Clinton Blitzes Local Media To Shift Public's View of Plan

EVERY day this week, President Clinton is setting aside time for local journalists from a different state as part of his public-relations blitz to shape views of his budget plan.

Today, in Chicago, he meets with journalists from neighboring Indiana - taking his pitch to fresh ears, past the White House-based reporters who have heard it all before.

Last week, he carried Perot-style pie charts onto the "Larry King Live" show and met reporters from Alabama, New Jersey, New York, Wisconsin, and Louisiana. Friday, the White House produced estimates of jobs that its economic plan would create in every state, designed to make news in local and regional media outlets.

The stakes in all this? The impressions people form of the Clinton economic plan during this roughly two-week period, says Clinton pollster Stan Greenberg, they will carry "forever."

And those impressions are very poor. "The impression is overwhelmingly that the middle class will be paying the taxes in this package," Mr. Greenberg acknowledged at a Monitor breakfast last week.

The single element most associated with this package is higher taxes, he adds. "Only a third [of voters] now believe it's good for the economy."

So the White House is putting a high priority on getting out the double message that the plan will create jobs by cutting the deficit and holding down interest rates, and that the tax burden on the middle class will be slight.

The theme of "fog" runs thick through the rhetoric of both Mr. Clinton and his aides, as well as Republican opponents of his plan these days.

"Somehow we haven't been able to take a big old knife and cut through the rhetorical fog that has been blanketing our efforts in this town for the last several months," Clinton told the House Democrats last week.

The Republican National Committee has been faxing out "talking points" to party leaders on how to combat the "White House fog machine."

The tax burden that the House-Senate conference will produce is not yet clear, because one of the most contentious and changeable issues, the energy tax, is the one that would most affect the middle class.

But the taxes that the Capitol Hill conferees have agreed on so far will fall on the affluent.

Tentatively, they are raising tax rates on individual taxable incomes above $115,000 and households above $140,000 to just over 36 percent. Rates will rise to 39.6 percent on incomes above $250,000. These increases are backdated to March 1, 1993. The 1.45 percent payroll tax for Medicare will be extended to all earnings, not just those under the current ceiling of $135,000. Taxes on Social Security benefits will rise to 85 percent from 50 percent for households with incomes above $40,000 and individuals above $32,000.

House Ways and Means Committee chairman Dan Rostenkowski (D) of Illinois told his colleagues last week that these moves raised about half of what the plan requires to meet the five-year target of $500 billion in deficit reduction.

Middle-class Americans will pay less than $50 a year for this plan, the administration says, while 70 percent of the tax burden in the plan falls on incomes above $200,000.

The $50, or $1 a week, that the average family would pay is based on speculation on how the energy tax or gas tax will emerge. The administration now supports a tax close to the Senate version, which is a narrower and lower tax than the broad energy tax approved in the House. A gasoline tax of 4.3 cents a gallon, as approved in the Senate, would cost a family with an income of $50,000 about $50 a year, says J.D. Foster, chief economist of the Tax Foundation, a research and advocacy organization.

Mr. Foster questions the 70 percent of the tax increases that will be paid by the wealthy. That calculation is based on Treasury Department models that do not make allowance for changes in behavior as tax rates change, he says.

People with very high incomes have far more latitude than others to adjust their taxable income, according to a National Bureau of Economic Research study. The study showed that after income-tax rates dropped in 1986, very high-income taxpayers reported significantly higher income the following year. That presumably means that if rates go up, the affluent will reduce their taxable incomes and the taxes will raise less revenue than forecast.

Less revenue from the wealthy will not raise the taxes of average families, but it could weaken the deficit cuts and reduce the plan's long-term economic benefit.

The "fairness" argument of the Clinton administration in placing the burden is based on the Clinton view of who benefited from the growth of the 1980s.

"Those who have the most should pay the most," Clinton told House Democrats last week. "We did the reverse in the 1980s and it didn't work out very well. Every serious study shows that most of the economic gains of the last decade went to the top 1 percent."

Fred Steeper, a pollster who worked for President Bush, recalls that the budget deal of 1990 was initially perceived as a burden on the middle class and never recovered. The Clinton plan will find it hard to recover from a negative public verdict, he says, and yet a positive verdict will remain fickle. "People tend to believe negative news more than they believe positive," he says. "It's easier to make people skeptical because they're so cynical about the federal government."