White House, Congress Facing Fight on Budget : Deficit: Rostenkowski ploy to fund college stirs threat by Administration of domestic spending cuts.

In a potential showdown with Congress, the White House is on the verge of threatening across-the-board cuts in most domestic spending programs in response to a key congressman’s efforts to slip $8 million for a Chicago college into an obscure budget bill.

By targeting one small item in a supplemental education budget passed by both houses of Congress last week, the Administration is hoping to send a message to Congress that under last fall’s budget accord, pork-barrel spending no longer will be tolerated.

Last year’s deficit-reduction agreement was supposed to force the White House and Congress to live within their means by requiring that each new federal spending program must be offset by spending cuts elsewhere. Any attempt to exceed the strict spending limits imposed by the accord can trigger automatic cuts through much of the federal government.

But by trying to make an example of one relatively minor violation of the accord, the Administration may be facing a nasty political fight. That is because Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, is the congressman in question. The college is Rostenkowski’s alma mater, Loyola University.

Congressional officials said that Rostenkowski has been angered by what he and his staff see as a petty attempt by the Administration to embarrass a powerful congressman who has gone out of his way to cooperate with the President on a wide range of issues.

“What is their point? Why are they trying to expose one of the prime Democratic supporters of the President?” a bewildered Rostenkowski aide asked.

The $8-million appropriation, which would help fund a new building for Loyola’s business school, was inserted in a supplemental budget request designed to fund Operation Desert Storm and other “dire emergencies” that have emerged since the 1991 budget was passed last fall.

“I think this is an excellent use of (federal) money,” insisted James Reilly, a Loyola assistant vice president.

The bill’s somewhat opaque reference to the Loyola funding sailed through a House-Senate conference committee that hammered out the final legislation passed by Congress late last week. But it was quickly detected by Office of Management and Budget Director Richard G. Darman and other Administration officials who appear to be spoiling for a fight with Congress over the budget accord.

The White House apparently wants to make an issue of the Loyola funding in an effort to make it clear that it will oppose congressional efforts to use emergency funding bills as a means to skirt the spending limits of the new budget accord.

Funding for programs declared national emergencies--including such things as the Persian Gulf War and the savings and loan crisis--has been excluded from the spending caps imposed on domestic, defense and other international programs. But the Administration does not want Congress to be able to declare an emergency each time it wants more money for a pet project.

Under the new budget process, Bush can trigger across-the-board spending cuts by declaring within 15 days of signing the dire-emergency bill that it violates the ceilings. If he announces such a violation in the case of the Loyola funding, $8 million must be pared from the budget, with the cuts spread out over every other federal government domestic program, except Social Security, Medicare and other entitlements.

One Administration official said that Bush is expected to receive the spending package today, but it was not clear whether he would go ahead with the threatened spending cuts.

If it does pick a fight over the Loyola issue, the White House may find itself facing a much larger battle over the budget agreement.

One of the most controversial provisions in last fall’s budget was an agreement that allowed Darman’s OMB to determine whether any particular program would bust the budget’s spending limits. That authority has given Darman unprecedented power to pick and choose which programs will live or die, based on how he “scores” their impact on overall spending caps.

In the Loyola case, Darman would be using that power to declare that one provision in a much larger spending bill threatens to break the budget. Congressional critics charge that the ability to “score” the costs of new programs amounts to a new form of veto power.

Last winter, the Democratic leadership in Congress unsuccessfully sought to transfer that power to the Congressional Budget Office. The potential attack on Rostenkowski could push Congress to finally transfer the scoring power to the CBO, according to congressional budget specialists.