NEWS ANALYSIS : BUDGET IMPASSE : Showdown: High-Stakes Game for Both Parties : Budget: Democrats and Republicans see battle as chance to highlight their differences and energize their constituencies. But GOP has more to lose.

As last-minute negotiations to avert a government shutdown broke off at the White House early today, both President Clinton and Republicans in Congress seemed to be spoiling for the fight.

Both sides vowed to meet again today. But both sides also see a rare opportunity for a simple, high-profile confrontation that stakes out clear differences between the parties and energizes their core constituencies.

Both sides are gambling that they have been dealt a winning political hand, but the dangers are enormous: If the public sees nothing more than the persistence of political gridlock, there will be only losers.

“They will blame all of us,” House Speaker Newt Gingrich (R-Ga.) said earlier in the day. “The American people expect us to act like adults. . . . It must look like a spectacle to the average American.”

But a recent poll clearly indicates that Republicans face the bigger political threat. A Wall Street Journal/NBC News survey found that 43% of those polled said the Republican Congress would be to blame if a budget stalemate forced a government shutdown. Another 32% said Clinton would be to blame; 18% blamed both sides equally.

In this, Republicans may be the victims of their own success. Traditionally, both parties are blamed for stalemate in Washington because voters’ hostility to incumbents often knows no party line. But now the GOP has convinced people that their party--not Clinton’s Democrats--is running the show in Washington.

“The President’s moved off center stage,” says Thomas Mann, an expert on Congress at the Brookings Institution. “They’ll both be seen as having failed, but the GOP Congress will take the bigger blame.”

“A lot of people last year were voting for change, and this confrontation is like the old politics,” says Gary Bauer, a conservative activist who heads the Washington-based Family Research Council.

The political burden being borne by the GOP may help explain why the first moves toward compromise came Monday from Senate Republicans--and why other Republicans worked full time to try to pin the blame for the impending fiscal crisis on Clinton.

It is remarkable that the political stakes have grown so large over two seemingly routine, short-term fiscal measures--a two-week extension of government spending authority and a monthlong extension of the federal debt limit. Later, the battleground will shift to a much more far-reaching bill that would reshape federal policy into the 21st Century.

That budget-reconciliation bill, which is expected to go to Clinton later this month, contains Republican plans to scale back Medicare, cut taxes and make scores of other changes in the federal government to try to balance the budget by 2002.

But Republicans and Clinton have gone to war over the short-term measures in part because they are linked to two issues--Medicare and balancing the budget--that are central to the images the two parties are trying to craft for themselves. Clinton has refused to engage in budget talks with Republicans unless they drop a proposal that would increase Medicare premiums Jan. 1; Republicans have refused to compromise unless Clinton agrees to a seven-year timeline for balancing the budget.

Democrats--and even some Republicans--are convinced that attacking the GOP plans for curbing Medicare growth has helped Clinton improve his standing in recent polls. That attack strategy was heightened when Clinton threatened to shut down the government over the Medicare premium increase.

“It’s clearly a ’96 strategy to make Republicans out to be a heartless party,” said Rep. Sherwood Boehlert (R-N.Y.). “Short-term, that gives him a big boost; long-term, people will see through it--I hope.”

Republicans think their political strength is their overarching goal of balancing the budget--not dwelling on the painful details of how to get there. Many see these must-pass fiscal measures as their last best hope of extracting from Clinton a commitment to balance the budget in seven years.

“This is not really an issue about a continuing resolution for 15 to 18 days,” said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.). “The issue is whether we’re going to get a real balanced budget--after all the effort we’ve put into it--or not.”

For Clinton and the Republicans, the faceoff is an opportunity to demonstrate to their party faithful that they are willing to stand up and fight for core principles. That is a more pressing political imperative for Clinton, whose reputation for compromising too easily is a big liability among liberal Democrats.

Indeed, Republicans portray Clinton’s confrontational budget strategy as a poll-driven desire to change his image. “Is the President’s pollster behind a government shutdown?” screamed a press release by the House Republican Conference.

But even on the Republican side, some GOP strategists say, forcing a shutdown helps shore up their own political base among conservatives who are suspicious that their principles will be sold out by the GOP leadership. “It helps us with our base, which continues to think we are not serious,” said a House Republican leadership aide. “They will look and say, ‘The revolution is alive.’ ”

“You have a group in our conference who could not care less if the government shuts down,” said Boehlert, a Republican moderate. “They will be cheering.”

And Gingrich suggested that whatever political price the GOP might pay for a government shutdown, it will be forgotten at year’s end if they deliver on promises to balance the budget, reform welfare and Medicare and cut taxes.

“By Christmas, people will think we’ve done a pretty good job,” he said.