Another Shutdown Looms as Budget Negotiations Falter : Government: U.S. agencies prepare to reduce activities. But the impact won’t be as severe as the first closure.

The federal government prepared for a partial shutdown Saturday for the second time in four weeks, as high-profile talks to balance the budget fell apart amid angry complaints by Republican and Democratic negotiators.

“The cuts they [Republicans] propose would deprive millions of people of health care--poor children, pregnant women, the disabled, seniors in nursing homes,” President Clinton said Friday. “They would let Medicare wither on the vine into a second-class system. And these things simply are not necessary to balance the budget.”

For their part, Republicans scolded the White House for relying on “smoke and mirrors”--gimmicks--to achieve the false appearance of a balanced budget by 2002.

“They just want to use optimistic rosy scenarios and cook the books,” charged Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) after the afternoon session with administration representatives and congressional Democrats broke off abruptly.

The breakdown of the talks torpedoed efforts to pass a separate, temporary spending bill required to fund part of the government beyond midnight Friday. Lacking passage of such a measure, nine Cabinet departments and many other agencies prepared to halt nonessential activities. But the major effect would not be felt until Monday, when most of the 280,000 furloughed workers normally would report to work. Over the weekend, the most apparent effect of the shutdown would be the closure of national monuments and museums.

The number of workers to be furloughed is substantially smaller than the 800,000 workers affected by last month’s six-day closure, largely because Congress has passed funding for the Defense Department, along with several other agencies. Many employees at the departments of State, Health and Human Services, Labor, Education, Interior, Justice and others would be affected again, however.

It was not clear when a shutdown might end, although some in Congress were hoping that a deal might be reached with the administration within the next few days. Some Democrats chided Republicans for failing to achieve passage of the needed spending bills.

“If they don’t submit these things, then there’s absolutely no way the government’s going to start again,” a House Democratic aide said. “The president can’t do it by fiat.”

The latest impasse focused attention on a potentially pivotal coalition of 21 House Democrats dubbed the Blue Dogs, whose moderate-to-conservative views could form the basis of an alternative budget scheme. The group, being courted by both sides, was planning to meet with Clinton this weekend to discuss the budget.

“We want to talk to anybody who wants to be constructive about the goal of reaching a balanced budget,” said a spokesman for Rep. John Tanner (D-Tenn.), adding that “there seem to be some in both parties who would submarine the deal.”

White House officials seemed resigned to the second shutdown on Friday evening. “We are where we are,” one said. And if there were a peace feeler Friday night “it wouldn’t be coming from here.”

White House officials said that while there might be no new meetings with the Republicans over the weekend, administration officials would be at work trying to develop a unified position for the disparate wings of the Democratic Party.

While the temporary spending bill to avert a shutdown and the long-term spending plan are technically separate matters, they have become inextricably linked in the budget politics now dominating Congress. Many House Republicans said that they would not offer a temporary spending bill unless the administration comes up with what they view as a serious plan to eliminate the deficit in seven years.

The acrimonious day had started on a more upbeat note, as both sides prepared to resume negotiations after days of stalemate. At noon, Republican leaders and White House officials sat down behind closed doors in the Capitol and swapped proposals.

But it became immediately clear--even with new estimates from the Congressional Budget Office that narrowed their differences--that the sides remained more than $200 billion apart and still had sharply different assumptions about the future performance of the economy.

“Kasich’s face turned white” when Clinton’s plan was unveiled, one witness recalled, referring to House Budget Committee Chairman John R. Kasich (R-Ohio), who is one of the GOP negotiators.

While the White House said that it had added $121 billion in savings from its previous budget plan, Republicans only accepted about $40 billion as real savings. Much of the rest was in the form of economic assumptions that are more optimistic than those held by the Congressional Budget Office.

Democrats, meanwhile, were disappointed that the GOP proposed shrinking its tax cut only by $5 billion and remained unhappy with the deep cuts that Republicans seek in an array of domestic programs, including health care, welfare and education. While major gaps continue to separate the two sides, Republicans on Friday offered to ease some of their recommended curbs in spending, by putting $24 billion back into Medicare, $16 billion back into Medicaid and $25 billion back into other domestic programs.

“Right now the rifles are cocked and everyone is pointed at each other,” said Sen. Frank R. Lautenberg (D-N.J.). He characterized the newest GOP budget proposal as “insignificant.”

“We’re just wondering when the other side is going to move just a teeny little bit--in a real way,” Kasich said.

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Key differences remain over the magnitude of tax cuts, with the Republicans advocating $240 billion in relief and Clinton proposing a figure under $100 billion, as well as over savings sought for Medicare and Medicaid, with the White House seeking almost $200 billion more than the GOP in spending for those two programs alone.

“They said they would not even continue to talk unless we agreed right now to make deep and unconscionable cuts in Medicare and Medicaid,” Clinton said on television after the talks ended. “That’s unacceptable.”

Times staff writers Janet Hook and Paul Richter contributed to this story.