THE BUDGET BATTLE : Rubin Warned on Debt Maneuvering

Three former Treasury secretaries have cautioned Secretary Robert E. Rubin against taking the “fateful step” of acting further to circumvent the nation’s statutory debt limit.

Nicholas Brady, James A. Baker III and Donald Regan made the assertion in a letter to Rubin released Friday, one day after the chairman of the House Rules Committee threatened to begin impeachment proceedings against him if he continues extraordinary steps to avoid exceeding the $4.9-trillion ceiling on the national debt.

Replying to the former GOP secretaries Friday, Rubin defended his actions as “infinitely preferable” to default and accused congressional Republicans of undermining the nation’s credit standing for political gain.

Faced with a refusal by the Republican-led Congress to lift the limit on government borrowing unless a balanced-budget agreement is reached, Rubin has sidestepped the limit since mid-November by taking unusual measures. Those have involved shifting money out of government trust funds and withholding a payment to one fund.

He has said that those measures would allow the government to both avoid exceeding the debt ceiling and ward off a default until at least early February.

In the letter to Rubin, the three former officials, who served Presidents Reagan and Bush, expressed concern about the potential for further action.

“It now appears that by the beginning of February you will be required to take broader actions . . . to avoid the effect of the statutory debt limit,” the letter said.

“This will be a fateful step, and one that could, in our view, raise serious legal, perhaps even constitutional, issues.”

They said Rubin should avert the crisis by using his influence to persuade President Clinton to agree to balance the budget in seven years.

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In his reply, Rubin suggested the three former secretaries persuade Republicans in Congress to stop using the debt limit to pressure the administration into accepting GOP budget priorities.

“It is wrong and dangerous for anyone to use the credit-worthiness of this great nation as a tool to achieve their side of any policy debate,” Rubin said.

In a separate development, members of a House Republican task force looking into Rubin’s efforts to avoid default met Treasury officials Friday.

“They stonewalled us,” said Rep. John Mica (R-Fla.), after the meeting with the Treasury officials. He added the task force would seek House approval of a rare resolution of inquiry--a mechanism for getting specific information in writing from an executive agency.

Members of the group say Rubin was skirting the Constitution, which gives Congress authority over fiscal matters.

Meanwhile, Democrats in Congress harshly criticized Rules Committee Chairman Rep. Gerald Solomon (R-N.Y.) for suggesting that Rubin could be impeached for violating the Constitution’s grant of borrowing power to Congress.

The threat, along with Republicans’ cancellation of a budget-bargaining session with Clinton, sent bond prices plunging on Thursday, pushing the 30-year yield to 6.03% from 5.95% on Wednesday.

* UNEMPLOYED NUMBERS

Government shutdown delays a critical economic report. D2