Federal Shutdown Nears Despite GOP Budget Action

The federal government edged closer to a shutdown Thursday as congressional Republicans forged ahead with a pair of temporary budget measures that the White House vowed to veto.

The immediate threat to government operations is the expiration at the end of Monday of most of the government’s spending authority. The Senate voted, 50 to 46, Thursday to approve legislation allowing federal spending to continue through November while Congress works on its bogged-down budget for the fiscal year that began Oct. 1. The House approved a similar spending measure Wednesday.

A second measure would temporarily increase the government’s $4.9-trillion borrowing limit by $67 billion. Without it, the government is in serious danger of running out of sufficient funds to operate on Nov. 15. The House voted, 227 to 194, and the Senate, 49 to 47, to increase the debt limit. But the Senate sent the measure back to the House after voting by voice to eliminate language killing the Commerce Department.

The House was expected to accept the Senate versions of both measures and send them to the White House today.

But even as Congress worked, Administration officials declared the measures unacceptable. The White House objects to several conditions in the measures that promote the GOP agenda, such as a requirement to balance the budget by 2002 and bar lobbying by nonprofit organizations or private companies that receive federal funding.

White House Press Secretary Mike McCurry said that “there doesn’t seem to be any possibility” that Congress will pass a spending bill by the Monday deadline that would escape a Clinton veto. “Default seems to be increasingly likely,” he said.

The standoff sent a tremor through a bond market that has until now been largely undisturbed by months of maneuvering and increasingly inflammatory rhetoric on the budget. The benchmark 30-year Treasury bond, which had been rallying earlier, sank after McCurry’s remarks, and its interest rate rose 0.4 of a percentage point to close at 6.29%.

As the White House and congressional leaders blamed each other, federal officials began laying plans for a shutdown that would furlough 800,000 federal workers, halt new claims for Social Security, veterans’ and other benefits, and curtail federal services deemed not essential. Such a shutdown would be the first since a budget impasse furloughed workers over Columbus Day weekend in 1990.

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The government will be forced to close many of its doors at midnight Monday if Congress and the President do not approve the temporary spending authority, known as a continuing resolution.

Clinton summoned his Cabinet for an hourlong meeting Thursday evening to explain the shutdown and to have Office of Management and Budget Director Alice Rivlin give a briefing on its basic elements. Education Secretary Richard W. Riley said a hush fell over the room as Clinton said the dispute had reached a crisis.

“There’s a nervousness,” one White House aide said. “People will remember this as the day when this threat suddenly became real.”

If a shutdown does occur, about half of the 2.1-million-person federal work force will stay on to continue such functions as air traffic control, veterans’ hospital care, the writing of Social Security and food stamp checks, and defense operations.

But a host of other functions would cease, such as clean water and hazardous waste testing, issuance of passports and the processing of new applications for the full range of federal benefits.

Treasury Secretary Robert E. Rubin said he could borrow money from federal trust funds to keep the government functioning “for some period of time,” but he wouldn’t speculate on how long that would be.

The debt-ceiling measure would temporarily increase the federal government’s $4.9-trillion borrowing capacity.

Attached to this measure is a raft of conditions, including riders to limit Death Row inmates’ appeal rights, make it harder to impose some federal regulations and prevent the use of civil service retirement funds and other federal accounts to stave off default.

Further complicating the complex maneuvers is the role they are playing in a far-broader dispute: Republican attempts to win approval for their fiscal 1996 budget, which is now six weeks overdue, and their bid to overhaul spending priorities for the long haul.

Republicans are hoping to use the threat of a government shutdown to force the White House to accept not only the conditions attached to the temporary budget measures, but also to sign off on their 1996 and longer-range budget plans. The overall budget document would, over seven years, eliminate the federal budget deficit, cut taxes by $245 billion and pare nearly half a trillion dollars from projected health care spending.

White House Chief of Staff Leon E. Panetta called the Republican strategy “a form of terrorism.”

“Don’t put a gun to the head of the President, the head of the country, and say: ‘You don’t accept our priorities, you don’t accept what we want to do to Medicare and Medicaid, what we want to do to education, we’re going to blow you apart,’ ” Panetta told reporters.

House Speaker Newt Gingrich (R-Ga.) called the remark bizarre, and a group of Republican leaders later sent Clinton a letter of complaint.

“Instead of meeting with your Cabinet to plan a government shutdown, you should be meeting with the leadership of Congress to devise a plan to keep the government operating while we work together on a balanced budget,” wrote Gingrich, Senate Majority Leader Bob Dole (R-Kan.) and the chairmen of the Senate and House budget panels, Sen. Pete V. Domenici (R-N.M.) and Rep. John R. Kasich (R-Ohio).

Another sign of the increasing rancor was a nasty public argument over whether Clinton should have tried to resolve the differences early in the week when the President and the GOP leaders flew together on Air Force One to Israel for the funeral of Prime Minister Yitzhak Rabin.

Gingrich and Dole each complained to GOP groups that Clinton had not taken advantage of a 26-hour round-trip flight.

But McCurry said it would have been inappropriate to negotiate during the solemn flight over, and he asserted that it was already 11 p.m. Monday when the return flight began.

“This thing smacks of silliness, and it’s also a little bit offensive when you consider the purpose of the trip,” McCurry said.

In a letter, Tony Blankley, Gingrich’s press secretary, responded by saying: “Our Speaker and our Senate majority leader were ready to talk with our President. Our President was not.”

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Administration officials, stressing the disruption that an impasse could cause, said Clinton may be forced to cancel a scheduled trip to Japan next Thursday if the standoff is not resolved.

The two camps also continued their attempts to line up financial experts embracing their views of the budget contest.

The White House released a letter signed by six Republican and Democratic Treasury secretaries warning of the risks of default on federal bonds.

“We are profoundly concerned that uncertainty about the timing of an increase in the statutory debt limit will threaten to increase the costs of federal borrowing,” said the letter, signed by former secretaries Lloyd Bentsen, W. Michael Blumenthal, George P. Shultz, G. William Miller, William E. Simon and Henry H. Fowler.