Last-Minute Talks on Budget Falter; Shutdown Looms : Government: Clinton and congressional leaders fail to strike deal to extend spending authority. Workers could be sent home if morning negotiations break down.

The federal government skidded toward partial shutdown today as a last-minute effort by President Clinton and Republican congressional leaders to broker a temporary budget deal came to nothing only minutes before the government’s spending authority ran out at midnight.

GOP leaders met with top congressional Democrats and Clinton in the Oval Office for nearly two hours Monday, but emerged at 11:45 p.m. to say they had fallen short of a deal that would allow the government to continue operating as the two sides complete this year’s budget work.

“We went around and around, but we don’t have an agreement,” Senate Majority Leader Bob Dole (R-Kan.) told reporters.

With no progress on substantive issues, it seemed unlikely that curtailment of federal services could be avoided today. The White House and Republicans did schedule a meeting for this morning, however.

If a deal is not in view by late morning, the government plans to furlough 800,000 of its 2.1 million civilian workers. Supervisors in the East probably will begin sending employees home around noon.

The late-night meeting followed Clinton’s vetoes on Monday of a bill to give the government temporary authority to continue spending, and a second measure to extend the government’s ability to borrow.

After days of bitter exchanges over their budget impasse, the two sides now entrust their hopes for progress in a meeting set for this morning between Senate Budget Committee Chairman Peter V. Domenici (R-N.M.), House Budget Committee Chairman John R. Kasich, (R-Ohio), White House Chief of Staff Leon E. Panetta, and Office of Management and Budget Director Alice Rivlin.

If this session proves fruitful, Dole and House Speaker Newt Gingrich (R-Ga.) may meet again this afternoon with Clinton, officials said.

“I think we made a little headway,” Dole said after the Oval Office meeting. “Nobody’s going to go out and beat each other up. We know this is serious business.” He predicted that the shutdown could be no more than a “one-day affair.”

But predictions from the Democratic side were not so sanguine.

“This could last a while,” House Minority Leader Richard A. Gephardt (D-Mo.) told reporters on the White House driveway after he and Senate Minority Leader Tom Daschle of South Dakota emerged from the West Wing. “It may not be resolved for a number of days,” he added grimly.

Daschle agreed, saying he saw “no realistic possibility” that a continuing resolution could be agreed to and signed by Clinton in time to avoid the shutdown.

The two parties do gain certain public relations advantages by falling just short of an agreement at the last minute. Both Clinton and the more conservative Republicans want to demonstrate that they are standing up for their convictions on the all-important spending issues.

After offering such harsh critiques of their opponents for so long, it would have been difficult for them to have made a quick about-face and come to terms quickly late Monday. Yet both also have an interest in avoiding a long-term shutdown that would anger constituents and raise questions about the effectiveness of their leadership.

For these reasons, some analysts and aides close to the action believe that an agreement may come before too long.

GOP Meeting

Sheila P. Burke, Dole’s chief of staff, said a 10 a.m. meeting today among Dole, Gingrich and their respective leadership staffs is to be held in Gingrich’s office.

Only after such a GOP internal briefing will a meeting with Panetta and other senior Administration officials take place, Burke said. No specific time or place for that meeting had been set, she added.

It was Burke’s telephone call to the White House Monday night that led to the late-night meeting. In a conversation with Patrick Griffin, the President’s director for legislative affairs, Burke asked for the meeting and Griffin readily agreed, Burke recalled.

Griffin’s only condition was that the Democratic congressional leaders be included in the meeting. Gingrich and Dole, who were in the room during the Burke-Griffin conversation, immediately signaled their acquiescence.

The sudden agreement to talk came after a day when White House and GOP leaders had traded denunciations.

Clinton declared that signing the two short-term budget bills would force him to swallow unacceptable portions of the GOP agenda that Republicans had tacked onto the legislation.

