Hopes Build for Compromise on Balanced Budget

In an abrupt switch, congressional Republicans and White House officials have agreed to step up the intensity of their budget negotiations in the hope that a sweeping compromise can be reached soon, GOP leaders announced late Wednesday.

Negotiators are “very hopeful that we will make substantial progress toward a balanced budget,” said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) after a day of closed-door meetings and telephone calls involving all parties in the stubborn conflict.

At the White House, spokesman Barry Toiv said: “We expect serious negotiations on Friday. This is what the president has wanted.”

“It’s now clear that the White House is prepared to be serious in these discussions,” said an aide to House Speaker Newt Gingrich (R-Ga.).

The possibility of a thaw in the chilly impasse over balancing the budget in seven years came as the White House Office of Management and Budget prepared to furlough 280,000 federal workers should Congress and the Administration fail to agree on a short-term spending plan by Friday. Republicans did not say how the stepped-up negotiations would affect the prospects of avoiding furloughs.

Congressional leaders said late Wednesday that the new round of budget talks would run all day Friday and continue through the weekend and into early next week, a dramatic contrast to the on-again, off-again pace of talks so far. The sense that budget talks were entering a more promising stage emerged during a meeting that included Domenici, Senate Majority Leader Bob Dole (R-Kan.), White House Chief of Staff Leon E. Panetta and Senate Minority Leader Tom Daschle (D-S.D.).

Republicans declined to give details of any concessions by either side but said that they would have further announcements today. A significant gulf continues to divide the two sides, according to a new analysis of the Administration budget plan released by the Congressional Budget Office late Wednesday. Clinton’s plan, rather than balancing the budget, would create a $115-billion deficit in 2002, according to Republican congressional aides familiar with the new CBO economic assumptions, which are more conservative than those being used by the White House.

Overall, the CBO said that the administration plan falls $350 billion short in the savings that would lead to a bona fide balanced-budget plan over seven years, according to the congressional aides.

“Obviously, we have a long way to go,” Domenici said, adding that “we are pleased that we’re now going to join together with” the administration in serious discussions.

Earlier Wednesday, House Republican leaders demanded that President Clinton come up with a new balanced-budget plan by the end of the week as a condition of keeping the government open after Friday, when temporary spending authority for many government agencies will expire.

“That is a very important next step,” Gingrich said. “They owe the country a CBO-scored, seven-year balanced budget by Friday.”

However, White House officials said they would not produce another budget plan until Republicans make a move. They want the GOP to produce another proposal in light of new economic assumptions that could allow about $135 billion more in spending while still balancing the budget over seven years.

“The next move is Republicans’ laying down their offer,” Panetta said.

Clinton has maintained that his own spending plan would balance the budget in seven years, but he has relied on the more optimistic assumptions of the White House OMB.

Republicans set a target for wrapping up the talks of Friday--the day that government spending authority expires for the many federal agencies whose 1996 appropriations have not been approved. If an extension of appropriations, known as a continuing resolution, is not passed by Friday, those agencies will be shut down except for essential personnel.

Gingrich said Wednesday that he would be willing to extend spending authority through Monday night. But that would happen only if the White House produces by Friday a new budget that would eliminate the deficit based on the CBO’s new economic assumptions, he said. At the same time, Gingrich said, Republicans would release a new version of their budget, revised in light of the new CBO forecasts.

“We’ll be prepared to swap budgets with them on Friday,” Gingrich said.

The speaker said he does not want any longer extension of spending authority “because we need an incentive plan to have real work every day.” Without such pressure, he said, the administration “could easily dawdle until sometime around Easter.”

Dole said he prefers a longer extension of spending authority and that he would be willing to continue the search for an agreement over Christmas week if one is not reached by the end of next week.

“We need a little longer time to get down to brass tacks,” the majority leader said.

In a separate budget development, Congress on Wednesday moved to finish work on one of six appropriations bills when the House approved a measure providing $12.2 billion for the Department of the Interior and related agencies. The Senate is expected to act soon on the measure.

Clinton has threatened to veto the bill because it includes too little money for energy, Native American and arts programs, and because it includes provisions affecting logging in Alaska and other proposals that the administration objected to on environmental grounds.

Meanwhile, Treasury Secretary Robert E. Rubin explained his plans to continue avoiding default even though the government is operating near the limit of its legal borrowing authority. Later this month, he said, Treasury will hold off issuing new securities to the Civil Service Retirement and Disability Fund, a move that would increase the debt level.

Rather, Treasury in effect will issue IOUs, a bookkeeping move that does not count against the debt limit. The action will help stave off a default into early February at least, and Rubin vowed to find a way to avoid default at that time if Congress and the White House have not yet agreed on a measure to raise the debt ceiling.

“I will do everything in my power to avoid default and I believe we will find ways to take this further,” Rubin said in congressional testimony.