800,000 Federal Workers Idled in Budget Impasse : Government: Little hope is seen for a quick end to the standoff. Clinton denounces Republican stance, while GOP depicts the President as intransigent.

Hundreds of thousands of government workers streamed home Tuesday amid predictions that the federal budget standoff would keep them from work for at least several more days.

As workers shuttered facilities from the Statue of Liberty to Alcatraz Island, congressional Republicans and White House officials said they saw little hope of a quick end to the fourth government shutdown in the last 15 years. While none of those have run longer than four days, some officials predicted that with its unusual rancor, this confrontation could set a record.

“Quite frankly, I’m discouraged,” House Majority Leader Dick Armey (R-Tex.) said of the shutdown that idled about 800,000 of the 2.1-million member civilian work force.

White House Chief of Staff Leon E. Panetta said that the two sides were “at an impasse,” while President Clinton denounced the Republicans for what he said was a plot to close down the government.

“The Republicans are following a very explicit strategy, announced last April by Speaker [Newt] Gingrich, to use the threat of a government shutdown to force America to accept their cuts in Medicare and Medicaid, to accept their cuts in education and technology and the environment,” Clinton declared.

Republicans rejected Clinton’s characterizations, noting that government spending actually increases under their budgets, although the rate of growth is cut significantly. They in turn blamed Clinton for precipitating the crisis by not making a realistic effort to balance the federal budget.

The shutdown order came after Clinton on Monday vetoed two short-term measures: one bill to allow continued federal spending and another measure that would have allowed the government to increase its borrowing.

Clinton contended he was compelled to veto the bills because they included language that would have forced destructive spending cuts, while the Republicans argued that these provisos were needed to assure that the federal government made real progress toward eliminating the budget deficit.

Late Monday, federal officials were holding out hope that the two sides could reach an agreement that would permit them to avoid the massive furlough Tuesday morning. But by midmorning, it was clear that no such agreement was in the cards, and officials at the budget office gave the order for so-called “nonessential” employees to head home.

Among those still at work were air traffic controllers, FBI agents and other federal law enforcement personnel, Amtrak workers, postal employees, safety inspectors and a skeleton work force of gardeners, stewards and chefs deemed necessary for the functioning of the White House. All active duty military personnel also remained on the job.

But the furloughs idled a huge share of employees at national parks and museums, and up to 99% of some agencies, including the Department of Housing and Urban Development. National Park Service employees headed into the backwoods to notify campers and hikers that they needed to clear out of the federal grounds.

Some federal employees were as unwilling as the campers to clear out.

It was a point of pride to have been chosen to remain at work. And at the White House, for example, “some people around here are having a hard time with the idea that they’re not essential,” one employee said.

But government lawyers insisted that even those furloughed employees who wanted to stay on should go home because of the legal liability the government would incur if something happened them.

Interim Legislation

In one sign that a long siege is expected, Republican leaders began talking about trying to pass special legislation that would fund operations of the Department of Veterans’ Affairs, the Social Security Administration and perhaps other services. Such a step would allow those organizations to process new applications for benefits--and presumably relieve popular pressure for an end to the shutdown.

But for just that reason, Clinton Administration officials began hinting that they probably would not go along. “That would relieve pressure, and we’re trying to build it up so we have momentum to end this disaster entirely,” one aide said.

Administration officials also warned that although the shutdown had gone smoothly in its opening day, the service cutbacks were likely to become an increasing burden.

“The longer this goes on, the more services will be disrupted,” said Laura D’Andrea Tyson, chief of the National Economic Council.

Republican officials hammered away at what may be their most politically appealing argument: that the President’s intransigence was a sign of his fundamental opposition to the deep cuts in spending growth rates that are needed for real deficit reduction.

“The issue here is not Medicare or Medicaid or welfare,” Senate Majority Leader Bob Dole (R-Kan.) said. “The issue here is a balanced budget.”

But Clinton tried to undercut those arguments Tuesday by insisting that he, too, was dedicated to a balanced budget--although not in a way that would harm the weak or choke off needed “investment” in social services and the economy.

Glimmer of Hope

There was one glimmer of hope in the talks between the two sides.

