Economy Better, but Clinton Likely to Push His $31 Billion Stimulus PlanBy Jill Dutt
President Clinton is likely to push ahead with plans for a $31 billion stimulus package despite increasing signs that the nation's economy is forging ahead without his help. And he seems to have come up with a way to fund the package without looking like he's busting the budget.
The government reported Thursday that the nation's retailers had surprisingly strong sales in January and noted that factory orders in December jumped 5.3 percent to a record $256.2 billion. Meanwhile, U.S. productivity -- that is, the amount of output per hour of work -- rose 2.7 percent last year, the best showing since 1972. Several analysts suggested that the long-stagnant job outlook may be brightening.
Indeed, the number of people filing initial claims for unemployment insurance dropped slightly in the week ending Jan. 23, the first downtick in three weeks.
Clinton told reporters Thursday that he was happy about the spate of positive economic news. "But I'm still not convinced that this country is yet set on the right course in terms of generating jobs. And that's the key thing: jobs," Clinton said.
Clinton aides are crafting a stimulus package, expected to include up to $16 billion in new spending and $15 billion in tax credits, in a way that will give the president room to argue that he is not increasing this year's $327 billion federal deficit.
Sources said Clinton should be able to argue that his stimulus package is not adding to the deficit because Congress has actually spent less money than it was allowed under spending caps imposed for this fiscal year. "There's $16 billion in wiggle room under the caps," said one source close to the process.
Not surprisingly, Clinton told Senate leaders this week that he expects to ask for $16 billion in new spending for construction of roads, bridges, wastewater treatment facilities and other projects. More than $14 billion of those savings have come from defense, so to get around rules that require defense savings to go to deficit reduction, Clinton will have to declare a budget emergency. That will allow him to spend that money on domestic programs.
There's an additional $3.5 billion or so of "wiggle room" in what are called pay-as-you-go targets. These are budget provisions that require Congress to find new revenue for every new spending program approved.
So far this year, Congress is $3.5 billion in the black under those provisions. That money could be used to restore a corporate tax credit for research and development and possibly fund some extension of emergency unemployment benefits.
Clinton would pay for an additional $15 billion in tax credits for business equipment purchases by pushing that cost into the next fiscal year, which begins Oct. 1, and incorporating any cuts in other programs as part of his overall budget package for next year.