Bush, Congress Agree on Measure to End Shutdown : Budget: The President is expected to sign the bill today. Lawmakers approve new $500-billion deficit plan.

President Bush and Congress agreed early today on a stopgap funding measure needed to end a three-day government shutdown, even as the Senate joined the House in approving a new $500-billion plan to reduce the burgeoning federal deficit.

A senior White House official said that Bush would sign the stopgap bill this morning. The Senate approved it by voice vote and the House gave it final clearance by a vote of 362 to 3.

Agreement was reached on the funding measure, which reinstates spending for government operations for 11 more days, after Democrats consented to slightly lower domestic spending and slightly higher defense levels than previously had been projected for the period. Passage of the funding measure means that more than 2 million government workers can return to their jobs this morning.

Meanwhile early today, the Senate approved sketchy outlines of the five-year deficit-reduction package--the House had acted on identical legislation 24 hours earlier--clearing the way for congressional committees to come up with specific spending cuts and tax increases.

The committees would be asked to report implementing legislation to the Senate and House floors by Oct. 12, with final action targeted by Oct. 19, when the stopgap funding measure will expire.

The Senate vote on the deficit-reduction plan was 66 to 33. Democrats split, 42 to 13, in favor of the plan, while Republicans split, 24 to 20.

Sen. Alan Cranston (D-Calif.) voted for it but Sen. Pete Wilson (R-Calif.), who is campaigning for governor in his home state, was absent.

Republican lawmakers earlier had urged Bush to veto the stopgap bill if it failed to require about $1.3 billion in harsh, across-the-board spending cuts for the next 11 days.

Bush had vetoed a stopgap measure Saturday morning and selectively shut down much of the government in a move aimed at pressuring Congress to approve a new deficit-reduction plan. The action infuriated Democratic leaders, who protested that the veto ignited partisan warfare that would make an eventual budget agreement much more difficult.

The House approved the $500-billion budget plan early Monday, 250 to 164, in a much more partisan action than the Senate. Only 32 House Republicans supported the package and only 28 Democrats opposed it.

The budget plan essentially revives the overall deficit-reduction targets that had been set by White House and congressional negotiators in the “budget summit” accord that was rejected by the House last Friday.

But the new plan junks provisions in the earlier agreement detailing Medicare cuts and new tax increases on items ranging from gasoline to beer. Instead, Democratic-run congressional committees would be given wide leeway in drafting the specifics of any spending cuts and tax hikes.

Largely in response to citizen outcries less than a month before congressional elections, the committees are expected to soften Medicare cuts called for in the original plan. They also are likely to shift more of the tax burden onto upper-income taxpayers.

Senate Republican and Democratic leaders said that Bush had no objection to the new deficit-reduction plan. And a senior White House aide glumly speculated that “we’re going to have to swallow it” because of the behavior of rebellious House Republicans, who helped sink the original package, which Bush heavily promoted in a nationally televised appeal.

Shortly before agreement was reached on a new stopgap bill, House Speaker Thomas S. Foley (D-Wash.) said Monday night: “I am optimistic that this . . . artificial crisis can be ended.”

And Senate Majority Leader George J. Mitchell (D-Me.) told colleagues that prompt action was imperative. Alluding to federal employees who would have been sent home from work today if operating funds had not been approved, Mitchell said: “We’re not just dealing with numbers but with individual human beings and their families--their hopes and fears and concerns.”

Sen. Pete V. Domenici (R-N.M.), ranking minority member on the Senate Budget Committee, said that he, Senate Minority Leader Bob Dole (R-Kan.) and a number of other Republicans voted for the plan’s outline “because it moves the process along.”

Domenici said that the proposal “maintains the basic framework” of the original budget summit package.

However, the New Mexico senator had said earlier in the day after a GOP caucus that a number of other Republicans would vote against it because they believe implementing committees will make unacceptable changes in the original plan’s details, which were widely supported by GOP senators.

Domenici said that he was drafting a letter in which Republican senators would declare that they would not support implementing legislation unless it met certain tests. And Dole said Monday night that Bush would issue “guidelines” that he expects such legislation to follow.

Domenici insisted that the legislation contain no “smoke and mirrors”--that is, ostensible cuts unlikely to produce savings.

The final laws, he said, would have to provide the full $500 billion in deficit-reduction over five years and revenue increases could not exceed the $118.8 billion outlined in the plan’s blueprint.

Moreover, cuts in Medicare and other entitlement programs would have to total at least $107.4 billion. And spending-cut enforcement mechanisms and budget process reforms spelled out by the budget negotiators would have to be included, Domenici said.

Sen. Phil Gramm (R-Tex.), co-author of the Gramm-Rudman deficit-reduction law that helped force the current plan, said that he would vote against the revised version.

“It’s a promise, not a program,” he said. “It’s easy to pass a promise. It’s tough to pass a program.”

In a related development, Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) said that he believes the final package will raise income taxes on top-bracket payers in exchange for lowering the tax on capital gains, or profits from investments.

Bentsen said that the change would be part of a Democratic effort to make the tax increases more equitable for low- and middle-income taxpayers, who would be hit disproportionately hard by proposed tax hikes on gasoline, alcoholic beverages and cigarettes.

“You just can’t have a package that hits the average family that much,” he said.

A deal on capital gains faltered in budget summit talks when Administration negotiators resisted Democratic demands to raise the income tax rate on the wealthiest to 33% from 28%. The Administration reportedly refused to go above 31%.

Sen. Robert W. Kasten Jr. (R-Wis.) said that he and most other Senate Republicans and Bush are opposed to raising marginal income tax rates under any circumstances.

“And in my discussions with the President and (his chief of staff, John H.) Sununu, they have been opposed to that trade, too,” he said.

Staff writers David Lauter and Michael Ross contributed to this story.