Clinton's political woes could mean trouble for economy

WASHINGTON -- President Bill Clinton's political woes could create trouble for the U.S. economy by undermining consumer confidence and distracting Clinton and Congress from problems that could threaten growth, analysts said Wednesday.

Strong growth and low inflation have helped keep Clinton's job approval ratings high throughout a series of investigations. Those conditions are still in place as Independent Counsel Kenneth Starr submitted his report Wednesday to Congress on the results of those probes.

Clinton's standing in the polls could fall once Starr's report becomes public and take the economy with it. Stocks fell Wednesday after news that the investigative report was complete and on its way to the House Judiciary Committee.

"We are about to enter a period in which the Clinton scandal will be a big negative for the markets," said Tom Gallagher, a political analyst for Lehman Brothers in Washington. "Markets don't like uncertainty, and uncertainty intensifies when Starr's report is submitted."

That could heighten concerns that the president won't be able to rally the country or deal with Congress on such concerns as funding for the International Monetary Fund, and Iraq.

"The real question is whether the U.S. government will appear within the country and around the world as impotent and leaderless," said David Komansky, chairman and chief executive officer of Merrill Lynch.

At the same time, the report could benefit congressional Republicans, particularly after the November elections. If Republicans add to their majorities in the House and Senate, that could give them added leverage in pressing for budget and tax policy changes that Clinton has successfully blocked.

U.S. Rep. Bill Archer of Texas, chairman of the House Ways and Means Committee, pledged as the Starr report was being transmitted that Republicans would offer a "significant" tax reduction bill.

Clinton, battling to keep scandal from overcoming his presidency, called congressional Democrats to the White House Wednesday to offer a personal apology for the problems he's caused. Later, campaigning in Florida, he apologized to voters.

"I let this country down, but I'm trying to make it right and I'm determined not to let anything like that happen again," he said.

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