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Test of Leadership Looms Ahead

Agenda: Clinton will need all his ability to protect budget surplus, pass cigarette tax hike, analysts say. Some deficit hawks wonder if he is up to task.


WASHINGTON — President Clinton's call to Congress to hold the line on spending the federal government's first projected budget surplus in 30 years will require an unusual amount of presidential leadership to enforce, analysts said Tuesday.

In his State of the Union message, the president all but held up his hand to stop lawmakers from dipping into the surplus, urging them instead to put the money aside for the baby boom generation's Social Security benefits.

At the same time, he outlined a spate of costly spending proposals--from child-care subsidies to Medicare expansion--with the proviso that they not be enacted unless lawmakers also increase cigarette taxes sharply to pay for them.

If the president can pull it off--if he can jawbone the lawmakers into forgoing tax cuts and spending increases of their own even as they pass a tobacco-tax hike--he may be able to emerge with the government's fiscal integrity intact.

But if his leadership ability is eroded--say, as a result of the Monica S. Lewinsky controversy--then 1999 will not become the first deficit-free year since 1969, as the White House now projects. That prospect haunts Washington's deficit hawks.

"By the end of the year, we'll probably be nostalgic for gridlock," said Carol Wait, director of the Committee for a Responsible Federal Budget, a nonpartisan budget-monitoring group that has been urging Clinton to protect the emerging budget surplus.

Budget experts hailed Clinton's attempt to use the Social Security issue to help deflect congressional tax-cut proposals and spending initiatives. His exhortation to lawmakers not to fritter the surplus away "is in principle a very good thing," said Van Doorn Ooms, budget expert at the Committee for Economic Development, a nonpartisan business group.

But White House officials conceded that Clinton was asking the lawmakers to accept his appeal largely on faith: The administration will set the wheels in motion, but it will not unveil a firm proposal for overhauling the Social Security system for at least another year.

Similarly, some experts argue that the president's insistence on linking his own domestic spending proposals to a hefty increase in the federal cigarette tax blows smoke rings in the face of fiscal reality.

The increase in cigarette taxes itself depends on congressional approval--which now seems uncertain--of the controversial legal settlement between state attorneys general and the tobacco industry.

Moreover, one purpose of a higher tobacco tax is to discourage smoking. But if it succeeded in that goal, the result would be less revenue from the tobacco tax--possibly making the tax inadequate to finance Clinton's longer-term spending proposals.

"Fiscally, the tobacco tax increase would be essentially a kind of one-shot affair," Ooms said. "There is a certain serendipity about linking the tobacco tax and the president's spending increases that makes one a bit skeptical."

There also is some skepticism about other of Clinton's proposals:

* While his plan to extend Medicare to retirees aged 62 to 64 may be affordable, critics warn that it is likely to set a precedent for a further, more costly expansion of the program in coming years. The Medicare trust fund is already heading toward deficit.

* While Clinton wants to provide grants to put 100,000 more teachers into the nation's classrooms, there is substantial debate over whether a lack of resources is really the problem in most districts. Reformers say management must be improved before extra money can help.

* While Clinton is proposing to boost the nation's $5.15-an-hour minimum wage to keep pace with inflation, he has tentatively decided to put off recommending a specific dollar amount for such an increase--effectively leaving that decision to Congress.

* While the president wants to provide more money for retraining American workers who have been displaced by foreign competition, analysts say the effort is cosmetic and not likely to blunt the impact of globalization, which inevitably produces losers as well as winners.

The president also served notice that he will ask Congress to approve an increase in the U.S. contribution to the International Monetary Fund, which is overseeing the rescue of financially trouble Asian countries, and to pass his stalled "fast-track" trade legislation.

Congressional Republicans indicated Tuesday that the White House faced an uphill battle on both measures. Clinton was forced to withdraw his fast-track bill last November after failing to garner enough votes to push it through the House unscathed.

The Lewinsky episode aside, Congress-watchers concede that Clinton has a lot going for him in his efforts to keep Congress in check on the issue of "using up" the projected surplus prematurely:

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