Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 29, 1993 TAG: 9301290085
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: ROBERT A. RANKIN KNIGHT-RIDDER/TRIBUNE
DATELINE: WASHINGTON LENGTH: Medium
STRONG ECONOMY MAY NOT REQUIRE SPUR FROM CLINTON
The economy's surprisingly strong performance is making it harder for President Clinton to justify spending billions this year to spur growth, because it would swell the federal budget deficit."The economy does seem to be taking off by itself. Does it really need another $15, $20, $25 billion of stimulus, especially when the deficit problem is so overwhelming?" asked David Wyss, research director for DRI/McGraw-Hill Inc., consultants of Lexington, Mass. "My answer is, `No.' "
Last year Clinton promised to spend billions to stimulate the sputtering economy, even if that drove up federal budget deficits.
But on Thursday he learned the economy is now growing faster than at any time since Ronald Reagan was president - achieving a robust 3.8 percent growth rate in the fourth quarter of 1992.
Moreover, that growth rate is accelerating on its own, rising from a healthy 3.4 percent from July through September, without any special federal spending stimulus. Meanwhile the deficit has been getting steadily worse.
Against that backdrop, early this week top Clinton aides said his economic program would contain two key elements that appear to contradict each other in light of this emerging trend of growing economic strength.
First, Treasury Secretary Lloyd Bentsen said the program would include tax increases on consumption to help reduce deficits. He hinted that probably meant a new broad-based tax on all forms of energy. A 5 percent energy tax would raise $18 billion a year, according to the Congressional Budget Office.
Then Labor Secretary Robert Reich said the program also would include spending $15 billion to $20 billion extra to stimulate the economy this year, widening the deficit by that amount. White House spokesman George Stephanopoulos said the plan's stimulus "could be a little higher" than $20 billion.
If Clinton includes both elements in his economic program - due to be unveiled Feb. 17 before a joint session of Congress - he will be raising a tax on the middle class in the name of deficit reduction, then spending the entire first year's revenues from it to stimulate an economy that finally appears to be rallying quite nicely on its own.
Advocates of a stimulus program say one still is needed anyway.
"We are still in a jobs recession," observed Clinton's press secretary Dee Dee Myers. "There has been virtually no jobs growth."