THE BUDGET STALEMATE : GOP Fails to Muscle Clinton Into a Deal

As the budget impasse drags on, the principal levers that congressional Republicans hoped would force President Clinton into accepting a deal increasingly appear to be too weak to accomplish the task, strategists in both parties say.

For most of this year, congressional Republicans have anticipated that they could compel Clinton to accept a budget drafted to their specifications by closing down the government or eliminating its ability to borrow money. But both of these weapons appear to have fizzled.

Treasury Secretary Robert E. Rubin has found ways to continue borrowing money without an increase in the federal debt ceiling. Meanwhile, the nearly three-week partial shutdown of the federal government, while producing scattered problems, does not seem to be generating enough public discomfort so far to force either side to significantly alter its position in the underlying negotiations on how to balance the budget by 2002, pollsters in both parties say.

“It is a strange interlude,” says Floyd Ciruli, a Democratic pollster in Denver. “The shutdown is not a topic of everyone’s conversation.”

Onus on GOP

Even to the extent that anxiety over the shutdown is increasing, private polls recently conducted by both parties show that Americans are more likely to blame Republicans than Clinton for the impasse. Largely because of that, even if the budget standoff bites more deeply, the pain is as likely to sharpen divisions among Republicans as it is to prod Clinton toward making major concessions.

Overall, the maneuvers that the GOP expected to drive Clinton toward concession “are clearly not as potent as Republicans have hoped,” says Allen Schick, a budget expert at the Brookings Institution in Washington.

This equation could change in the weeks ahead if the public grows more concerned about the shutdown or if congressional Republicans make a more concerted effort to prevent the Treasury from borrowing new money to fund the government. But even some conservatives now concede the party was overly confident that Clinton, who has a reputation for waffling, would cave in to Republican demands to avoid a prolonged confrontation.

“They all bet on what they assumed was Bill Clinton’s inability to take a stand on anything,” said one GOP consultant.

The frustration of the GOP’s tactical maneuvers does not eliminate the possibility of an accord on balancing the budget. But no outside force can compel an agreement. If a deal comes, it will do so only if both sides conclude that they are politically better off with a compromise than without one.

Yet the political calculations for both parties in this dispute are so complex and contradictory that the politics, too, may be insufficient to force agreement on the thorny policy issues dividing the parties, many close observers say.

Many congressional Democrats fear that reaching an agreement could undermine their ability to run against the Republican budget plan next fall and virtually foreclose their prospects of regaining control of the House. Conversely, some advisors to Senate Majority Leader Bob Dole (R-Kan.) fear that a deal with Clinton would remove from the table many of the GOP’s most powerful issues for the 1996 presidential election, including welfare reform, taxes and spending.

And while each party fears being blamed for a breakdown in the negotiations, they may be even more fearful of reaching an agreement that alienates their core supporters. “There is not enough pressure out there to make either side get crosswise with their base,” insists one senior Republican Party operative, who is increasingly pessimistic that a deal can be struck.

Republicans hoped to create that pressure by linking their balanced-budget plans to the government’s most basic functions: the ability to raise and spend money.

In a September speech to an association of government bond traders, House Speaker Newt Gingrich (R-Ga.) said he was willing to accept an unprecedented default on the government’s debts if that was the cost of forcing Clinton to accept a balanced-budget plan. “I don’t care what the price is. I don’t care if we have no executive offices and no bonds for 60 days. Not this time.”

Congressional Republicans structured legislation in November to extend the ceiling on federal borrowing in a way that maximized pressure on Clinton to accept a balanced budget by December. But Clinton vetoed the measure after Rubin concluded he could continue to borrow anyway through a complex maneuver that involved tapping billions of dollars from two federal trust funds.

Through these steps, Rubin has freed enough funds to cover federal borrowing through the end of January. Treasury Department officials now say they are optimistic that they will find ways to continue borrowing for at least several weeks beyond that.

The second source of pressure that Republicans hoped would force Clinton to accept their priorities was a shutdown in the federal government. But the first shutdown, in November, ended after six days with only an elastically worded agreement between the two sides that did not meaningfully change the dynamics of the standoff.

Where’s the Fire?

The second partial government shutdown, now nearing three weeks, so far appears to be generating less public unease and attention than the first. Beyond the obvious hardship on federal workers not receiving their paychecks, the shutdown has created some hassles, such as a backlog in passport applications. And as Clinton declared Wednesday, more troublesome consequences may be ahead, including curtailment of Meals-on-Wheels programs for the elderly and Federal Emergency Management Agency activities.

But the shutdown has not affected many of the most visible things that government does, from providing Social Security checks to delivering the mail.

“Initially the shutdown played badly for everybody concerned,” said Karl Rove, a Republican political consultant in Austin, Texas. “But now . . . planes are flying, people are getting their benefit checks and people are asking: What does it mean to me?”

Indeed, in a Republican poll in late December, 75% of Americans said the shutdown has had no direct effect on their lives.

That so-far limited effect may explain why House Republicans feel comfortable refusing to fund the closed agencies until Clinton signs on to a balanced-budget deal. But it also explains why the shutdown has not more substantially increased pressure on Clinton to reach agreement with them.

Many House Republicans still believe the shutdown constitutes an effective lever against Clinton.

Senate Plan Rejected

On Wednesday, the House pointedly rejected the legislation the Senate approved Tuesday to place federal workers back on the job. But the Senate vote reflected a sense among some Republicans that the value of the shutdown as a weapon in the talks is steadily depreciating and thus is not worth whatever public anger it produces.

“The symbolic value of the government shutting down and its related leverage in the negotiations process appears to be fizzling,” said Republican media consultant Mike Mihalke.

Likewise, the financial markets have exerted less pressure on Clinton than many conservatives had hoped. When the stock market dropped over 101 points Dec. 18, some Republicans expressed optimism that a decline might force Clinton to move more quickly. But over the past two weeks, the market has more than regained that lost ground.

Other political calculations also push toward agreement. Both Clinton and congressional Republicans appear eager to claim credit for balancing the budget. “A deal would help Clinton and the Republicans in Congress,” says GOP pollster Frank Luntz. “It helps incumbents.”

Likewise, both sides are leery of being blamed for a failure to reach a balanced budget. “The exit strategy is tricky for both sides,” says one administration official.

These forces are enough to keep the negotiators in the room. But whether they will be enough to bridge the policy differences remains the most perplexing question in the capital.

Times researcher Janet Lundblad contributed to this story.