Federal Cash Crisis Averted on Eve of Summit Talks : Reagan Signs Temporary Debt Increase

President Reagan Thursday signed legislation extending federal borrowing and spending power for another month, defusing a threatened government cash crisis at the 11th hour.

Reagan’s action, taken after the House completed congressional action on the measure earlier in the day, ensures that government checks will not bounce while the President attends next week’s summit meeting with Soviet leader Mikhail S. Gorbachev.

President Had Balked

Initially, Reagan had balked at signing a measure temporarily increasing the debt ceiling, contending that he wanted Congress to complete action by Thursday on a deficit-slashing issue--linked to a permanent increase in the debt limit--that has been stalled by controversy.

But he changed his mind after Senate Republicans agreed to go along with a temporary debt hike to avoid a domestic fiscal crisis while the President was negotiating with Gorbachev.

Procrastinating lawmakers now will have more time to resolve the dispute over competing Democratic and Republican proposals to cut deficits by mandating that the budget be balanced by 1991.

Meanwhile, Defense Secretary Caspar W. Weinberger, adding to confusion over the Administration’s stand on the budget-balancing plans, told a Senate committee that Reagan would oppose any measure that fails to insulate defense spending from automatic budget cuts. Under the plans, congressional leaders of both parties have acknowledged, defense cuts would inevitable if Congress failed to meet declining annual deficit targets.

U.S. Securities Sale

The Senate had acted Wednesday on the debt bill, which grants the Treasury Department $80 billion in new borrowing authority--enough to cover government obligations through about Dec. 12. The House acted Thursday on a voice vote without debate. The Treasury promptly announced the unprecedented auction of $61 billion in government securities, beginning today.

Earlier in the week, both chambers had passed separate bills extending the spending authority of most government agencies through the same date.

The House and Senate have attached separate versions of the budget-cutting measure to a bill permanently hiking the national debt ceiling to more than $2 trillion from $1.8 trillion. Both versions of the budget bill would put the annual deficit--more than $200 billion last year--on a declining path leading to zero by 1990 or 1991 and require automatic across-the-board spending cuts if Congress failed to achieve the targets.

May Urge Veto

Although the White House continued publicly to press for approval of the Senate-passed balanced budget plan, Weinberger said he would recommend a presidential veto of any bill that could require large defense spending cuts.

“I am not aware of any difference between my position and the Administration’s on these matters,” Weinberger insisted.