Clinton agrees spending cuts: Republicans force President to slash dollars 4bn off economic package

IN HIS biggest defeat to date on Capitol Hill, President Bill Clinton yesterday offered to slash dollars 4bn ( pounds 2.6bn) from his dollars 16bn package to stimulate the economy as a compromise to end a Republican Senate filibuster that has been threatening to torpedo the measure.

In a letter to the Senate Democrat leader, George Mitchell, Mr Clinton declared he was making the move 'reluctantly'. But, declared the President, it was the only way to 'move the country forward' and fulfil his election mandate of 'ending business as usual in Washington'.

In purely economic terms, the scaled down dollars 12bn package retains the most important components of its predecessor, including dollars 4bn of extended unemployment benefits, a summer jobs programme and increased funding for highways and other infrastructure projects, all aimed at generating more than 200,000 new jobs.

Far more serious are the political implications of the setback. In mounting a successful filibuster, the Republicans have proved that the Democratic majorities in both House and Senate do not guarantee Mr Clinton a free ride in Congress. Worse still, three or four Democratic defections in the Senate have shown the White House cannot even count on 100 per cent loyalty of its own troops.

Nor is it clear whether the deal Mr Clinton is proposing will end the impasse. His spokesman George Stephanopoulos said dollars 12bn was the 'best offer'. But it was immediately dismissed by the Senate Minority leader, Robert Dole. 'It isn't a compromise when the President absolutely refuses to pay for his new spending programme,' he said.

Having now tasted blood, the Republicans may press for more. The next showdown will come on Tuesday, when the Senate again votes on a cloture motion to end the filibuster. And assuming the 43 Republicans hold rank, the Democrats will once more come up short of the 60 votes needed for Congress' equivalent of a guillotine.

Republicans maintain they are merely trying to bring down the deficit by attacking a spending package that many economists say has been made unnecessary by recovery.

Left untouched from the original package is increased federal funding for Aids treatment. The topic was high on the agenda of Mr Clinton's scheduled meeting with leaders of the gay and lesbian communities yesterday afternoon - the first such encounter in the Oval Office.