Congress Passes $490-Billion Cut in Deficit; Bush to Sign Bill : Budget: House votes for the historic plan at dawn, 228 to 200, after debating all night. Senate follows later in day, 54 to 45, to end 5-month drama.

A weary Congress gave final approval Saturday to a historic budget bill designed to reduce the national deficit by $490 billion over five years through a combination of tax increases and spending restraints.

The bill now goes to President Bush, who said he would sign it.

The last act in the five-month-long budget drama featured a sharply divided House and Senate, worried over how the budget measure would play on Election Day, joining across party lines to push through a plan that will require some sacrifices by nearly every American.

After a bitter all-night debate, the House greeted the dawn by endorsing--shortly before 7 a.m. Washington time--the deficit-reduction plan on a 228 to 200 roll call. Just before sunset, the Senate gave its approval on a vote of 54 to 45.

At a press conference in Hawaii, where he was campaigning for GOP Senate candidate Patricia Saiki, Bush said he would sign the new budget bill when it reaches his desk but warned that he planned to criticize the plan--and the Democrats--heavily between now and the Nov. 6 election.

“There are some things in it I had to gag and digest,” Bush said of the new budget bill, which flies in the face of his earlier pledge not to raise taxes. “This was a one-time compromise.”

Nevertheless, the President said he was “pleased” by enactment of the new budget plan. “I can’t say this is the best thing that’s happened to us since sliced bread,” he said, but he added that it would prove to be “good medicine” for a “sluggish” economy.

Democratic leaders immediately rejected Bush’s implied criticism, contending that he played a major role in the negotiations through his own high-level representatives and that he had approved of virtually every item in the package.

In the House, only 47 members of Bush’s party voted to support the package, while 126 Republicans voted against it. Among Democrats, 181 voted to approve the plan, while 74 opposed it.

In the Senate, there was a similar division: 19 GOP lawmakers and 35 Democrats favored the bill, while 25 Republicans and 20 Democrats opposed it. Sen. Alan Cranston (D-Calif.) voted for the bill and Sen. Pete Wilson (R-Calif.) voted against the measure.

Lawmakers from both parties clashed over whether the package, which contains tax increases totaling $164 billion and spending cuts amounting to $326 billion over the next five years, would tip the economy into recession or would promote growth by pushing interest rates down.

But a determined majority in both chambers apparently concluded that failure to pass the budget compromise--worked out during seemingly endless negotiations between the White House and congressional leaders--would be far worse.

“This package deserves to pass because it’s better than political gridlock,” said Sen. Jim Sasser (D-Tenn.), chairman of the Senate Budget Committee. “It’s better than sequester or stagflation or outright depression--any or all of which could result from continued inaction.”

Senate Minority Leader Bob Dole (R-Kan.) agreed. “The American people have been waiting for this for a long time,” he said. “They’ve almost given up on the Congress of the United States. Today we have a chance to redeem ourselves.”

But nearly all of the 30 senators running for reelection voted against the bill, clearly concerned over a possible voter backlash against the tax increases that the measure contains--including a 5-cent-a-gallon increase in the federal gasoline tax, starting Dec. 1.

“This is a dark day for the Republic,” warned Sen. William V. Roth Jr. (R-Del.). “Americans have as much right to rebel (against taxation) as they did in 1774.”

The new budget package would raise the tax rate on the highest-income brackets to 31%, from 28% now. It also would limit itemized deductions for wealthy taxpayers, reduce the benefit from personal exemptions and impose the Medicare payroll tax on higher incomes.

As expected, the compromise also contained higher taxes on cigarettes, beer, wine, alcohol and a limited number of luxury goods, such as high-priced cars, boats, planes, jewelry and furs.

The gasoline-tax issue is particularly sensitive in California because the state already has boosted its gasoline tax by 5 cents a gallon, with additional penny-a-gallon increases scheduled each January through 1994.

The thrust of the package reflected efforts by Democrats to shift the burden of tax changes to upper-income Americans. Under the plan, the taxes of those earning $200,000 a year or more will be raised by an average of 6.3%.

An earlier version of the accord, worked out by congressional and White House negotiators, had sought to spread the cost more evenly, but it was rejected overwhelmingly by the House, which objected to proposed increases in taxes and premiums for Medicare beneficiaries.

While tax increases account for about 30% of the deficit-reduction package, the budget plan also would reduce spending on government benefit programs by $100 billion and lower defense outlays by $185 billion below projected levels over the next five years.

