Budget Law Compromise Wins Backing

House and Senate negotiators struggled Thursday to reach a compromise on legislation that would restore the threat of automatic spending cuts to the Gramm-Rudman budget-balancing law.

In the House, Democrats and Republicans appeared close to ironing out differences between their positions. But more talks with the Senate lay ahead, and time was running out before Congress’ scheduled summer recess.

The impasse blocked enactment of an urgently needed increase in the national debt limit. The Treasury prepared to suspend sales of government securities today because an interim debt ceiling was expiring at midnight Thursday.

‘Driving to Finish’

House Majority Leader Thomas S. Foley (D-Wash.) said lawmakers were “driving to finish” a compromise so final congressional action could come today. Lawmakers planned to start their summer vacation after business today, but cannot leave without passing a debt bill.

Sen. Phil Gramm (R-Tex.), co-author of the original Gramm-Rudman law and the revised version that passed the Senate last month, said he would fight the debt bill and the recess unless the Gramm-Rudman work is finished.

“I think we have one final opportunity here” to fix the law, he said.

Both the House and Senate have voted in favor of strengthening Gramm-Rudman.

The 1985 law that promised to gradually reduce the deficit was crippled by a Supreme Court ruling last year. The court said the law’s automatic spending cut mechanism, which would enforce its annual deficit targets, was constitutionally flawed.

Separation of Powers

The new amendment would attempt to address the court’s concerns centering on the original measure’s violation of the constitutional separation of powers.

It would also revise the deficit targets, abandoning the strict original schedule--which was largely ignored--for one that lawmakers said is more realistic by delaying attainment of a balanced budget past the original goal of fiscal 1991.

The Gramm-Rudman language was attached by the Senate to a bill needed to increase the ceiling on the national debt so the Treasury can continue to finance the government’s huge deficits.

An interim debt ceiling of $2.32 trillion was expiring, leaving the Treasury without authority to sell securities or even U.S. savings bonds. The Treasury was in the same situation for part of last month before the interim debt bill was approved.

The conference committee on Tuesday agreed to President Reagan’s request to raise the debt limit to $2.8 trillion, enough borrowing to carry the Treasury into 1989.