning to pay into the system--Social Security will be there when you need it,” Clinton declared. “Let us tonight make this commitment--Social Security first.”

Unveiling his 1998 legislative agenda, Clinton called for raising the minimum wage, hiking cigarette taxes, providing new protections for participants in managed health care plans, reforming the Internal Revenue Service and protecting the rights of pensioners.

The White House budget request for next year will be balanced, he said with pride. “And if we maintain our resolve, we will produce balanced budgets as far as the eye can see.”

While the address focused heavily on the domestic policies Clinton said would help Americans thrive in the unfolding global society, he aimed at least some of his remarks overseas. Clinton voiced his support of the U.S. troop commitment in Bosnia, and offered words of warning to Saddam Hussein: “You cannot defy the will of the world,” Clinton told the Iraqi dictator. “You have used weapons of mass destruction before. We are determined to deny you the capacity to use them again.”

For weeks, Clinton’s White House had been anticipating the speech as a high-water mark for a president who had been strengthened by last year’s balanced-budget deal and seemed to have survived official investigations into campaign finance practices with little damage to his stature.

Yet, the crisis that exploded last week over allegations that Clinton carried on an affair with a former White House intern and then urged her to lie about it has eclipsed all issues and events in Washington.

The furor forced a rattled White House to crank up emergency damage-control machinery, robbing the State of the Union address of the optimistic aura that officials had hoped for. Still, advisors who had labored over the address for weeks insisted that the public remains more interested in Social Security, health care, education and the environment than in the lurid allegations that have preoccupied the media and political Washington for a riotous week.

“These are the things people care about,” said Gene Sperling, a top economic advisor to Clinton, shortly before the speech. “These are the things the president was elected to deal with.”

Repeated Stress on Access to Education

In his address, Clinton repeatedly stressed the need to expand access to quality education to help Americans acquire the skills needed for the future. He highlighted new proposals to hire 100,000 teachers, finance school renovations and establish higher standards in public schools.

“We have opened wide the doors of the world’s best system of higher education,” he said. “Now we must make our public elementary and secondary schools the best in the world too--by raising standards, raising expectations and raising accountability.”

Despite the many proposals outlined in his speech, Clinton sought to go beyond what one advisor called “a national to-do list,” attempting to provide his vision of a prosperous society he said is “within our reach.”

“An America where everybody has a chance to get ahead with hard work,” Clinton said in a series of brush strokes that conjured up a sunny, almost Reaganesque picture of the nation. “Where families are strong, schools are good and all young people can go to college. An America where scientists find cures for diseases from diabetes to Alzheimer’s to AIDS. An America where every child can stretch a hand across a keyboard and reach every book ever written, every painting ever painted, every symphony ever composed.”

Yet Clinton clearly was seeking to draw a sharp distinction from former President Ronald Reagan and other conservatives who have long fought to slash the size of the federal government.

Clinton’s declaration that “the era of big government is over” gained great attention in his State of the Union address two years ago. This year, he sought to broaden the point, defending the role of government and trying to distinguish his approach from the typical dichotomy of liberals vs. conservatives.

“We have shaped a new kind of government for the Information Age,” he said, and “moved past the sterile debate between those who say government is the enemy and those who say government is the answer. My fellow Americans, we have found a third way. We have a smaller government, but a stronger nation.”

The new America, Clinton maintained, would have several fundamental characteristics: “An economy that offers opportunity. A society rooted in responsibility. And a nation that lives as a community.”

Highlights of Year’s Agenda

Some highlights from Clinton’s 1998 agenda:

* The president called for raising the $5.15-an-hour minimum wage, while stopping short of citing a dollar figure. White House aides said a precise proposal might come within the next several days. Clinton called it a “simple, sensible step to help millions of workers struggling to provide for their families.”

* Tobacco should be taxed heavily in order to discourage children from smoking, he declared. “Let’s raise the price of cigarettes by up to $1.50 a pack over the next 10 years, with penalties on tobacco companies if they continue marketing to kids.”

