THE FEDERAL BUDGET : Congress OKs Bill to Return Federal Employees to Jobs

Bowing to apparent public disgust over the longest government shutdown in the nation’s history, Congress approved legislation Friday to return 280,000 furloughed federal employees to work until Jan. 26 and fund several high-profile federal programs. President Clinton later signed the measure sending employees back to work.

The Senate and House acted despite GOP concerns that the reprieve will relax pressure on Clinton to negotiate a broader budget agreement.

The bill falls short of reopening the government because, although it pays the salaries of 780,000 federal workers, it does not include operating funds for many federal activities.

But Congress also passed, by voice vote, a second bill that would reopen the entire federal government until Jan. 26--paying both operating costs and workers’ salaries. But that bill will go to the White House and take effect only if Clinton accedes to Republicans’ long-standing demand that he submit a proposal for balancing the budget in seven years, using Congressional Budget Office estimates.

Clinton has refused to do so, but Republican leaders, after meeting with him at the White House Friday, said that they are hopeful that Clinton will produce such a plan soon, clearing the way for full restoration of government services. But, House Speaker Newt Gingrich (R-Ga.) cautioned: “He has not made a decision.”

The Senate passed the bill to return federal employees to work without operating funds by voice vote. The House passed the same bill by a 401-17 vote, with 15 Republicans and two Democrats opposed. The margin is a testament to the unpopularity of the government shutdown--and to the party discipline applied to Republicans by Gingrich, who made a stern appeal to his troops to accept a fundamental shift in GOP budget strategy.

Clinton later signed the bill that sends workers back to their jobs without operating funds, even though he said it “amounts to cruel and unusual punishment” because it leaves many federal services without funds. Under the bill, federal workers at affected agencies would return to work with pay but would not be able to spend federal money for such purposes as disbursing federal grants and contracts and purchasing equipment.

The measure includes operating funds, howver, for a small list of the government’s most popular and visible functions, including veterans benefits, national parks and passport processing.

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In another step toward easing the effects of the shutdown, Congress passed late Friday another bill that would restore operating funds for programs in another 17 agencies until Sept. 30, including law enforcement activities at the Justice Department, Medicare, Medicaid, the National Institutes of Health, the Peace Corps, the Centers for Disease Control and Prevention, black-lung disease benefits for coal miners and certain Native American programs.

The House approved the measure by a 344-24 vote and the Senate passed it by a voice vote. Clinton is expected to sign it.

After the votes, the House recessed until Jan. 23, when Clinton is scheduled to deliver his annual State of the Union message.

Republicans said that the bills passed Friday represent a new GOP strategy of reopening the government piecemeal, funding activities they like and starving programs they dislike.

They said that strategy was developed on the assumption that negotiations with Clinton over plans to balance the budget in seven years are going nowhere.

But Democrats said that the move to send federal employees back to work was a major concession from House Republicans, who formerly had refused to reopen the government until an agreement was reached with the White House to balance the budget in seven years.

“That represents a fairly huge shift over the last three days,” said White House Press Secretary Mike McCurry. “Now they’ve relented because I think, frankly, that strategy backfired on them.”

But Republicans said that they hope continued pressure on Clinton will yield concessions in negotiations with congressional leaders, which were to resume this afternoon.

The second measure approved by Congress--making the full restoration of government services contingent on Clinton submitting a balanced budget--is intended by GOP leaders to pressure the president to endorse a CBO-certified balanced budget. Clinton has offered only a budget that shows balance because it uses more optimistic economic assumptions than does CBO.

Early in the day, McCurry said that Clinton would not respond to that GOP demand.

But after meeting with Clinton late Friday afternoon, Gingrich told reporters in the Capitol: “It is our hope the president will submit a balanced budget by tomorrow or Sunday.” Dole said “there’s some reason to believe” Clinton may do so.

In another sign of potential movement in the talks, House Republican leaders gave a clear signal late Friday night that they would be willing to scale back their proposed savings in Medicare from the $201 billion over seven years called for in the last GOP budget plan to $168 billion. House Budget Committee Chairman John R. Kasich (R-Ohio) announced that he and a group of conservative Democrats had agreed to support that figure in negotiations independent of the White House talks.

The administration has called instead for $97 billion in Medicare savings.

Friday’s votes to return federal employees to work capped a week of rapidly changing budget dynamics that had put House Republicans increasingly on the defensive.

Senate Republicans broke with House GOP strategy Tuesday when they approved a bill to reopen the government temporarily while budget talks continued.

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A turning point in the House leadership’s change of course came, a top aide said, when Rep. Marge Roukema (R-N.J.) wrote a letter to Gingrich urging him to change strategy and bring up a measure to reopen the government. Fifteen House Republicans signed on to the proposal. That was a small number of potential defectors but it was enough to threaten the GOP leader’s control of the issue in the House, where Republicans outnumber Democrats by a 39-vote margin.

“The defining moment came when we understood there were about 30 Republicans prepared to vote with the Democrats” to reopen the government, the GOP aide said.

House leaders then drafted a plan to send employees back to their jobs until March 15 but failed to sell it to a rebellious GOP conference, during which many members complained that the move would be seen as caving in to the president. GOP leaders regrouped and revised the proposal.

The political problems of selectively reopening the government became immediately apparent to House GOP leaders as they began talking about putting together another bill that would provide targeted funding for additional programs. House leaders said they were deluged with requests from members to have their favorite programs included.

Times Washington Bureau Chief Doyle McManus and staff writer Paul Richter contributed to this story.

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Gridlock at a Glance

Key developments in the effort to end the federal government shutdown, which was in its 21st day on Friday:

* Congress passed legislation that would temporarily return 280,000 furloughed federal employees to their jobs but leave many government functions without money. President Clinton has agreed to sign the measure, but called it “cruel and unusual punishment” because it will not restore all services. The plan expires on Jan. 26.

* The plan will also pay 480,000 “essential” workers--federal employees who have been working without pay since Dec. 16--their full salaries retroactively.

* The legislation will reopen some government functions, including operation of the Smithsonian museums, national parks, the Meals on Wheels for the elderly, passport agencies and veterans compensation, through the end of summer.

* A second House plan, opposed by Democrats, would reopen the entire government through Jan. 26, but only if Clinton proposed a balanced budget with estimates certified by the Congressional Budget Office.

STICKING POINTS:

* Major issues still to be decided in the larger dispute over the federal budget include how deeply to slash taxes, and how much to cut Medicare, Medicaid and other social programs.

COMING UP:

* Weekend talks between congressional leaders and the White House over balancing the budget are likely.

* The House leaves for a two-week recess, returning Jan. 22.

“This Republican Congress has passed the line from reality into insanity,” -- House Minority Leader Richard Gephardt (D-Mo.).

Researched by D’JAMILA SALEM / Los Angeles Times