Problems crowd in on Clinton

TWELVE days are still left before Bill Clinton enters the Oval Office. But suddenly, from Haiti and North American trade to fulfilment of his promises to curb the budget deficit and reform his country's uncontrollable health care system, problems are crowding in on him from every side.

Today the President-elect steps formally into the international arena with a summit in Texas with the Mexican President, Carlos Salinas, his first with a foreign leader since his November election victory - and an opportunity to clear up his ambiguous stance on the planned North American Free Trade Area linking Canada, the US and Mexico. Within days, too, a statement is due on how he intends to stave off a new flood of refugees from Haiti - which could provoke the first foreign crisis of his new administration.

But the largest difficulties loom at home. Yesterday Mr Clinton was holding his first policy session with his top economic officials, amid signs that alarming government figures this week are already forcing a rethink of his pledges to boost the economy and speedily introduce a comprehensive plan for health care reform.

The final budget figures from the Bush administration, released on Tuesday, confirmed fears which Mr Clinton failed to acknowledge in his campaign undertakings to halve the federal deficit: the projected 1993-1994 deficit of dollars 293bn ( pounds 191.5bn) is bigger than feared and will increase to some dollars 400bn by the end of the decade if nothing is done.

The response from the Clinton camp in Little Rock was of righteous outrage: 'These figures show the deficit is far worse than anyone has been telling us for a long, long time,' said Mr Clinton's spokesman, George Stephanopoulos, virtually accusing the White House of deception. To which Richard Darman, the outgoing budget director who only in 1990 was asserting that the deficit would have been eliminated by now, retorted that the Clinton grand design for the economy was 'a circle that cannot be squared'.

Any early moves to stimulate the economy will be problematic. To some extent this serves Mr Clinton's cause: a growing number of experts reckon that the economy is recovering and needs no further encouragement. In the longer run, though, his room for manoeuvre is even more limited.

The cause of the trouble is the runaway cost of a health-care system by common consent out of control. According to the Commerce Department, the US spent dollars 839bn on health care last year, or 14 per cent of output, a share almost double that of any other big industrial country. If nothing is done, the report warns, health- care spending will rise by 12 to 15 per cent annually, compared with economic growth of 3 per cent at best. Efforts to reshape the budget would be rendered irrelevant.

The Bush figures show, for instance, that between 1992 and 1998 outlays on Medicaid and Medicare, the two main federal health programmes, will more than double. Originally, Mr Clinton had promised a blueprint for health-care reform within 100 days of coming to office, centred on so- called 'managed competition' that would, in theory, have brought down costs by ensuring competition between health insurance networks while extending coverage to everyone. That looks inadequate for the task at hand.