Another $68 billion in savings is expected from a predicted reduction in interest payments on the debt.

The final plan also includes major changes in the budget process designed to discourage increases in spending for defense, foreign affairs and domestic programs.

In addition, another provision would require a pay-as-you-go approach requiring lawmakers to offset tax cuts with new tax revenues or reduce benefits if new benefit programs are enacted.

For all the unprecedented size of the deficit reduction, however, advocates of the plan acknowledged that it would not balance the budget by itself, and they called for renewed efforts next year to control red-ink spending.

Despite the endorsement of the bill by both parties, agreement on the measure Saturday was not expected to end the fierce partisan warfare over the budget that marked protracted negotiations between the White House and Congress.

Indeed, the fighting appeared to have resumed Saturday even before the measure reached the President’s desk. Bush, for example, said in Hawaii that Democrats had forced him to approve higher taxes despite his misgivings.

But Senate Majority Leader George J. Mitchell (D-Me.) quickly shot back that “for the President to say we made him do it raises the inevitable question: Is the President so weak that he does what we tell him to do?

“Is this the image the President seeks to convey by signing the agreement and then saying ‘they made me do it?’ ” Mitchell asked.

House Majority Leader Richard A. Gephardt (D-Mo.) also joined in the criticism, contending that “The public should not be confused. . . . (Bush) was a central player when this budget was written, and it would never have gone forward without his approval of every item in it.”

The legislation also drew criticism from protesters who were organized by the Council for Citizens Against Government Waste, a Washington-based coalition. About 200 people demonstrated in Dallas, 100 in Chicago, and 70 gathered in Lafayette Park across the street from the White House.

The protest was planned for 160 cities, but many of the turnouts were less than organizers had anticipated.

Staff writer David Lauter contributed to this story.

VOTE ON BUDGET

WASHINGTON--Here is how members of the California House delegation voted Saturday on the deficit-reduction package:

Democrats for--Anderson, Beilenson, Berman, Bosco, Boxer, Brown, Dixon, Edwards, Fazio, Hawkins, Lantos, Lehman, Levine, Matsui, Miller, Mineta, Panetta, Pelosi, Torres, Waxman.

Republicans for--Lewis, Lowery.

Democrats against--Bates, Condit, Dellums, Dymally, Martinez, Roybal, Stark.

Republicans against--Campbell, Cox, Dannemeyer, Dornan, Dreier, Gallegly, Herger, Hunter, Lagomarsino, McCandless, Moorhead, Packard, Pashayan, Rohrabacher, Shumway, Thomas.

MAJOR DEFICIT-REDUCTION ITEMS Here are the major defict-reduction items other than tax and Medicare provisions. Listed are big ticket items in each category. AGRICULTURE Total savings: $14.94 billion Reduce acreage on which farmers receive crop subsidies Change formula for calculating farmer income subsidies Shift lending by Farmers Home Administration and Rural Electrification Administration from direct to guaranteed loans BANKING Total savings: $9.01 billion Allow regulators to increase deposit insurance premiums paid by banks and thrifts CIVIL SERVICE Total savings: $9.67 billion Suspend for five years lump-sum retirement benefits, with exceptions for those over 64 with 30 years of service EDUCATION Total savings: $1.70 billion Tighten student loan eligibility HOUSING Total savings: $4.23 billion Limit Federal Housing Administration mortgages, increase annual FHA insurance premiums LABOR Total savings: $1.79 billion Increase fees for violations of Occupational Safety and Health Act and Mine Safety and Health Act POSTAL SERVICE Total savings: $4.68 billion Increase liability of Postal Service for certain employee retirement expenses USER FEES Total savings: $8.69 billion Impose fees on nuclear power plants, hospitals, universities and other licensees of Nuclear Regulatory Commission Raise tonnage taxes on vessels arriving from foreign ports Increase patent and trademark fees Impose recreation user fees on Army Corps of Engineers campsites, swimming beaches and boat launching ramps VETERANS AFFAIRS Total savings: $3.67 billion Limit inheritance of benefits Reduce education benefits Reduce pensions to veterans in nursing homes Eliminate presumption of disability, and associated benefits, when a veteran turns 65 Cancel benefits for surviving spouses who have remarried Reduce government’s Medicare co-payment obligations Increase home loan fees by 0.75% Limit vocational rehabilitation services