Clinton TV Speech to Brace Taxpayers : Economy: President tonight will give his blueprint for sacrifice to pave way for his address to Congress Wednesday. It includes an energy tax and a bite on pensioners.

WASHINGTON —  Escalating an extraordinary campaign to sell President Clinton’s economic plan to the nation, the White House said Sunday that the chief executive will make a prime-time television speech tonight to explain the program he will unveil Wednesday.

Thus, Clinton will appear on the airwaves twice this week to talk about the same subject: the need for all Americans to sacrifice and bear some of the costs of deficit reduction and new investments in his domestic agenda. Details of the long-awaited economic plan will be spelled out in his speech to a joint session of Congress on Wednesday.

Clinton’s decision to speak at 6 p.m. PST today about the thinking that went into his plan suggests just how sensitive the White House has become over public reaction to the higher taxes and spending cuts that will be proposed. The Administration seems especially concerned because Clinton is certain to break a key campaign promise: not to raise taxes on the middle class to finance his programs.

He will propose hitting the middle class with a 5% consumption tax on most major forms of energy usage. Moreover, he will seek to increase to 85% from 50% the tax on Social Security income for retired couples earning more than $32,000 a year and for individuals earning more than $25,000 a year.

Overall, Clinton’s massive economic package seems likely to include some of the largest tax increases ever sought by a President. Its tax increases and spending cuts will total as much as $500 billion over five years.

To stay one step ahead of an expected barrage of criticism for his proposals, the President sent out many of his key advisers over the weekend to prepare the nation for his agenda. Appearing on various television interview programs were Vice President Al Gore, Office of Management and Budget Director Leon E. Panetta, Council of Economic Advisers Chairman Laura D’Andrea Tyson and White House Communications Director George Stephanopoulos.

Stephanopoulos even suggested on NBC’s “Meet the Press” that the President may appear before members of Congress on Thursday to take questions, just as Britain’s prime minister goes regularly before the House of Commons.

The public relations effort is designed to convince Americans that the wealthy and the corporate community will bear the heaviest burden in financing Clinton’s plan, even though the President now has decided to hit the middle class as well.

Stephanopoulos said that Clinton will continue making direct public appeals after his speeches this week, arguing that his plan is fair.

“Now, if well-paid special interests and lobbyists are to pick it apart, that’s their prerogative,” he said. “But we’re going to fight them with the people and say, look at this package, look at it yourself. Is it fair? Is everybody being asked to pay their burden?”

Still, the White House is clearly sensitive to criticism that the President has reneged on his campaign pledge not to ask the middle class to help finance his agenda. Thus, aides said that Clinton plans to release “burden tables” Wednesday showing that his tax increases fall mostly on the rich.

Meanwhile, Panetta said Sunday that the Clinton plan will come close--but still may fall short--of meeting Clinton’s promise of reducing the federal deficit by $145 billion a year by the end of his four-year term.

Appearing on CBS’ “Face the Nation,” Panetta also acknowledged that the Administration will be unable to live up to its goal of cutting $2 worth of government spending for every $1 in tax increases that it proposes.

The former California congressman said that Clinton will seek $34 billion in cuts in Administration and government overhead over four years. Officials also said that the White House plans to seek $35 billion in cuts in the Medicare program over four years through new limits on payments to doctors and hospitals.

Panetta said that the health care cost controls to be announced Wednesday will represent a “down payment” on Clinton’s massive health care reform package due in May. But he refused to say exactly how the President will square a circle that has bedeviled Clinton’s advisers for weeks: how to count those Medicare cuts toward deficit reduction and also use the same savings to finance health care reform and universal access to medical insurance for the nation’s 36 million uninsured.

Panetta and other Administration officials also refused over the weekend to provide much detail on broader spending cuts that will be necessary to help finance Clinton’s comprehensive agenda. Only a handful of highly visible domestic programs--including the Space Station Freedom and the Superconducting Super Collider in Texas--appear to be facing Clinton’s budget knife.

Instead, the President’s plan now seems almost certain to rely far more heavily on tax increases, including those that will affect the middle class, than Clinton ever acknowledged during last year’s presidential campaign.

His plan definitely will hit the rich. He will propose raising the top income tax rate to 36% from 31% for those earning more than $200,000 a year. An additional 10% surtax would be imposed on those earning more than $1 million annually. He also will ask that the corporate income tax rate be raised to 36% from 34%.

But Clinton has faced up to one of the cold budget realities that George Bush chided him about during last fall’s campaign: There simply aren’t enough rich people around to pay for all of Clinton’s plans. So he has had to go down the income ladder to slap the middle class with taxes on energy use and pensions.

To offset the effect of such hits on the working poor and the lower middle class, Clinton is likely to propose an expansion of the earned income tax credit for low-income families with small children, Gore said on CNN Saturday.

House Speaker Thomas S. Foley (D-Wash.) added Sunday that Clinton has decided on the form the energy tax will take: It will be based on the energy content, measured by British Thermal Units, of fuels used by consumers.

The energy tax is certain to run into broad opposition from a wide range of liberal and conservative activists, ranging from farmers to groups representing the inner-city poor.

The energy tax is “going to touch everybody to some extent,” Foley acknowledged in a CNN interview. But he insisted that it is needed to enhance U.S. energy conservation and to help finance the budget.

“The United States is probably the most extravagant user of energy per unit of production in the world. We’ve been energy wasters in many ways,” he said.

Republicans were quick to attack the Clinton plan over the weekend, drawing battle lines that raise questions about the extent to which the President’s promise to end gridlock in Washington can become legislative reality.

“The energy tax is one of the most insidious ways possible” to raise revenues and cut the deficit, Rep. Dick Armey of Texas, a leading House Republican, warned on “Meet the Press.” He said that Clinton’s plan clearly relies too heavily on higher taxes, without focusing enough on spending cuts.

“The problem is we spend too much of the taxpayers’ money, too foolishly, in too many ways that are self-indulgent to politicians’ whims rather than the public’s interest,” Armey added.