Across the Nation Time Warner may merge with EMI NEW YORK - Time Warner, which only two weeks ago announced a stunning $145 billion merger with America Online, plans to shake up the music industry through a $20 billion merger with EMI Records, home of the Beatles and the Rolling Stones, a source familiar with the deal said yesterday. The two companies will formally announce the deal in London today, the source, who spoke on condition of anonymity, told The Associated Press. London-based EMI confirmed yesterday that it is in the final stages of negotiations and said an announcement is forthcoming. Time Warner in New York also acknowledged the talks, but spokesperson Edward Adler said, "No deal has been signed." The deal, if it is approved by regulators, would likely be a boost for music sales via the Internet. Both Warner and EMI have been testing ways to let customers digitally download music via their computers. The new company would have a very captive audience with America Online's 20 million subscribers. The merged company, to be called Warner EMI Music, would be the second-largest music company with more than $8 billion in annual sales. Only Seagram's Universal Music would be bigger. EMI brings to the deal the Virgin, Priority and Capitol record labels; Time Warner contributes its Atlantic, Elektra and Warner Brothers labels. The merger is expected to close in about a year. Clinton plans $250M tax cut in budget WASHINGTON - President Clinton's last budget will be crammed with election-year proposals to distribute federal largesse to as many Americans as possible. He is asking Congress for billions of dollars to expand health care coverage for the uninsured, offer tax breaks to the middle class and help the elderly pay drug bills. Surprise is about the only thing the budget will lack when it is formally released Feb. 7, thanks to a stream of announcements from the White House in recent weeks. The president will hit highlights of his spending initiatives in his State of the Union address Thursday night before a joint session of Congress. The speech also will contain Clinton's wish list of legislation he wants enacted in his last year in office. In the budget area, Clinton is expected to provide more details on his tax-cut proposals. The administration already has said it will seek roughly the same amount in tax cuts - about $250 billion over 10 years - as Clinton proposed last year. But presidential aides say more tax relief is intended for the working poor and families struggling to pay for college and for long-term care for elderly relatives. That will leave less money for the proposal Clinton made last year to establish universal savings accounts to help low- and middle-income workers save for retirement. Budget experts say the new proposals show the president has learned from past budget battles and made positive revisions, either to better reflect budget realities or make it more difficult for Congress to reject popular programs in an election year. "Many of his initiatives have been polished a bit," said Robert Reischauer, a former head of the Congressional Budget Office who is now at the Brookings Institution. "He is putting forward proposals that have some chance of being accepted by a Republican-controlled Congress that is first and foremost interested in survival." One example is Clinton's health care proposal. Clinton said last week he wants to spend $110 billion over the next 10 years to help provide health care coverage for at least 5 million of the 44 million Americans who now lack health insurance. While Clinton's plan would be the biggest expansion of federal health coverage in 35 years, it stops far short of the measure he put forward in his first term to make sure all Americans have health insurance. Clinton's new health plan also reflects something many of the other budget proposals do - an effort to boost the presidential campaign of Vice President Al Gore. The Clinton health proposal is very similar to the one Gore is promoting on the campaign trail, employing an incremental approach that builds on existing government health programs. Former Sen. Bill Bradley, Gore's Democratic opponent, is suggesting a more radical overhaul that would abolish existing programs and promises to provide greater coverage. Gore's presidential campaign is visible in Clinton's budget in a number of other ways. The document devotes increased resources to many of the areas Gore is focusing on in his campaign, such as education, the environment and high-tech research. Gore has played a prominent role in the many unveilings of portions of the budget over recent weeks, either standing at Clinton's side or sometimes making announcements himself. For example, Gore: -Announced a proposed major expansion in soil conservation efforts for farmers in Iowa and other states. -Said at the United Nations that the administration would seek more money to help fight AIDS in poor countries. -Unveiled a $50 million proposal to clean up the Great Lakes, a help in the primary states of New York, Ohio and Michigan. All the activity has drawn notice from the Republican presidential candidates, many of whom are campaigning on the traditional GOP view that what voters want is more tax relief, not more government programs. "This guy is a plan-a-day person," Texas Gov. George W. Bush said last week in response to Clinton's plan to provide greater health coverage. Beyond all the maneuvering for the November elections, Clinton's budget faces an uncertain fate in Congress. Administration supporters hope the president can use the added pressure of the fall elections to force Republicans to vote for initiatives in such areas as education and health care. But others predict a replay of last year's battle, when the Republican Congress rejected most of Clinton's proposals for increased spending and Clinton vetoed the big GOP tax cut. U.S. to develop geothermal energy DENVER - The Department of Energy is scheduled to announce an initiative today that seeks to spur the development of the geothermal-energy industry, a highly productive but still evolving source of renewable energy. Energy Secretary Bill Richardson will present his GeoPowering the West project and set out ambitious goals that call for geothermal energy to provide as much as 10 percent of the West's electricity by 2020, supply the electric-power or heating needs of 7 million homes by 2010 and double the number of states with geothermal-power facilities to eight by 2006. Originally on page 2A in the 1-24-2000 issue of the Daily.