Budget Talks to Resume on Down Note

White House and Republican congressional leaders will end a one-week break in budget talks and resume negotiations today amid bleak forecasts about chances that the two sides will resolve their deep differences on eliminating the deficit in seven years.

Even as White House officials announced today’s planned meeting, they were notably downbeat. White House Chief of Staff Leon E. Panetta said that he is pessimistic about achieving a budget agreement and that the two sides “are reaching the point where neither side is going to give.”

Senate Republicans warned that there would be little to discuss unless President Clinton offers new compromises on spending and taxes.

“The ball is in the administration’s court,” said a Senate Republican aide. “If they want to move ahead toward a balanced-budget agreement, then they can lay something on the table.”

House Speaker Newt Gingrich (R-Ga.) confirmed that he will attend the session at the White House but noted that Republicans have “had no indication of any movement on their part so far.” The on-again, off-again talks were suspended Jan. 9, after repeated meetings failed to yield a breakthrough.

An immediate issue facing both sides is the Jan. 26 expiration of a temporary funding measure that covers activities within nine Cabinet agencies--Commerce, Justice, State, Interior, Labor, Education, Veterans Affairs, Health and Human Services, and Housing and Urban Development. But a broad shutdown no longer is expected.

House Budget Committee Chairman John R. Kasich (R-Ohio) signaled Sunday that Republicans have grown weary of shutting down so much of government and of threatening a national default by refusing to raise the legal debt limit.

“I think the [GOP] leadership is in sync on this,” a Senate budget aide said Tuesday.

Rather, the conflict appears to be entering a chaotic stage as Republicans become highly selective in funding some programs and not others--a tactic intended to pressure the White House.

Administration officials acknowledged Tuesday that deep philosophical divisions continue to block a budget deal, thus raising the likelihood that Republicans will try to impose a new strategy of piece-by-piece appropriations in coming months.

Such stopgap funding could mean deep 25% cuts for many programs, Panetta told reporters.

One byproduct of a standoff would be that Clinton would deliver a “more confrontational” State of the Union Address on Tuesday, he said. In the speech, Clinton would contrast his defense of Medicare and other social programs with Republican proposals for deep cuts in the growth of the programs.

Panetta predicted that “Republicans are not going to want to give us an agreement” before the State of the Union Address and said that, if no agreement is reached this week, “both sides will be talking exit strategy.”

Although the administration and Republicans each have offered plans to balance the budget by 2002, they differ in numbers and policies. Ideological disputes between the two sides center on taxes, cost-saving approaches to health care and welfare reform. The possibility that the talks will fall apart is increasingly accepted among Republicans who have voiced frustration at what they see as the lack of compromise from Democrats.

Democrats, including some administration officials, have suggested that negotiators sign off on a limited budget deal and leave the more divisive matters to be fought out in the November election.

Times staff writer Jack Nelson contributed to this story.