Clinton shifts focus to cutting deficit in talks with congressional Democrats

WASHINGTON — WASHINGTON -- In what could be a significant shift in focus, President-elect Bill Clinton expressed more concern yesterday about weaning the nation from its deficit-spending ways than in encouraging one last binge of borrowing to give the economy a short-term boost.

In closed-door meetings with Democratic members of Congress and later at a news conference, Mr. Clinton stressed the need for deficit reduction along with long-term economic growth. He indicated he may not support tax breaks or new spending programs unless they are offset by tax increases or spending cuts.


"There must be a very strong multi-year deficit reduction plan submitted at the same time as I submit this coming year's budget, and that's what I'm going to do," he said.

But the president-elect said his policies aren't being adjusted to reflect new doubts about whether a quickie package of measures to stimulate economic growth is necessary now that a variety of indicators suggest the long recession could be over. "There is no evidence that we're really coming out of this in a traditional sense," Mr. Clinton said.


To illustrate his point, Mr. Clinton produced a chart supplied to him by Sen. Paul S. Sarbanes, a Maryland Democrat who is chairman of the Joint Economic Committee. He said that when recent figures on job creation and gross domestic product are compared with those of past recessions, "we are nowhere near to knowing that this short-term recession, which has gone on agonizingly long, is, in fact, over."

The president-elect said he still intends to focus on job-creation and investment while simultaneously pursuing the deficit reduction goal. But the emphasis may be on the deficit.

"Everything that I advocated in the election of 1992 as a short-term pickup for the economy is consistent with what we need to do in the long run," Mr. Clinton said. The one "very tiny difference," he said, is "should the deficit be increased with a real stimulus in the short run this year to pay for the things we talked about all along, or should we go ahead and pay for it all this year?"

The "tiny difference" could be important, though, as the new president and Congress begin to choose which programs they have to cut to finance such items as new public investment in crumbling cities.

That issue is not resolved and probably will be among the first to be dealt with by the new team of economic advisers Mr. Clinton is expected to announce tomorrow. They will include California Democrat Leon E. Panetta, the House Budget Committee chairman, who is expected to move to the White House as budget director. Mr. Panetta has placed deficit-reduction high among his concerns.

Meanwhile, the middle-class tax cut Mr. Clinton promised during his campaign was hardly mentioned yesterday, although Clinton advisers have repeatedly insisted he will at least propose a small cut.

"I don't recall an extensive conversation on a middle-class tax cut," said Albert Wynn, a newly elected Democrat from Prince George's County who attended Mr. Clinton's meeting yesterday with 63 House freshmen from his party.

In his second round of goodwill meetings with the legislators who will help determine the success of his presidency, Mr. Clinton managed to leave most with the impression yesterday that they had heard what they wanted to hear from him -- even on conflicting issues.


Mr. Sarbanes, who has been advocating an emergency increase in the nearly $290 billion deficit to create jobs in education, transportation and public safety, said yesterday he still believes Mr. Clinton may support such a plan.

In keeping with his deficit-cutting concerns, Mr. Clinton spent more time discussing health care reform, calling the reduction of medical costs critical to the health of the economy as well as the nation.

Fifty percent of the growth in the government deficit results from health care costs, primarily in the Medicare and Medicaid programs, Mr. Clinton told Gannett newspaper executives at a meeting at a Washington hotel.

During a question-and-answer session later with the entire Democratic majority of the House, Mr. Clinton said he would personally take charge of trying to broker the sharp differences among the various factions on the health care issue.

Rep. Benjamin L. Cardin, a Baltimore Democrat who will be working on the health care issue on the Ways and Means Committee, said Mr. Clinton told the legislators he is "moving toward an all-payer rate system," similar to what is used in Maryland. It requires hospitals and doctors to accept the same fee for a service from all patients, regardless of whether they have private insurance or rely on a government program like Medicaid or Medicare.

As with his first post-election visit to Capitol Hill last month, Mr. Clinton dazzled the legislators with his knowledge of the issues and charmed them with his personal attention. He addressed all the members who questioned him by their first names, including freshmen.


Sen. Barbara A. Mikulski, a Maryland Democrat who took part in Mr. Clinton's news conference yesterday, said she advised Mr. Clinton to remain accessible to the public.

Later yesterday, Mr. Clinton and Vice President-elect Al Gore spent nearly 45 minutes socializing with justices of the Supreme Court, after a three-minute private session with Chief Justice William H. Rehnquist. The justices gave them a warm reception.

Outside the court, Mr. Clinton and Mr. Gore spent about 15 minutes shaking hands and accepting letters and papers that were given to them by a group that included students from Lockerman Bundy Elementary School in Baltimore.