Democrats Drop Stimulus Package in Clinton Defeat : Congress: White House compromises fail to end Senate GOP filibuster over $16.3-billion bill. Setback may signal trouble for other parts of President’s agenda.

In the first major legislative setback for President Clinton, the Senate on Wednesday yielded to a Republican filibuster and abandoned his stimulus package, approving only $4 billion to pay for extended unemployment benefits.

The outcome ends a standoff that the President’s repeated attempts at compromise failed to resolve and may portend trouble ahead for other elements of Clinton’s agenda, including his economic program, health care reform and aid to Russia.

It also underscored the power of a united band of Senate Republicans, outnumbered 57 to 43 by Democrats, to stall legislation by using Senate rules that permit debate to continue indefinitely unless 60 senators vote to end it.

Democrats fell four votes short on a 56-43 roll call Wednesday, failing for the fourth time to shut off the GOP filibuster.

Even so, the White House refused to acknowledge defeat. Instead, the Administration tried to get Republican backing for an eleventh-hour proposal that offered to pay for most of the emergency spending by making offsetting cuts in other programs, as Republican opponents have demanded.

But Senate Minority Leader Bob Dole (R-Kan.), who prevailed in the test of wills with the new President, rejected the last-minute White House plan, and Democrats spurned a GOP counteroffer to provide slightly more money than under a previous Republican proposal.

The Senate ultimately jettisoned more than $11 billion worth of programs, including $1 billion for a summer jobs program, $3 billion for highways and public works, $300 million for immunization of children and $141 million for small business loans.

The measure now goes to the House, which approved the President’s original $16.3-billion stimulus package last month. The House is expected to approve the Senate bill, which would keep extra jobless benefits flowing to an estimated 1.8 million Americans before existing funds run out sometime next week.

House Speaker Thomas S. Foley (D-Wash.) said recently that there would be dismay among House Democrats who voted for Clinton’s entire program, but he acknowledged that it might be difficult to revive much of the emergency spending in view of the determined Senate Republicans.

Clinton’s reaction was low-key. He told reporters that he was “disappointed” but not “disheartened” and declared that the Republican tactics “did not make a lot of sense.”

“This is a defeat--not for President Clinton--but for the American people and the American economy,” said Senate Majority Leader George J. Mitchell (D-Me.). “We will be back--we are not going to give up on summer jobs or immunization for children.”

Sen. Barbara Boxer (D-Calif.) said: “The Republicans think they won today, but what a hollow victory it is for them. We are in a jobs recession and we needed this bill to give employment a lift.”

Dole, however, said Republicans had a fundamental difference with Democrats and did not want to enact programs that would increase the federal deficit.

“It’s just a bump in the road for President Clinton,” Dole said. “He ought to rejoice--the taxpayers won this one.”

Many Democrats were frustrated by their inability to pass a key part of the President’s economic program when he has been in office for less than 100 days.

“There is a lot of concern about our ability to pass something with far greater consequences,” said Sen. Thomas A. Daschle (D-S.D.).

“This sounds a real trouble note for the Russian aid bill,” said a senior Senate Democratic staff aide, alluding to the President’s plan to seek $1.8 billion from Congress to help the Russian government of President Boris N. Yeltsin improve living conditions.

“I don’t think the House is going to be in a mood to vote Russian aid after the Republicans refuse U.S. aid,” the aide said.

Also likely to be in trouble are Clinton’s proposal to raise income taxes on Social Security benefits for retirees with incomes above $25,000 a year and a politically unpopular plan to cancel a cost-of-living pay raise for federal civilian and military employees.

In addition, the President’s energy tax and his proposed reductions in farm subsidies may face renewed obstacles in the Senate.

Dole agreed that parts of the President’s economic program are likely to face increased difficulties, but he said the filibuster would not be standard operating procedure for Senate Republicans.

In fact, he said, Clinton might find that he needs GOP votes to offset defections by Democrats on other issues, such as the North American Free Trade Agreement.

But Mitchell said he anticipates Republican filibuster attempts on Clinton’s proposals in other areas as well.

However, under special rules, the Democrats will be able to avoid any attempted filibuster and force a vote on tax increases and changes in mandatory benefit programs that are at the heart of the President’s deficit-reduction plan.

Despite the long odds against success of the stimulus package, Mitchell presented a White House offer to the Republicans on Wednesday morning in hopes that it would break the deadlock.

That $12.9-billion package included $4 billion for jobless benefits and $2.9 billion for highways and public works that would be financed out of a trust fund. Of the remaining $6 billion for jobs programs, the Democrats offered to pay for $5 billion by an across-the-board cut in all federal outlays in this fiscal year and a lower cap on outlays in fiscal 1995.

Originally, the Administration sought $16.3 billion in emergency job-creating programs and another $3.2 billion for highway construction from a trust fund. Clinton cut that total to $15.2 billion last Friday and then dropped it to $12.9 billion Wednesday.

Dole, however, rejected the lesser bills on grounds that they did not provide offsetting spending cuts to pay for the highway spending or the remaining $1 billion in jobs programs.

He submitted a counteroffer of a $6.5-billion package, including $4 billion for jobless benefits, $1 billion for summer jobs and the remaining funds for immunization and small business loans. Mitchell termed it “not credible,” and the negotiations ended.