* Congress, he said, should enact a “consumer bill of rights” that would protect patients in managed-care health plans. Americans, he said, have the right to know all their medical options, “not just the cheapest,” along with the right to choose doctors, receive emergency room care wherever it is available and keep medical records confidential.

* As a way to ease the “fund-raising arms race” in politics, Clinton said he would ask the Federal Communications Commission to provide free or cheaper television time for candidates. Broadcasters, he said, “have a responsibility to help strengthen our democracy.”

* Clinton called on Congress to pass legislation for “sweeping” reforms of the IRS. “We need new citizen advocacy panels, a stronger taxpayer advocate, phone lines open 24 hours a day, relief for innocent taxpayers,” he said.

* On the environment, Clinton endorsed $6 billion in tax cuts and research spending to promote cleaner factories, fuel-efficient cars and energy-efficient homes.

* The president reiterated his call for “fast-track” authority enabling him to negotiate trade deals that Congress would not be able to amend. “We must shape this global economy,” Clinton said, “not shrink from it.”

* Clinton also extolled the promise of science and technology, proposing a 21st century research fund to finance biomedical and other research.

Proposal to Save Social Security

Under his proposal to save the Social Security program, no federal budget surpluses should be spent until Social Security’s financial problems are solved, Clinton said.

Under current law, the retirement system faces a long-range financing problem with the retirement of the baby boom generation. The crisis is expected to hit in 2029, when the system will be able to pay only 75% of its promised benefits. Changes must be made long before then to avoid sizable tax increases or benefit cuts.

The president invited members of Congress from both parties to join in a series of nonpartisan forums around the country this year, leading to a White House conference in December.

It is not the White House plan that the surpluses--perhaps $200 billion over the next five years--would necessarily all go to Social Security, but that the money would at the very least not be committed elsewhere before political leaders agree on a plan to preserve the program.

On foreign policy, Clinton delivered a direct warning to Hussein to stop interfering with the work of United Nations arms inspectors. The president also made a point of telling Hussein that the White House approach is supported by “everyone in this chamber, Republicans and Democrats.”

Although the United States is talking to its allies about possible military action against Iraq, Clinton did not say what Washington planned to do if Hussein does not back down.

Acknowledging opposition from within his own party that scuttled fast-track last year, Clinton pledged to expand his trade agenda to include additional support for improved environmental and worker standards--including new restrictions on child labor.

“But we can’t influence other countries’ decisions if we send them a message that we’re backing away from trade,” Clinton said.

He asked Congress to authorize a new $18-billion line of credit to help the International Monetary Fund deal with the economic crisis in Asia. The IMF legislation languished on Capitol Hill last year.

Concern for Asia’s Problems

Americans should be concerned about the financial problems of Thailand, Indonesia and South Korea because “if Asia sinks into recession, they won’t be able to buy the goods we want to sell them [and] if their currencies lose their value, the price of their goods will drop, flooding our market and others with cheap goods, making it tougher for us to compete.”

On other topics of foreign policy, Clinton called on the Senate to ratify the treaty expanding the North Atlantic Treaty Organization by adding Poland, Hungary and the Czech Republic to the alliance.

He urged the Senate to ratify the treaty banning all nuclear test explosions.

Clinton appealed for congressional support for his plan to leave some U.S. troops in Bosnia after their scheduled departure in June, assuring lawmakers that progress toward peace in the Balkans “is unmistakable--but not yet irreversible.”

He called on lawmakers to put up the money to allow the United States to pay almost $1 billion in back dues to the United Nations.

The president proposed $6 billion in tax cuts and research grants to encourage U.S. industry to discover ways to reduce emissions of “greenhouse” gasses, blamed by scientists for global warming.

“Every time we have acted to heal our environment, pessimists have said it would hurt economy,” Clinton said. “Well, today our economy is the strongest in a generation--and our air and water are the cleanest in a generation.”

Times staff writers Norman Kempster and Robert A. Rosenblatt contributed to this story.

* LEADERSHIP TEST: Protecting budget surplus will be challenge, analysts say. A13

* SOCIAL SECURITY: Debate looms on future of retirement program. A14