Both White House officials and congressional aides voiced optimism that they might find common ground on the economic assumptions they could use in their budgetary planning. While the issue seems technical, by using more optimistic assumptions about economic growth and government spending, officials could adopt a budget that requires far more modest cuts in services.

Congress has been insisting on a more conservative set of assumptions set out by the Congressional Budget Office, while the White House has argued for the more optimistic assumptions of the Office of Management and Budget.

But now, the Republicans have begun saying that they would consider revisions in CBO projections if they are justified by changes in economic conditions--not just in political demands to ease the pain of deficit reductions.

“We are willing to have the budget office look at intellectual arguments about why their projections need to be changed,” Gingrich said. He said there might be “legitimate” arguments about adjusting spending projections because of falling health care inflation.

That adjustment alone could be worth tens of billions of dollars, according to Senate Majority Whip Trent Lott (R-Miss.), and would reduce the amount needed to be cut from Medicare and Medicaid.

Early Tuesday, Clinton dispatched three of his top lieutenants--Panetta, Treasury Secretary Robert E. Rubin and Budget Director Alice Rivlin--to negotiate a settlement with congressional leaders, including Senate Budget Committee Chairman Pete V. Domenici (R-N.M) and House Budget Committee Chairman John R. Kasich (R-Ohio).

Although the immediate purpose of the talks was to find a way to end the fiscal crisis that had shut down the government, Republicans were eager to broaden the discussion to lay out the parameters of longer-range talks on their plan to balance the budget over the next seven years.

Gingrich suggested that if a compromise on the continuing resolution--which would extend the government’s spending authority--is not reached soon, the GOP may include another stopgap spending measure and debt-limit increase in the budget reconciliation bill that Republicans are hoping to pass by week’s end. Clinton has threatened to veto that far-reaching package because it includes Medicare changes and tax cuts that he opposes.

Key GOP Demand

The Republicans’ non-negotiable demand is that the President join the GOP in their commitment to balancing the budget in seven years. Without that, they are refusing to pass another short-term extension of government spending and borrowing authority.

But with an agreement from Clinton to pursue a seven-year budget-balancing plan, Republicans said they would be willing to drop from the continuing resolution the Medicare premium increase that Clinton opposes. “Everybody could walk away as a so-called winner,” said Sen. Don Nickles (R-Okla.).

But Administration and congressional negotiators emerged from an afternoon session Tuesday to announce that no progress had been made. Panetta said the two sides exchanged--and rejected--each other’s offers and counteroffers.

No further talks among these high-level officials have been scheduled, but Panetta said that staff members from both sides would continue to negotiate and that OMB and CBO budget analysts would discuss technical issues of economic assumptions.

In light of the impasse, Rubin said he would take steps today to keep the government from breaching the debt ceiling--moves that may include dipping into government trust funds to avoid default.

The proposals exchanged in the budget talks were a measure of how far apart the two sides are. Panetta asked Republicans to pass a continuing resolution and debt ceiling stripped of controversial riders, in exchange for a commitment by Clinton to balancing the budget by a date certain--using economic assumptions agreeable to both sides.

Republicans rejected that proposal and insisted in their response for a presidential commitment to balancing the budget in seven years using CBO assumptions. Panetta refused, saying he did not want to bind the negotiations to an “arbitrary timeline.” But he said the President was willing to consider a seven- to 10-year time frame.

Even as Congress struggled with the White House over a short-term spending bill that would end the government shutdown, Republicans continued their efforts to finish up a sweeping plan to balance the budget by 2002.

But lingering disputes over farm subsidies, health care and other matters continued to impede a House-Senate compromise.

“We had the courage to do what everyone in this Congress and everyone who has looked at budgets said we have to do,” declared Domenici in the opening meeting of the House-Senate panel that will try to iron out the lingering disputes this week.

Stumbling Block

A key stumbling block to finishing up the legislation, known as the reconciliation bill, has been a dispute over price supports for dairy farmers, with farmers from the Northeast especially unhappy about proposed cutbacks.

Another obstacle facing Republicans is a likely White House veto of the reconciliation bill, which would be sparked by the magnitude of tax cuts and Medicare restrictions, among other measures.

Times staff writer Jonathan Peterson contributed to this story.