Bush Demands a Budget : Government Shutdown Threatened

Refusing to sign another stop-gap federal spending measure, President Bush today demanded that Congress enact a budget agreement by midnight or face a shutdown of the federal government.

With the specter of a government closed down except for essential services, a disappointed but determined Bush and congressional leaders launched a frenzied drive to come up with a substitute for the five-year, $500-billion plan rejected by the House early today.

The House, under strong public pressure, defeated the deficit-cutting package by an overwhelming 254-179 vote after an all-night session. An unpalatable mix of taxes and spending cuts--including higher charges for Medicare recipients--doomed the compromise that Bush had announced with great fanfare just last Sunday.

Failure to enact a new emergency money measure--called a continuing resolution--by midnight would leave the government without authority to spend, and Bush said he would refuse to sign one even if it is passed.

The last budget ended at midnight Sept. 30, with the end of the fiscal year, and the government has operated since under a continuing resolution approved by Congress and Bush to allow time to consider the budget plan.

The deficit-cutting compromise was reached among negotiators for Republicans and Democrats in Congress and the Administration to avoid more than $100 billion in automatic across-the-board spending cuts required by the Gramm-Rudman balanced budget law.

Those cuts were still possible in the absence of an overall budget accord, but the threat of a government shutdown was virtually immediate.

Bush summoned his Cabinet to an emergency meeting late in the afternoon to arrange for the shutdown, and Budget Director Richard G. Darman dispatched instructions to all department and agency heads on suspending non-essential activities.

White House Press Secretary Marlin Fitzwater expressed confidence the House, which handed Bush his first major defeat by repudiating the unpopular budget compromise, would be able to reach agreement on a comprehensive budget resolution.