Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, May 27, 1993 TAG: 9305270137
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: ROBERT A. RANKIN KNIGHT-RIDDER/TRIBUNE
DATELINE: WASHINGTON LENGTH: Medium
A win could be a first step toward restoring public faith in Clinton as a leader with an economic game plan and the ability to make it work. He and his budget would still face many tests, but a victory would strengthen his ability to govern.
Defeat might well quake financial markets, force up interest rates and push the slowing economy toward recession. It would surely deal Clinton a powerful blow from which his struggling young presidency might never recover.
If Clinton, the first Democratic president in 12 years, cannot push his top-priority program through the heavily Democratic House, his defeat would be seen as political impotence and the triumph of business-as-usual gridlock in Washington.
And defeat remains quite possible. Although Democrats hold an 80-vote majority in the House, all sides say today's vote could be razor close.
"The stakes are very high. Because this is a situation where the president has really put himself on the line, he simply cannot afford to lose," said George Edwards of the Center for Presidential Studies at Texas A&M University in College Station. "If he loses this one, his credibility is basically shot, I would think."
The vote carries so much weight because this budget essentially sums up the program Clinton was elected to enact.
It would reduce federal deficits by $500 billion over five years through a combination of tax increases and spending cuts. It also would shift federal spending away from Reagan-Bush-era priorities, such as defense, and toward Clinton's "Putting People First" favorites, such as education, technology development and job-training programs.
If the Democratic House rejects Clinton's budget, "the deficit-reduction plan could fall apart," said L. Douglas Lee, chief economist for County NatWest, a global investment bank. "That would cause a very volatile reaction in the markets.
"It certainly would affect the average person," Lee said. "Interest rates would go up" by perhaps half a percentage point immediately. "Anyone interested in buying a house would pay a higher mortgage rate. Anyone looking to refinance their mortgage or buy a car would pay a higher interest rate."
The political consequences could be equally serious, according to Stuart E. Eizenstat, who watched similar struggles between a Democratic Congress and president as Jimmy Carter's domestic policy adviser.
"This is the Democratic Party's opportunity to show they can be trusted to govern," Eizenstat said.
by CNB