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Broad range of support growing for economic plan.

The fate of the President's economic recovery plan is expected to be decided over the next few weeks and months, setting the course for the nation's cities and towns.

President Clinton's budget director, Leon Panetta, last week told Congress "We're dealing with a very small window of opportunity. You've got to move quickly. If you don't, it [the deficit reduction economic recovery plan] will die a death of a thousand bites. "

Herbert Stein, a senior fellow at the American Enterprise Institute and former Chairman of the Council of Economic Advisors for both former Presidents Nixon and Ford, last week wrote that the President's economic program is "probably the most far-reaching effort ever made by a President to control the federal budget deficit.

Most economists believe it is the only deficit reduction plan with any chance of being adopted. But, Stein indicated, unless leaders in the public and private sector accept responsibility to help make it happen--even if they oppose some parts--the whole plan could collapse.

The President's plan is a commitment to changing the scope of government. It is a plan to cut the defict and stimulate the economy at the same time. It is a plan to change federal priorities from consumption, borrowing, and spending on the past to investment in the future of our people and communities.

Stein wrote his column as efforts to delay or kill the President's economic recovery plan mounted in in the Congress and among special interest groups.

On the same day that Stein wrote his column, U.S. Federal Reserve Chairman Alan Greenspan testified before Congress, praising the President's efforts to "set the [deficit reduction] process in motion." Greenspan, appointed by former President Reagan, said he could not think of another such attempt "as far back as I can remember."

Achieving real and significant deficit reduction would have both direct and indirect impacts on cities and towns. The most significant impact would be on interest rates--which affect the cost of borrowing for cities and towns, and for both businesses and residents of communities.

Last week the interest rates on 30-year U.S. Treasury bills fell to their lowest levels since they were first sold on a regular basis to finance the national debt in 1977--a demonstration that the market and Americans of all stripes beyond the Washington beltway have expressed confidence in the President's bold plan.

According to Greenspan, each 0.1 percentage-point decline in long-term interest rates adds $ 10 billion to the economy. Since the election that has meant $90 billion. Or, as Merrill Lynch economist Bruce Steinberg reported:

"By coming up with a credible deficit reduction plan, the Clinton administration may ultimately provide far more stimulus to the economy via lower interest rates than it could possibly have done by proposing a more traditional tax-and-spend plan."

As former Republican Senator Warren Rudman (R-N.H.) said on national television, there are no such things as painless cuts anymore. He said to suggest so is a disservice to the Congress and the country. To seriously address the deficit will require a willingness by the Congress, the cities, and the country to pay some of the bills accrued over the last decade.
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Title Annotation:President Bill Clinton
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Mar 8, 1993
Words:528
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