WASHINGTON -- President-elect Bill Clinton yesterday sought to reassure financial markets that he remains committed to reducing the federal budget deficit, but he also said he will ask Congress to approve a short-term economic plan to spur growth.
The comments, made in Little Rock during Clinton's first news conference since the election, seemed to indicate he will pursue a middle course on economic policy as he seeks to fulfill campaign promises for creating jobs while trying to retain the confidence of a nervous bond market.
"I believe that what we have to do is to have a disciplined reduction in the debt that will send a clear signal to the markets at home and abroad that we're going to bring this deficit down, but that we do it more gradually, and within a framework that will substantially increase investment," Clinton said.
"I believe that we cannot balance this budget ever unless we can get more economic growth than what we've got ... on the other hand, to ignore the deficit is a great mistake."
Clinton said he plans to submit to Congress "an aggressive plan" to revive the economy that will include both "a short-term economic agenda" and a long-term plan to increase productivity and personal income.
While he did not elaborate on any proposals for the long haul, Clinton said his program for immediate action will include an investment tax credit that could create as many as 500,000 jobs within a year.
He also said he will seek to accelerate spending on highways, water projects, and other infrastructure programs, which he expects to have "a lot of spin-off effects" in stimulating economic growth.
The bond market is keenly interested in what kind of short-term package the new President will seek next year because of the potential for increasing the budget deficit, although it is already priced in anticipation of some additional fiscal stimulus.
During the campaign, Clinton favored additional federal outlays of $20 billion a year for roads and other infrastructure programs.
It remains to be seen how quickly and under what terms any such program will be implemented. State budget officials recently said that federal matching rules will have to be eased because state fiscal conditions remain lean and states cannot afford to match increased federal grants.
Asked whether he continues to favor a tax cut for middle-income people, Clinton reiterated his support for the proposal contained in the "Putting People First" economic initiative that he unveiled last summer.
That plan calls for increasing taxes on the wealthy, an idea reinforced during the campaign by Clinton's advisers who talked openly of raising the marginal tax rate to 36% from 31%. Such a proposal, analysts say, would enhance the appeal of municipal bonds. The initiative also urges a reduction in the burden on the middle-class taxpayers by offering either a children's tax credit or a cut in income tax rates.
Clinton said he has not made any decision about Cabinet-level appointments, but emphasized he is taking a hard look at the role of all federal agencies and will seek to integrate their functions into overall economic policy.
Clinton's aides have said economic policy appointments will be among the first to be announced. The President-elect plans to create an economic security adviser to oversee Cabinet-level decisions, a position that would presumably eclipse the Treasury secretary and Office of Management and Budget director.
Robert Reich, a Harvard University economist and a friend of Clinton's from Oxford University, was named yesterday to join the transition team and help pick the top economic officials.
In addition to filling those positions, Clinton is planning to meet with a group of top business executives, labor leaders, and economists to get advice on formulating an economic program.
Opinion among economists on the merits of how to speed up growth is split, Clinton said. Some economists favor cutting the deficit at the expense of near-term growth to bring down interest rates and foster growth in future years, while others advocate spending money and cutting taxes right away to give the economy a kick.