Clinton steps up pressure for cuts

BARGAINING ON Capitol Hill over the shape of President Bill Clinton's deficit-reduction package was finally wound up yesterday, leaving Mr Clinton with the task of selling it to wavering Democrats and a sceptical American public.

With the small print at last settled by a special conference of Democrats from the Senate and House of Representatives, the plan is now set for final votes, first in the House tomorrow and then in the Senate on Friday.

In both chambers the votes on the deficit package are expected to be nail- bitingly close, with the outcome in the Senate looking particularly uncertain.

By common consent, a rejection of the package by Congress would spell disaster for President Clinton, who has made deficit-reduction the centre- piece of his agenda.

While he and a 25-strong 'War Room' of officials in the White House continued to apply great pressure to Democrats on the Hill whose votes may save or sink the plan, Mr Clinton made a rare, nationally-televised address last night to try to strengthen public support.

The core aim of the package is to reduce the amount of growth in the federal deficit over five years by just under dollars 500bn ( pounds 333bn). In an effort to blunt Republican criticism that it amounts only to a tax-raising exercise, Democrat negotiators have ensured that the dollars 254bn in funds to be raised from spending cuts just outweighs the projected new tax revenues of dollars 242bn.

'It's a good package, it's solid, it's real numbers,' Mr Clinton said of the final compromise. 'I feel quite good about it.'

The bulk of the spending cuts will come from the defence budget and from a cap on Medicare, the government-funded health insurance plan for the elderly. Mr Clinton pledged yesterday that additional spending cuts would be brought forward after the budget is through.

The biggest share of the tax increases will be borne by the very wealthy and by corporations. Most other Americans will be affected only by a 4.3 cent increase in federal tax on a gallon of petrol, when petrol is at record low prices once inflation is taken into account.

When the preliminary version of the package was put to Congress in May, it was passed by only 219-213 votes in the House. In the Senate, it squeaked through by 50-49 only after Vice-President Al Gore cast a tie- breaking vote.

But prospects in the Senate might now be worse. Senator David Boren of Oklahoma, who supported the package last time, has publicly declared that he will oppose it this time around, forcing the White House to win back at least one of the Democrat senators who initially voted against the bill.

One constant in the equation is the position of the Republicans, all of whom are committed to voting against the package. Leading their camp is Kansas Senator, Bob Dole, who is focusing his attack on a provision that will make the increased tax rate of 36 per cent for high-earners retroactive to 1 January.

Predicting that it would land many Democrats in terminal trouble with voters, he said: 'I think there are going to be a lot of retroactive senators too, and House members.'