Clinton and GOP on Path to Shutdown : Budget: The President and congressional leaders say they are amenable to a compromise on spending--if their priorities are met. A fiscal crisis for the federal government nears.

The Clinton Administration and Republican congressional leaders suggested possible common ground in their partisan budget wars Sunday even as the government lurched toward a temporary shutdown on Tuesday.

With both the White House and the GOP leaders insisting they would rather let the government close than compromise their principles, a shutdown appears imminent once the government’s authority to spend money expires at midnight tonight.

Congress is expected to finish work today on legislation to extend a temporary spending authority through the end of the month, but Administration officials continued to vow that President Clinton will veto the bill because it would make Medicare recipients pay $11 more a month for their medical insurance.

At the same time, House Speaker Newt Gingrich (R-Ga.) and Senate Majority Leader Bob Dole (R-Kan.) suggested that they would be amenable to a compromise if only Clinton, who last summer proposed spending and tax policies designed to balance the federal budget within 10 years, would support the Republican goal to do it in seven years.

“He could end it in 30 seconds,” Dole said of the standoff.

White House Chief of Staff Leon E. Panetta indicated Sunday that the President may be willing to accept a seven-year target, provided that his spending priorities--particularly Medicare and education programs--are retained.

“That’s something obviously we’re willing to discuss along with other issues,” Panetta said on the CBS-TV program “Face the Nation.” However, he insisted that such a concession must be negotiated separately and could not become part of a resolution specifically dealing with the pending crisis.

Late Sunday, Clinton renewed his offer to discuss ways to avert the crisis, proposing a meeting today with Republican and Democratic congressional leaders--but only if the GOP lawmakers first agreed to drop the proposed Medicare premium increase.

The potential expiration of the authority to spend money is not the only threat looming over the continued operation of the government. Separately, the Treasury has just about reached its legal capacity to borrow money to make up the difference between what the government spends each year and what it takes in.

Without legislation increasing the debt ceiling, Treasury Secretary Robert E. Rubin said, the government will have to take “extraordinary actions” to make a $25-billion interest payment due Wednesday.

Such actions, which include using surplus funds in some government trust funds for such programs as pensions for government workers, would have substantial adverse long-term effects on the nation’s economic integrity, Rubin said.

“It is very much like an individual who allows his or her credit rating to be tarnished,” Rubin said on ABC-TV’s “This Week With David Brinkley.” “It has effects for a long, long time.”

Congress has completed work on a bill that would extend the government’s borrowing authority, but Clinton has vowed to veto the legislation because it would also prevent the Treasury from borrowing from government trust funds to avoid default.

The Administration was proceeding with plans to furlough about 800,000 of the government’s 1.9 million civilian workers. The shutdown would not affect essential services, such as emergency, military, law enforcement, postal and airport operations. Federal benefits for programs such as Social Security, Medicare, Medicaid, Supplemental Security Income and Aid to Families With Dependent Children also would continue at least through the end of the year.

But the shutdown would prove disruptive for millions of Americans. Government contractors would temporarily go unpaid. National parks, museums and other nonessential services would be curtailed. Military recruiting would cease.

Without a compromise, Clinton may be forced to alter plans for a five-day trip to Japan for the annual Asian trade summit. The President has already canceled a trip to Boston today for a health care discussion and a political fund-raiser.

Clinton is scheduled to arrive Friday in Osaka, Japan, where he and other Pacific Rim leaders are expected to continue talks on implementing last year’s agreement to create a free-trade zone by the year 2020.

”. . . I don’t see how he can go to Japan because, frankly, the government will be closed,” Gingrich said.

The Speaker’s comments were “unfortunate,” Panetta said, “and the President ought not to be held hostage, in terms of his foreign policy responsibilities, by the Congress or the Speaker.”

The trip comes at a delicate time for U.S.-Japanese relations following the admitted involvement of three U.S. servicemen in the rape of a 12-year-old Japanese schoolgirl.

Most of the government, with the notable exception of the Agriculture Department, needs emergency funding because Congress has failed to enact all but two of the 13 appropriations bills necessary to fund government operations for fiscal year 1996, which began on Oct. 1. Government funds have been provided for the past six weeks under temporary financing measures that expire at midnight tonight.

Instead of simply extending the existing funding authority, the Republican-led Congress passed a measure that called for deeper spending cuts and included the Medicare premium increase that is part of the GOP’s long-term budget reform plan.

Republican leaders said Sunday that the budget dispute could be quickly resolved if Clinton accepted their seven-year budget-balancing plan.

“Everything would clearly be on the table at that point, as long as he agreed to seven years of an honest balanced budget that was real,” Gingrich said on NBC-TV’s “Meet the Press.”

Dole, appearing on the ABC program, said: “If the President would agree to a balanced budget within seven years, then I think we could make very good progress.”

As a presidential candidate in 1992, Clinton promised that he would present a five-year plan to balance the federal budget. In June, Clinton announced a 10-year balanced-budget plan that leading Republican legislators denounced because they said it contained overly optimistic assumptions about economic growth.

Then, in July, the Administration lowered its estimate for this year’s federal budget deficit and disclosed that the President’s spending plan would produce a balanced budget in nine years.

Administration officials said they were prepared to negotiate a balanced-budget plan with Republicans, so long as the talks were not tied to the current crisis and the budget plans met the President’s spending priorities.

“The President has basically said to them: ‘I’m even willing to look at a seven-year period if you’re willing to look at our priorities, our assumptions,’ ” Panetta said. “They rejected that out of hand.”