White House, GOP Strive to Avert Another Shutdown : Budget: Negotiators report progress as deadline on renewing spending authority nears. But some Republicans renew threat to idle government.

Prospects for averting another government shutdown appeared to improve Tuesday as the White House and congressional Republicans began discussions on extending government spending authority, which expires Friday at midnight.

But Republicans are divided on how aggressively to use the threat of another shutdown in their budget battle with the White House.

The effort to avoid a replay of last month’s shutdown, affecting much of the government, came as political leaders resumed negotiations on a long-term plan to balance the budget amid possible signs that the deadlock might be starting to ease, at least slightly.

“We’re making some progress,” White House Chief of Staff Leon E. Panetta said after a brief meeting with congressional budget committee chairmen late Tuesday.

Earlier in the day President Clinton called Senate Majority Leader Bob Dole (R-Kan.) and House Speaker Newt Gingrich (R-Ga.) to urge them to work out a temporary spending measure that would enable the sides to continue their negotiations for a week, if not through the holidays.

House Republican leaders have resisted a short-term extension of spending and have talked brashly about their willingness to let parts of the government shut down unless Clinton makes significant concessions toward their seven-year plan to balance the budget.

But many other Republicans, including party leaders in the Senate, are less eager to pull the plug on the federal government, as happened last month when the budget showdown between Clinton and congressional Republicans forced much of the government to close for an unprecedented six days.

“There ought to be some way we can resolve [the budget crisis] without shutting down the government,” Dole said.

The jockeying revolved around two separate but related budget matters coming to a head this week. First, appropriations for major parts of the federal government are about to run out. Much of the government now is being financed under a stopgap spending measure, known as a continuing resolution, because six of the 13 appropriations bills needed to finance the government have not been signed into law. If that resolution, which lapses Friday, is not extended, those parts of the government--including the departments of Commerce, State, Education, Labor and other large Cabinet agencies--will be forced to shut down.

In addition, White House and congressional negotiators have entered their third week of talks in search of a compromise plan to balance the budget by 2002. A revised forecast by the Congressional Budget Office, released Monday night, appears to have partly bridged the gap between Republicans and the White House because it found that the two sides have possibly $135 billion more in government funding to work with in reaching a balanced budget under congressional estimates than previously thought.

Many Republicans said that they hoped the savings could be used to restore funding for Medicare, Medicaid and other domestic programs but analysts cautioned that increased spending on such entitlements risked creating a new deficit in 2002.

Neither Republicans nor Democrats have revealed how they would employ the savings toward bridging a gap that some still estimate in the range of $300 billion. Each side called on the other to put forth more detailed proposals. Throughout the slow-moving budget talks, Democrats have attacked GOP proposals to curb the growth of spending in Medicare, Medicaid and other entitlements, while Republicans have questioned Clinton’s claim to have offered a balanced budget.

Despite some conciliatory signals, Republicans remained divided over strategy for the budget battle. In contrast to Dole, House GOP leaders have been planning a strategy that could provoke a veto confrontation and a government shutdown. They are planning to attach a full-year extension of government spending authority to a revised seven-year budget plan.

Many Republicans argued that the threat of a government shutdown may be the last piece of leverage the GOP has over Clinton.

However, many Republicans are showing a great reluctance to expose themselves again to the public relations drubbing that they suffered in November, when many polls showed that the public blamed the shutdown on the GOP.

Times staff writers Paul Richter and Elizabeth Shogren contributed to this story.

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Number Puzzle

It is an apparent paradox: Under the new economic projections that the Congressional Budget Office formally presented to Congress Tuesday, budget deficits during the next seven years would be a cumulative $135 billion less than under the earlier CBO estimate of economic conditions. Yet the new projections do nothing to relieve the pressure to make enough spending cuts to reach the goal of a balanced budget in 2002.

The reason is that if the Congress opts to throttle back on spending cuts to take advantage of the new deficit estimates, it risks slipping off the trend line that it must be on to reach a balanced budget by 2002. The budget windfall from the new CBO projections occur entirely in the six years from 1996 through 2001. There is no windfall at all in 2002; by then, the CBO projects that lower inflation and slower growth in the labor force will reduce government revenues. So to balance the budget that year, Congress needs to keep reducing spending at a targeted rate.

The following chart shows the impact of the old and new CBO deficit projections on the Republican-drafted budget that President Clinton vetoed last week. Individual years add up to more than $135 billion due to rounding by the CBO.

YEARLY BUDGET DEFICITS (in billions)

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Old economic New economic Year assumptions assumptions Analysis 1996 -$178 -$151 Windfall 1997 -$189 -$159 from new 1998 -$149 -$127 projections 1999 -$118 -$97 occurs in 2000 -$100 -$73 the first 2001 -$46 -$34 six years 2002 +$4 +$3 No windfall at all in final year; in fact, surplus is less than under old projections.

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Sources: Congressional Budget Office, Times Washington Bureau