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


President Clinton and Republican congressional leaders on Sunday ended the budget deadlock 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.

In Orange County, thousands of federal employees at federal agencies--including the Internal Revenue Service, Social Security Administration and the Immigration and Naturalization Service--will return to work after being furloughed almost a week ago.

Many of the 14,000 Orange County federal employees were sent home last Tuesday when a budget impasse shut down “nonessential” portions of the government. Workers interviewed at the time said they left their jobs unsure of when they would get their next paycheck. Many citizens seeking federal services arrived to an empty building and left feeling frustrated.


The agreement that returned federal workers back to their jobs, however, does not resolve a higher-stakes battle over the Republicans’ massive seven-year budget-balancing plan, a fight that will now commence in earnest.

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 Congress and the President 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. Clinton signed that bill Sunday night.

The Senate also approved a bill providing short-term funding to keep the government operating through Dec. 15. The House planned to pass the 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 substantial partisan differences over military spending and social programs.

The temporary funding measure, known as a continuing resolution, was necessary because only six of the 13 annual appropriation bills to operate the government for the 1996 fiscal year have been enacted.

Two of the six spending bills were signed by Clinton early Sunday. One is for the operation of Congress itself; the other funds the White House, Treasury Department and Postal Service.

Clinton has a seventh spending bill, for the military, on his desk but is weighing a veto.

Left untouched by Sunday’s action was the problem created by the fact that the government has bumped up against the $4.9-trillion ceiling for the national debt. The Treasury Department has solved the problem temporarily by dipping into two trust funds for government worker pensions, but even Treasury Secretary Robert E. Rubin, who came up with that technique, has deplored the need to use it.

At the same time, both Republicans and Democrats seemed visibly relieved Sunday to have resolved their stalemate over spending, an impasse that had fueled anxiety about the nationwide effects of the government furloughs and shuttered national parks, museums and other facilities.

“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, Clinton told reporters, “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.”

In the end, the two parties agreed to language that allowed each to claim victory. Each also touted the terms as a framework for the impending budget battle.

The deal states that the President and Congress “shall 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 had 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 news conference, “Who blinked?” A smiling Dole responded, “It’s seven years.”

At the same time, the White House gained 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 sticking point 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 could 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 White House Chief of Staff Leon E. Panetta and senior Democratic lawmakers met with the congressional budget committee chairmen, Sen. Pete V. Domenici (R-N.M.) and Rep. John R. Kasich (R-Ohio) in Dole’s office to present two options to end the impasse.

They used as a jumping-off point a Republican proposal that called for the passage of legislation to wipe out the federal budget deficit within seven years. It would be the job of the Congressional Budget Office to certify that the goal had been met.

Panetta said early Sunday that the Republican proposal was a step in the right direction. But, before the White House would sign 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’ seven-year budget plan to reduce taxes by $245 billion, while trimming the projected growth of spending by more than $1 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 returned to the White House with a counterproposal that led to the pact.

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 its “solvency,” which has been the Republicans’ avowed goal and modified the tax language to more closely echo the Republicans’ proposed tax cuts for families and capital gains.

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

The tone of public debate was more civil Sunday than it had been Saturday, 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.

Times staff writer Thao Hua also contributed to this report.