Tactics Assailed

“This legislation is part of an overall back-door effort by the congressional Republicans to impose their priorities on our nation,” he said. He charged that the GOP was violating the intent of the Founding Fathers by packing special provisions dealing with larger government policy questions into temporary measures meant to deal exclusively with government solvency.

Republicans countered that Democrats often engaged in such tactics when they were in control of Congress. They taunted Clinton and accused him of trying to avoid a compromise. Gingrich said the standoff “must seem like a spectacle to the average American,” and he warned that the public will “blame all of us.”

Some Democrats as well acknowledged that the standoff cast a highly unflattering light on the adversaries.

“Everybody loses if we try to bring the government to a standstill,” said Sen. John B. Breaux (D-La.). “We’re so busy trying to score political points, I think some people in Louisiana believe even we in Congress are not ‘essential’ employees who should report to work tomorrow.”

The furloughs would not affect federal services deemed vital, such as air traffic control, law enforcement, the mails and the military. But they would close national parks, museums, passport offices and the processing of new claims for Social Security, food stamps and other government benefits.

The battle over the two temporary measures developed because Congress has fallen behind in its efforts to finish the work of passing 13 bills needed to fund the various government operations for the fiscal year that began Oct. 1. So far, only three of the 13 bills have been finished by Congress.

The departments of Agriculture and Energy, the Army Corps of Engineers and some smaller agencies included in two of those three bills will not face any furloughs because their funding has been approved and signed by Clinton. The President vetoed the third bill.

The two temporary budget measures would keep the government operating as usual for several more weeks, providing Congress and the President time to complete work on the remaining measures.

Medicare Premiums

Some Senate Republicans sought to defuse Clinton’s opposition to a GOP provision to raise Medicare premiums for elderly beneficiaries. The Republican measure to temporarily extend the government’s spending authority would have raised those monthly premiums, starting Jan. 1, from the current $46.10 to $53.50, rather than allowing them to fall to $42.50, as provided in current law.

As a way around the White House objections, Domenici had suggested that the spending bill keep the premiums level at $46.10. But White House officials did not promise that Clinton would accept that compromise. They said that even agreement on that point would not eliminate the President’s objection to language in the same bill that would sharply cut interim spending levels for some federal programs.

The bill provides that temporary spending could fall to as low as 60% of fiscal 1995 levels for some federal programs that Republicans have sought to cut or eliminate. The provision threatens some programs that are close to Clinton’s heart--such as the national service program and Goals 2000 education programs--and thus run counter to vital White House aims.

Mike McCurry, White House press secretary, said: “The President is very concerned about the 60% funding level.” As the federal government’s borrowing authority ticked toward expiration at midweek, Treasury Secretary Robert E. Rubin took steps Monday to assure that the government would be able to pay its debts. The temporary borrowing bill vetoed by Clinton would have raised the current $4.9-trillion debt ceiling by $67 billion.

To stay below the debt ceiling, Treasury officials announced that they will dip temporarily into certain government retirement funds, essentially a bookkeeping ploy in which Treasury securities are redeemed for cash. By removing those securities from the books, the Treasury lowers the total U.S. debt, making room to add on new debt through a series of Treasury auctions this week and next.

Asia Trip Cut Back

The prospect of a shuttered government is also forcing the White House to shorten a trip to Asia that U.S. and Asian officials have deemed highly important.

Clinton will now spend two days, instead of six, on a trip that was to encompass a state visit with the Japanese, and a meeting with members of the Asian trade bloc.

Long scheduled, the trip will now amount to “a weekend trip to Asia,” McCurry acknowledged.

Only days ago, Japanese ambassador to the United States Takakazu Kuriyama was suggesting that such a shortening was undesirable and unlikely. “We don’t expect that to happen, and of course we don’t want to see that happen, given the importance of the relationship,” the ambassador said.

* THE BUDGET ISSUES: Duel between Clinton and Congress involves two bills. A5

* RELATED STORIES: A14, A15