WASHINGTON -- In October 1993, U.S. long-term interest rates fell to their lowest level in over a decade, and the Clinton administration hailed the decline as proof that the president's economic program was paying off.


What a difference a year can make. No sooner had long-term rates bottomed at 5.83 percent on Oct. 20, 1993, than they reversed course and began climbing again.


This week they broke through the eight-percent barrier, the highest levels for 30-year government bonds since May 1992, erasing all the gains achieved since President Bill Clinton took office and threatening to slow the nation's economic recovery.


What is more, the timing of the long upward march of interest rates is especially awkward for the president and his Democratic allies, because critical congressional elections are just two weeks away and the Clinton economic record is under intense scrutiny. American voters were in no mood to give Clinton any credit for the economy anyway, and so a sharp rise in borrowing costs for homeowners and other consumers with variable rate loans certainly won't make them any more sympathetic to Clinton.


But the irony is that Clinton seems to be a victim of his own success. Economists and other analysts argue that interest rates are rising simply because the economy is growing more rapidly, increasing the nation's demand for credit -- a trend that has compelled the Federal Reserve to raise interest rates five times this year. Clinton's deficit reduction agreement, which passed last summer, helped bring about lower rates, accelerating the pace of a lackluster recovery and providing more rapid job creation in interest-sensitive sectors like the auto industry and home construction.


And today, rates are probably lower than they otherwise would be if the administration had not pushed through its economic plan last year. "I think Clinton deserves some of the credit, because now rates are up for the right reason, which is that we are at or close to the peak of the recovery," observed David Wyss, an economist at DRI-McGraw Hill, a Lexington, Massachusetts, economic forecasting firm. "In 1992, when rates were high, it was due to structural problems in the economy, including a large federal deficit. Rates were too high then, retarding the recovery. But the rise in rates we see now is due to an upswing in business cycle.''


"We are seeing the fruits of the president's plan,'' added Rob Shapiro, an economist with the Progressive Policy Institute in Washington and a former Clinton campaign adviser.


After promoting the economic package last year on the promise of lower rates, administration officials are especially concerned about getting the message out to voters that this year's rate increases don't mean that the Clinton deficit plan was a failure. But they realize that higher rates are bad political medicine, especially right before an election in which the Republicans have a shot at taking control of one or both houses of Congress.


"You can never look at just one piece of the economic landscape; you have to look at the whole picture to understand what's going on with interest rates,'' argued Gene Sperling, a White House economic adviser.


"When we came into office, interest rates were high because of public perception that the public sector was growing too fast, and the deficit was not under control,'' he added. "Now, interest rates are higher because of a growing economy, and a perception that the demand for capital from the private sector is rising. Those are two very different scenarios for the American economy.''


Of course Republican politicians and allied economists are not willing to give Clintonomics credit for the drop in rates. And they see this fall's rapid increase in rates as proof that Clinton's plan had nothing to do with the recovery. Further, they now charge that most of the credit for faster growth should instead go to Federal Reserve Board Chairman Alan Greenspan, who they believe kept interest rates down late last year in order to help Clinton.


Independent economists disagree over how much credit for last year's plunge in interest rates should be given to Clinton and his economic policies. Most disagree with Robert Rubin, chairman of the National Economic Council at the White House, who maintains that virtually all of the drop in rates came because of the Clinton plan. Yet many still believe that up to half of the decline can be attributed to the deficit reduction package, and agree that rates might now be as much as half a percentage point higher than they are if the deficit had not been reduced.


When the Clinton administration came into office, the deficit for fiscal 1994 was forecast to hit $305 billion; the White House announced this week that the 1994 deficit actually fell to $203 billion, thanks both to rapid economic growth and the Clinton deficit plan.


Of course bond market analysts and other economists stress that the Fed has played a more critical role in determining the direction of interest rates than has the administration's budget policy.


"Deficits are cyclical beasts: they rise and fall with the business cycle and the economy, so they only affect rates and the bond market at the margins,'' said Joe Lavorgna, a credit market analyst at UBS Securities in New York. "By far the biggest factor right now is the Fed.''


Still, Rubin argues, that proves his point: that Clinton economic policies have liberated the financial markets from their previous fixation on federal deficits. Now, interest rates in the credit markets are free to rise and fall according to economic fundamentals. Moreover, he says, the Fed has raised rates this year because the economy is better.