Democrats Seek Delay in Drastic Budget Cuts : Deficit: A key House panel votes to put off reductions called for by the Gramm-Rudman law for 20 days. Bush says he would veto such a bill.

Defying President Bush’s veto threat, Democrats on the House Appropriations Committee voted Tuesday to delay for 20 days about $100 billion in automatic spending cuts that would otherwise be triggered without a bipartisan deficit-cutting agreement.

The committee also voted to provide the Pentagon with a supplemental $2-billion allocation to help pay for the Desert Shield deployment of American troops in Saudi Arabia and authorized the President to call up military reserves for up to a year instead of six months.

Meanwhile, in a startling development, House Minority Leader Robert H. Michel (R-Ill.) broke with the Bush Administration and dropped his personal support for a capital gains tax cut as part of any package to reduce the federal deficit by $500 billion over five years.

Michel, speaking with reporters, said White House and congressional negotiators assigned to hammer out a deficit-reduction pact were now considering scaled-back versions of the President’s capital gains proposal that would result in a smaller revenue loss.

“In my opinion, the doggoned price (for a capital gains tax cut) is too steep,” Michel said. “There are other ways to stimulate the economy. I’m hearing from people in the business community that we need an agreement more than we need capital gains.”

Michel’s remarks came after Senate GOP leader Bob Dole (R-Kan.) suggested last week that the controversial capital gains proposal be severed from the deficit-reduction discussions and be considered as part of a related tax bill.

Meantime, a GOP source close to the talks said the main stumbling block to completion of an agreement was now the Democrats’ reluctance to offer significant spending cuts, describing their latest offer in this respect as “very lame.”

The measure calling for delayed spending cuts in the absence of a deficit agreement and providing the supplemental Pentagon funding was approved by the Appropriations Committee, setting the stage for a bitter partisan showdown on the House floor today.

Even with the addition of military funds as a sweetener to attract votes, however, Democrats who favor the postponement of the spending reductions said passage of the bill remained in doubt.

One sign of the uncertainty was Democratic discussion of amending the resolution to authorize a shorter delay, of only three or four days, in the dramatic spending cuts in hopes of spurring the negotiators to a speedier settlement.

While one participant described both sides as “pretty close,” others said the key issue of tax changes remained unresolved as the Oct. 1 deadline neared for average cutbacks of 33% in most government programs.

Bush, taking a tough stance to increase pressure for a settlement, said he would veto any attempt to postpone the cuts called for by the Gramm-Rudman budget law unless there is a deficit agreement by the end of this week.

“I do not want to see further delays and kicking this problem on down the road,” the President told reporters. “Enough is enough. And the American people want a deal and they want it now.”

Rep. Jamie L. Whitten (D-Miss.), chairman of the House Appropriations Committee, said the extension was necessary to keep the government running since the failure to reach a budget deal had prevented Congress from passing any of the 13 money bills needed to finance federal services.

“Anyone who’s going to veto a bill and deny funds to Desert Shield and let the whole country go to pot, it’s a question of whether he’s patriotic or his judgment has gone sour,” Whitten said in unusually sharp criticism of the President’s veto threat.

Allowing the cuts to take effect, Whitten added, would “bring the country to its knees, and we can’t afford to take the risk.”

Marlin Fitzwater, the White House spokesman, acknowledged that it would be “very difficult” both for the economy and the American people if the spending cuts take effect as provided by the Gramm-Rudman law.

But he said the negotiators were “getting closer” and the President was meeting morning, noon and night with his budget negotiators and spending more time on the issue than anything else, including the crisis in the Persian Gulf.

“From our point of view, this has the highest priority and is an extremely urgent matter,” Fitzwater said, although Bush is traveling on a two-day campaign trip to the Midwest this week and plans to speak to the United Nations on Saturday.

Rep. Neal Smith (D-Iowa) insisted, however, that the public would blame Bush, and not Congress, if government services were crippled and hundreds of thousands of federal employees were placed on unpaid leave because of a presidential veto.

“His political advisers are not crazy enough to advise him to veto this bill,” Smith said. Added Rep. Anthony C. Beilenson (D-Los Angeles): “The President isn’t serious or he wouldn’t insist on this nonsense of reducing taxes.”

Despite the clash over when to lower the Gramm-Rudman ax, most of the debate in the House Appropriations Committee concerned other issues, such as the financial impact of the Persian Gulf crisis and an attempt to place new restrictions on the National Endowment for the Arts.

Despite Bush’s urging, the committee refused to include forgiveness of Egyptian debt totaling almost $7 billion in the resolution. Instead, the panel decided to keep economic aid flowing to President Hosni Mubarak’s nation by waiving a requirement for an aid cut-off to countries that are more than a year behind in repayments of U.S. debt.