Clinton sets the ball rolling for Gore

HE MAY be facing removal from office, he may be unable to get his legislation through Congress and he may be only two years away from the end of his term in any case, but President Bill Clinton last night gave notice that he has not given up.

In the State of the Union address he was due to deliver to both houses of Congress, he was set to lay out an array of projects that show he may be down but not out. But behind the facade, much of what he was due to announce had less to do with his own ambitions that those of his vice- president, Al Gore. Policy details seem designed to set out an agenda for Mr Gore and to guard his weaker flanks against the Republicans. It is a manifesto for the baby-boom generation at the century's end.

The mainstay of the speech was the growing budget surplus, expected to be a cumulative $2.7 trillion ($1,700bn ) over the next 15 years. There is no consensus about what to do with the windfall - spend it, save it or use it for tax cuts - and last night Mr Clinton was due to give his formula. He wants some 62 per cent to bolster the pension system.

Between a fifth and a quarter would be invested through the stock market. The US population is ageing and baby boomers fear there will not be enough paid in to keep their pensions. The initiative would keep the pension system solvent until 2055.

Another 15 per cent of the surplus would go to preserving the Medicare system for the elderly, and 11 per cent would be used for new "universal savings accounts" for individuals to invest for their retirement.

Mr Clinton's Republican enemies in Congress wanted the pensions system privatised. The Clinton proposals, by allowing private management of some of the system's assets, and by introducing the new retirement accounts, goes halfway to this, while preserving a nationally run scheme.

The Republicans preferred to devote the surplus to tax cuts, but Mr Clinton's proposals, which have overtones of careful economy, while reassuring people in their thirties and forties that there will be a pension waiting for them, will command considerable political support, especially among the less well-off.

The rest of the surplus Mr Clinton will propose spending - in interesting ways. Firstly, he was due to call for considerable investment in education, reinforcing discipline and standards. The state school system is, again, a big concern for those in their thirties and forties with young children, especially those who cannot afford to move them into the private system. Education is one of the big policy issues favoured by George W Bush, Governor of Texas and the most likely Republican candidate to face Mr Gore in the 2000 elections.

The President was also due to propose using some of the cash to boost military spending, part of a package that would devote $112bn to the Pentagon, the first increase in spending since the 1991 Gulf war.

Mr Clinton and Mr Gore are vulnerable on defence, where the administration is regarded as weak: a ready-made defence spending increase helps defuse this weapon at the polls.

New talks to reform the World Trade Organisation and reduce trade barriers was another of Mr Clinton's proposals. This will appeal to free-trade constituencies and unions and environmentalists, as Mr Clinton was to propose adding labour standards and green considerations into the WTO.

The spread of the speech and the boldness of some of the ideas conceals important facts. The first is that Mr Clinton faces weeks, perhaps months, of trial in the Senate that will absorb a lot of his time and energy. The second is that both houses of Congress are controlled by the Republicans, and he has found it all but impossible to get his priorities approved for the past two years. There is little reason to think that will change.

In any case, by the end of this year most politicians will principally be thinking about the elections.

But by putting down markers in so many areas, and in particular by appealing to the middle-of-the-road, middle-aged and middle class, Mr Clinton has given a hefty boost to the early prospects of Mr Gore.