House Votes Down Budget Deal; Fate of Plan Uncertain : Deficit: By 254 to 179, lawmakers ignore pleas by Bush and congressional leaders to approve $500-billion package. Cuts could go into effect Saturday.

In a stunning defeat for President Bush and the leaders of both parties in Congress, the House early today rejected the new five-year, $500-billion deficit-reduction plan. The vote was 254 to 179.

A combination of conservative Republicans and liberal Democrats scuttled the accord worked out by White House officials and top-ranking members of Congress in marathon negotiations that ended Sunday.

Because of the vote, the process of resolving the nation’s budget dilemma now is plunged into uncertainty. About $85 billion in spending cutbacks under the Gramm-Rudman deficit-reduction law that would have been avoided had Congress adopted a budget resolution are scheduled to go into effect Saturday.

There was no immediate indication of what steps the Bush Administration will take now. Congress is expected to pass a stopgap resolution today to keep the government in operation until Oct. 19 and increase the debt limit to permit the Treasury to keep borrowing to finance the debt.

But Bush has said that he would veto any further attempts to delay the Gramm-Rudman cutbacks if Congress refused to approve the agreement. That would effectively shut down government services Saturday and require furloughs for 1 million federal employees.

Republicans, who had been expected to oppose the budget plan, did so by a margin of 105 to 71. Democrats, who had been expected to favor it, instead voted against it by a 149 to 108 margin.

After announcing the result, Rep. John P. Murtha (D-Pa.), the presiding officer, said: “The Conference Report is rejected,” then adjourned the House until 10 a.m. today.

Rep. Bill Frenzel (R-Minn.), one of the budget summit negotiators, said afterward that he had no idea what would happen next in the House.

The rout of the President and the leadership reflected widespread unhappiness not only with the tax increases and spending reductions in the budget accord but also a resentment by many rank-and-file lawmakers that they have been left out of the process.

Opponents argued before the vote that a 12-cent increase in gasoline taxes, cutbacks in Medicare and higher taxes on beer, wine, alcohol and cigarettes would trigger a recession. And, they said, the burden would fall more harshly on middle-income and lower-income Americans than on the wealthy.

House Minority Whip Newt Gingrich (R-Ga.) led the GOP opposition to the agreement, pulling many in his party along with him, while liberal Democrats attacked the plan as too tilted toward the rich and overly generous with the Pentagon.

Others objected that a handful of lawmakers, meeting with unelected White House aides, had crafted the package without rank-and-file lawmakers’ participation.

“We’re asked to buy a pig in a poke,” complained Rep. Bud Shuster (R-Pa.). “It’s sheer folly to impose a $130-billion tax increase when we are on the brink of recession.”

“The solution is worse than the problem,” said Rep. Marty Russo (D-Ill.).

Others, however, argued that approval of the agreement was essential. As Rep. Bill Archer (R-Tex.) said: “This is the best we can do.”

Bush, joined by his Cabinet and top White House staff members, put on a down-to-the-wire lobbying campaign for the agreement. Some members of Congress reported that they had telephone calls from two or three members of the Cabinet. Bush himself wrote lawmakers urging that they “do what is right for America.”

Speaker Thomas S. Foley (D-Wash.) also wooed members of his caucus by declaring after a meeting with President Bush that there would be “flexibility” for House and Senate committees to revise provisions of the agreement that caused the greatest political pain for Democrats.

Foley and his lieutenants, working one-on-one to gather support for the plan, also argued that a vote for the budget resolution would only move the legislative process forward and avoid a chaotic cutoff of government services and furloughs for federal employees that was threatened if the House refused to pass it.

Despite opponents’ charges that the proposed $130 billion in tax increases over the next five years would derail the economy and bring on a recession, advocates of the accord said that there was no other reasonable choice but to endorse it.

“If we have to hold our nose and vote for this, let’s do it because it’s best for America,” argued Rep. James H. Quillen (R-Tenn.).

“If we fail to pass this budget resolution, we are nowhere,” warned Rep. Leon E. Panetta (D-Carmel Valley), chairman of the House Budget Commitee.

Opponents, however, replied with equally forceful arguments. “My people have been taxed to death. . . . I’m going to vote against this turkey,” said Rep. James A. Traficant Jr. (D-Ohio).

House Majority Leader Richard A. Gephardt (D-Mo.) argued for passage of the agreement.

“I was personally deeply disappointed with what we achieved,” he said of the budget negotiations, which he chaired. “But the best thing to do is to go forward. We can pass the agreement tonight, try to improve it in the committees, and come back to fight another day.”

In a rare appearance on the House floor, Speaker Foley delivered the final speech just before the vote early today in behalf of the budget agreement he helped to negotiate.

“This is one of the most important congressional decisions in your career,” Foley told the hushed chamber. “We have a chance to let the legislative process go forward. . . . If not now, when? If not us, who?” Foley received a standing ovation.

Federal Reserve Board Chairman Alan Greenspan had predicted that there would be trouble in the world’s financial markets if the plan were defeated. Both he and Bush have warned that defeat could throw the economy into a recession.

The agreement, worked out after four months of negotiations between the White House and congressional leaders, has run into criticism since it was announced from two camps: Conservative Republicans have attacked its call for some increases in taxes. And liberal Democrats say that it would cut spending too far.

On Tuesday, Gingrich and dozens of his followers broke with the President to oppose the pact, contending that it would destroy jobs and weaken the sagging economy.

The President spent about an hour Thursday morning with several dozen Republican members of Congress, seeking to win them to his side.