Clinton Boasts on Economic Report

WASHINGTON (AP) â€” President Clinton sent his last economic report to Congress on Friday, saying that it depicted eight years of ``prosperity and progress.'' He cautioned against excessive tax

Friday, January 12th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) â€” President Clinton sent his last economic report to Congress on Friday, saying that it depicted eight years of ``prosperity and progress.'' He cautioned against excessive tax cuts and spending increases, which he said could jeopardize that prosperity.

While insisting he was ``moving out of the policy business in just a few days,'' the president said those in the new administration and Congress should avoid a large tax cut or huge spending increases that could bring back deficit spending.

``I would hope that the combined total of the tax cut and spending plan would not be so large as to call our fiscal discipline into question,'' Clinton told reporters.

The president said that while the economy was slowing from its rapid pace of the past few years, most private forecasters continue to believe growth will be at a moderate level this year with no recession.

The incoming administration insisted that President-elect Bush, in expressing pessimism, was simply being as accurate as he could be in discussing the current economic slowdown.

Bush spokesman Ari Fleischer said Bush believes the slowdown provides strong evidence of the need for the full $1.3 trillion tax cut over the next decade. ``That is very reasonable,'' Fleischer said.

In an interview published in Friday's Wall Street Journal, Bush said, ``I've got a relatively pessimistic view about what the economy looks like. ... If, in fact, the economy is slowing down, as the numbers are beginning to clearly show, the operative word is: How soft will the landing be?''

Clinton, speaking to reporters on the White House lawn, said his economic plan helped to transfer record federal budget deficits into record surpluses. He said that change had put the government on a path that would allow it to totally eliminate the debt held by the public by the end of this decade.

``We're on track to do something unimaginable when I came here eight years ago â€” get America out of debt at the end of the decade,'' Clinton said.

But while Clinton counseled discipline in his final economic report, Bush stuck to his insistence that a big tax cut is needed to stimulate the economy. ``We would consider all options'' on when the reduction should take effect, he said. ``What I won't consider is trying to diminish the size of the tax-relief package.''

Clinton used the 402-page report to burnish his economic legacy, providing a detailed account of the gains the country has made during his administration, citing 22 million jobs created and the lowest unemployment rate in a generation.

The report contained the administration's final economic forecast in which it predicted that the expansion, already the longest in history at nearly 10 years, will last through this year and beyond.

The administration's official forecast calls for growth in the gross domestic product â€” the country's total output of goods and services â€” of 3.2 percent in 2001, compared with 4.1 percent for 2000, when measured from the fourth quarter to the fourth quarter of each year. It estimated that consumer prices will rise 2.5 percent this year after a 2.6 percent increase in 2000.

The administration's economic forecast was completed in November so that the estimates could be used in putting together a budget.

Since November, however, private economists have dramatically cut their growth forecasts for 2001 to reflect the steep drop in economic activity with some warning of a growing risk of recession.

Bush has repeatedly cited the economy's slower growth as increasing the need for Congress to move quickly to pass his $1.3 trillion tax cut.

Martin Baily, chairman of the president's three-member Council of Economic Advisers, said that if the administration were to update its November forecast, it probably would reduce the 2001 growth estimate by one-half percentage point to 2.7 percent.

That would put the forecast in line with the latest consensus from Blue Chip Economic Indicators, which surveys around 50 private forecasters each month.

But Baily said there was no reason to believe the economy was slipping into a recession, even with the sharp slowdown in economic activity in the past few months. He noted that the unemployment rate in December remained at 4 percent, near a three-decade low.

``We think the fundamentals are strong and we are not going into a recession,'' Baily told reporters at a briefing Thursday.