Clinton Offers 2 New Proposals for Budget Talks

With a second federal shutdown underway and jitters spreading to Wall Street, President Clinton sought Monday to shake the budget negotiations from a deepening stalemate with two new proposals.

Four days before a scheduled congressional holiday adjournment, Clinton told Republican leaders he would accept their conservative economic assumptions and budget-balancing timetable in an omnibus spending plan if they would carve no more from Medicare and Medicaid than he has sought.

Alternatively, Clinton offered to begin negotiations almost anew, this time with his personal participation at the bargaining table and with no promise to use the congressional economic forecasts.

Senate Majority Leader Bob Dole (R-Kan.) promptly took to the Senate floor to welcome the move as a “step in the right direction,” although it was unclear whether he or House Speaker Newt Gingrich (R-Ga.) would accept either offer. The two may meet today with Clinton to discuss his proposals.

Clinton’s proposals would satisfy the Republicans’ recent insistence that the president provide a new spending blueprint that uses their cautious assumptions about economic growth and government spending requirements in the years ahead.

By stipulating that the Republicans accept his desire to limit future Medicare cuts in the growth of spending to $124 billion and similarly future Medicaid cuts to $54 billion, Clinton increases the pressure for the GOP to cut deeply into the $240-billion tax cut they have proposed.

That feature might bring a more favorable reception from Senate Republicans, who are less committed to a large tax cut. But the same feature could also prompt rejection from Gingrich, whose House supporters have been adamant about a deep cut called for in their “contract with America.”

Clinton told Dole and Gingrich of his latest proposals in late-afternoon telephone conversations. On Monday evening, Gingrich remained noncommittal, telling reporters: “We’re not discussing either option. We’re going down [to the White House] to talk.”

An aide to Gingrich scoffed at Clinton’s two options, saying they did not represent significant movement from his previous position. Clinton is in essence saying, the aide argued, that he would abide by their past agreement to balance the budget in seven years only if Republicans capitulate immediately on Medicare and Medicaid. He was referring to the language of a temporary spending measure adopted Nov. 20. That measure said the two sides would seek to balance the budget in seven years while protecting programs for the elderly, children, veterans, the environment and other groups.

And another senior Republican aide said the lack of a reaction from top Republicans suggested that neither of Clinton’s proposals was “in play.”

But earlier in the day, Clinton insisted on his eagerness to get to a deal, and acknowledged that the three leaders could wrap up a deal quickly. “All three of us have to want to. But I want to,” he said.

The latest offer came as the second partial government shutdown of the year moved into full swing Monday. About 260,000 federal employees from nine agencies were sent home around midday, when it was clear that the two sides would not immediately agree on a temporary spending measure that would cover the agencies’ expenses.

The rising pressures for a deal were visible in a stock market slide that some attributed to disappointment over the seemingly stalled progress of talks. The Dow Jones industrial average closed the day off 101.52, at 5,075.21--its biggest one-day drop in more than four years--in a slide that some analysts said partly reflected fears that absent a budget deal, the Federal Reserve Board would refrain from cutting interest rates today.

Republicans saw the slide as a consequence of Clinton’s lack of commitment to balancing the budget. “I call it the Clinton crash,” said Rep. Tom DeLay (R-Texas).

But some analysts said the market, now trading at very high prices, is poised for some retreat.

Democrats, meanwhile, met to work out a way for all wings of the party to come together behind a common spending plan. Aligning behind such a proposal reduces the chance that the Republicans will be able to pick off enough moderate and conservative Democrats to enact a plan over Clinton’s veto.

Sen. Barbara Boxer (D-Calif.) predicted that the Democrats would come up with a measure that would eliminate the deficit in seven years and use the GOP’s economic assumptions, yet protect Clinton’s favored spending priorities by paring back the tax cuts.

“The difference between us and them is the tax cut,” she said. “And it’s going to starkly make our basic point: It is unnecessary to deeply cut Medicaid, Medicare, education and the environment if you abandon your tax cut.”

House Republicans tried to send a message to Clinton on the subject Monday by bringing up for a vote a resolution calling for a seven-year balanced budget on the GOP economic terms.

The resolution passed overwhelmingly, 351 to 40, with 133 Democrats voting for it. It was a toothless measure that some Democrats dismissed as meaningless, but Republicans cited the vote as a signal to Clinton that many in his own party support GOP budget-balancing goals.

“The earth is shifting under the White House now,” said House Budget Chairman John R. Kasich (R-Ohio).

Rep. Gary A. Condit (D-Ceres), a leader of conservative Democrats who supported the resolution, said the message to the White House was to accept the more conservative Congressional Budget Office numbers so they could “get to the real substance of the debate.”

Dole suggested that if the budget talks do not make progress by Friday’s scheduled holiday adjournment, the Republicans may give up efforts to reach a long-term budget plan and try to force Clinton to accept a temporary spending measure that would sharply curtail spending for some agencies through the end of the fiscal year on Sept. 30.

But Gingrich raised a possibility that would be equally unpleasant to many members: remaining in session through Christmas week.

“For us to walk off now and take a vacation, giving up on balancing the budget, would be a tragedy that would haunt us the rest of our lives,” Gingrich said.

The governmentwide furlough forced NASA scientists Monday to postpone plans to unveil the first scientific discoveries about Jupiter, beamed back by the space agency’s Galileo probe. Scientists had planned to make public today the data recorded during the probe’s fiery 57-minute descent through the giant gaseous planet’s upper atmosphere last week. The release of the data was scheduled at NASA’s Ames Research Center in Mountain View, Calif.

Clinton on Monday also vetoed two more appropriation measures, and aides said he will veto a third today.

Rejected were spending bills covering expenses for the departments of the Interior, Veterans Affairs and Housing and Urban Development, and the Environmental Protection Agency.

Clinton cited, among his objections, a 21% reduction in spending for the EPA; elimination of the Americorps national service program; $400 million less than he sought for veterans programs; environmental provisions that he said will favor developers, and language that would permit clear-cutting in the Tongass National Park in Alaska.

Clinton will veto the third bill, which provides money for the departments of state, justice and commerce, at a ceremony today. The veto will mean he has rejected nine bills in his three-year tenure.

* STILL WORKING: Many federal employees in O.C. are staying on the job. A29