Budget Deal Reached to End 6-Day Government Shutdown : Finance: GOP goal of balanced budget by 2002 is preserved while Clinton aim of protection for some social programs is met. High-stakes battle over seven-year spending program is next.

President Clinton and Republican congressional leaders agreed Sunday to end a budget stalemate that had forced a partial government shutdown for six days and inconvenienced Americans nationwide.

The pact, achieved following a day of intense behind-the-scenes negotiations, paves the way for all of the 800,000 federal workers who were idled Tuesday by the budget impasse to return to work today.

But it does not resolve a still higher-stakes battle over the Republicans’ massive, seven-year budget-balancing plan. The agreement reached Sunday will keep the government operating through Dec. 15 while the struggle over the particulars of that plan continue.

The two-paragraph agreement commits both the President and the Congress to the GOP goal of a balanced budget by 2002. But it also incorporates language favored by Clinton on ensuring adequate funding for Medicaid, education, and other programs, as well as committing both sides to unspecified tax policies that would help working families and promote economic growth.

The Senate and House both adopted a one-day temporary measure Sunday evening to reopen the government following its longest interruption ever. The Senate also approved a bill providing short-term funding to keep the government operating through Dec. 15. The House planned to pass this measure today.

Leaders from both parties said they hoped to have enacted by that date all the regular spending bills for the 1996 fiscal year, which began Oct. 1. But first they will have to settle huge partisan differences over military spending and social programs.

“What we’ve agreed to in a very bipartisan, nonpartisan way . . . is a very satisfactory conclusion to what has been a rather tense situation the last couple of days,” Senate Majority Leader Bob Dole (R-Kan.) said as he announced the compromise on the Senate floor.

Shortly thereafter, President Clinton said at a news conference: “Tomorrow the government will go back to work, and now the debate will begin in earnest.”

He called the agreement “a good and somewhat unexpected development” and said it reflects “our principles.”

Amid rising anxiety about the nationwide impact of the government furloughs and shuttered national parks, museums and other facilities, the two sides agreed to language that allowed each to claim victory. Both also touted the terms as a framework for the budget talks.

The deal calls for the President and Congress to enact a balanced budget by the year 2002 based on the conservative economic projections of the Congressional Budget Office, “following a thorough consultation and review” with the White House Office of Management and Budget and other government and private experts.

This was the non-negotiable demand that Republicans made in exchange for approving a temporary spending bill to send the entire government back to work after stopgap funding expired Tuesday.

Republicans were euphoric about winning Clinton’s commitment to this goal. He had been vacillating in recent months between seven and 10 years as an acceptable timetable.

Dole and House Speaker Newt Gingrich (R-Ga.) were asked at a Capitol Hill press conference, “Who blinked?” Dole responded, “It’s seven years.”

At the same time, the White House gained some flexibility through broad language stipulating that a balanced budget must address the President’s concerns about the effect of spending restrictions on the elderly, the poor, the environment and education.

The final language stated that “the balanced budget must protect future generations, ensure Medicare solvency, reform welfare and provide adequate funding for Medicaid, education, agriculture, national defense, veterans and the environment. It also declared: “Further, the balanced budget shall adopt tax policies to help working families and to stimulate future economic growth.”

Clinton said the agreement “represents the first sign of [the Republicans’] willingness to move forward without forcing unacceptable cuts . . . on the American people.”

A major problem throughout the negotiations was a debate over which economic assumptions would be used to determine whether the budget plan was balanced.

The White House had preferred to rely on the assumptions of its own Office of Management and Budget, which are more optimistic than those of the Congressional Budget Office. This disparity is significant because it can mean a difference of hundreds of billions of dollars in revenue and spending projections for the next seven years. A rosier scenario would allow Clinton to preserve higher spending levels for programs he is seeking to protect.

The rounds of offers and counteroffers that led to Sunday’s deal kicked off when Panetta and senior Democratic lawmakers met with John R. Kasich and Pete V. Domenici in the Dole’s office to present two options to end the impasse.

On the table was a Republican proposal that called for the passage of legislation to wipe out the federal budget deficit within seven years based on the CBO’s projections in consultation with other outside budget experts, including the Office of Management and Budget. This was essentially the same language that the Republicans had submitted to the White House for consideration late Saturday.

Panetta said early Sunday that the Republican proposal was a step in the right direction. But before the White House signed on, the Democrats wanted to add language that the pact would be binding “if, and only if, the President and the Congress agree that the budget protects Medicare, Medicaid, education, the environment, and doesn’t raise taxes on working families.”

Clinton has charged that these programs are jeopardized under the Republicans’ massive seven-year budget plan to reduce taxes by $245 billion, while reducing the growth of spending by $2 trillion and balancing the budget by 2002.

The plan is the centerpiece of the Republicans’ ambitious efforts to shrink the size of government and shift power to state and local governments and Clinton has promised to veto it when Congress completes work on it. That is expected today.

Kasich and Domenici subsequently came back to the White House with a counterproposal that became the basis for the final negotiations.

The language that was adopted also called for protecting such Republican concerns as spending for defense and veterans; changed the reference to protecting Medicare to ensuring “solvency,” and modified the tax language to advocate “tax policies to help working families and to stimulate future economic growth.”

Kasich said Republicans also rejected another option offered by the Democrats to call the commitment to balancing the federal budget in seven years only a non-binding “sense of Congress.”

The tone of public debate was more civil Sunday than it had been the previous day, when the House ultimately recessed in an uproar following intense partisan exchanges.

“I would hope . . . we can find a way and reach out to one another,” Dole said as the Senate opened its first Sunday session in five years and only the 17th since the founding of the Republic.

At the same time, however, Sen. Phil Gramm (R-Tex.) one of Dole’s rivals for the 1996 Republican presidential nomination, said he opposed the budget initiative put forth by the Republicans on Saturday because it called for the review by outside experts of the CBO’s budget projections.

“I am opposed to letting the President assume away the problems so we can spend more money,” Gramm said on the CBS television’s “Face the Nation.” “What is being proposed here is that we back off our budget. I’m not prepared to do that.”

The temporary funding measure, known as a continuing resolution, is necessary because Congress has enacted only six of the 13 annual appropriations bills to fund the government for the 1996 fiscal year. Stopgap funding expired as of last Tuesday.

Two of the six spending bills that have been enacted into law were signed by Clinton early Sunday. One is for the operations of Congress itself; the other funds the White House, Treasury Department and Postal Service.

Clinton has the defense appropriations bill on his desk but is weighing a veto of it because it contains funds for $7 billion more in weapons than he is seeking. The other six spending bills are still pending in Congress.