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Clinton Says He Will Accept Cuts in Economic-Stimulus Packages

By Ann Devroy
and Ruth Marcus

The Washington Post


President Clinton Thursday said he was willing to take cuts in his $16.3 billion economic-stimulus package, but then reeled off a list of programs he wanted to keep in and proposed another $200 million for law enforcement.

Clinton said he told Senate Minority Leader Robert J. Dole, R-Kan., that "I was prepared to reduce the package and I wanted to break the gridlock." However, he did not cite any program he is willing to cut, listing instead several billion dollars in programs that he considers vital parts of the package, including summer jobs, highway construction, programs for persons with AIDS, meat inspection and a new program to pay for communities to rehire laid-off police officers.

A senior official said later that was not an exhaustive list of the spending Clinton would insist on. The official said it was wrong to say Clinton was proposing $200 million more in spending because "the package is going to come down by substantially more than $200 million."

And on a day when millions of Americans were rushing to meet the midnight deadline for taxes they already owe, Clinton defended his consideration of a new national sales tax.

White House officials insisted it was an unfortunate coincidence that April 15 and the president's acknowledgement of his consideration of the value-added tax came on the same day. The president said he had made no decision on whether a value-added tax should pay for his health-care package, but the specter of a new general tax set off a storm of early lobbying for and against the tax, and a stream of attacks by Republicans.

Reacting to Clinton's offer of compromise on the stimulus, Dole swiftly rejected Clinton's suggestion that scaling back the stimulus package amounted to a compromise. A Dole spokesman quoted the senator as saying, "The White House doesn't get it. It is not a compromise to scale back a package that just is going to add to the deficit and has no public support."

Dole and other Republicans, as well as some Democrats, argue that whatever new spending Clinton wants to undertake immediately should be paid for by spending cuts, rather than adding to the deficit.

Clinton said Dole and Mitchell were to discuss a compromise later Thursday but spokesmen for both said no significant negotiation was occurring. And a White House official suggested the Clinton-Dole telephone conversations this week over the stimulus package "signal the beginning of the endgame" on the issue "not the end ... the negotiations are really just begun."

Clinton's push for the stimulus has centered on moderate Republican senators, such as Sen. Arlen Specter, R-Penn., and Clinton will travel on Saturday to Pittsburgh, which would receive money in the stimulus package. Clinton has been adamant in insisting the stimulus package was needed to create jobs because he viewed the current economic recovery as one in which insufficient new jobs were being created.

But the White House was forced to acknowledge Thursday that its major salesman of the jobs bill, Labor Secretary Robert Reich, had joined with the department's chief economist in "inappropriately" mixing jobless data to bolster their political argument.

The New York Times reported Thursday that Reich and his chief economist, Lawrence Katz, had tried to diminish the significance of the February employment statistics showing 365,000 new jobs created by saying 90 percent of those jobs were parttime. The agency later acknowledged the way the department presented the data was not correct, and White House communications director George Stephano- polous Thursday said such a manuever would not occur again. "I don't know if it was totally false," he said, though he added that it was a mistake.

On the matter of the value-added tax, the president said there was "a lot of support in the business community and the labor community" for such a tax as part of a health-care package that would help them control the tremendous increases in health-care costs. "People ... asked us to consider that," Clinton said.

The health-care task force headed by Hillary Rodham Clinton is examining the value-added tax, in which an item is taxed at each stage of production, among a group of options to provide the $30 billion to $90 billion that might be needed to pay the cost of providing health-care coverage to all Americans.

Despite Clinton's statements that the VAT was being pushed by business groups, business was divided over the issue Thursday. Retailers and small-business groups condemned the tax while manufacturers showed more favor.

Bob Verdisco, president of the International Mass Retail Association, said a VAT would be "a real devastating approach" for the 150 companies in his association and would hurt consumers. "If that's spurring the economy, that's the most novel approach I've heard yet."

The National Association of Manufacturers, however, said it favored a value-added-tax, but not to finance health care and then only if Clinton gives up his proposed energy tax.

"You can't go around creating new taxes every week," said Jerry Jasinowski, NAM's president.

There is no consensus among business groups about how to finance health-care reform.

Verdisco said his association favored spending cuts to pay for health reform. The National Federation of Independent Business, a group of small firms, favors limits on employer deductions for health insurance they provide their workers. The Business Roundtable, with a diverse collection of big companies, has no position.