Negotiators Ease Their Way Out of Dying Budget Talks

With a deal to balance the budget increasingly out of reach, political leaders on both sides focused Thursday on how to pull the plug on budget negotiations while avoiding blame for derailing the process.

Republicans in particular spoke as if the negotiations were an episode of the past and dismissed President Clinton’s latest proposal, which was made public Thursday.

“This is nothing but a political document,” complained Senate Majority Leader Bob Dole (R-Kan.) “In my view, the president has already decided the talks are ended, and he’s started to lay the groundwork with this document for 1996, for his reelection bid.”

Indeed, a sense of resignation spread Thursday that the extraordinary, top-level effort to agree on a balanced budget was falling apart--even though no one wanted to pronounce it officially dead. Reasons cited included the pressures of this year’s presidential election and deep-seated ideological differences on health care, taxes, welfare and other issues.

“Like Elvis’ daughter and Michael Jackson, it now appears as though we have some irreconcilable differences,” said House Budget Committee Chairman John R. Kasich (R-Ohio), playing off of news reports that Lisa Marie Presley had filed for divorce from her pop-star husband.

White House officials contended that the two sides have agreed on more than $600 billion in savings, and repeated their invitation for Republicans to sign off on that much, at least.

In addition, sources said the administration has made overtures on tax policy, including the GOP goal of reducing the capital gains levy and easing taxes on the sale of homes held for at least three years.

Yet the president seemed to be sending a mixed signal to the other side. On Thursday he described a litany of deep policy differences dividing the two sides on Medicare, Medicaid, education and environmental regulation.

Then he added that a deal to balance the budget by 2002 remains in reach. “My door is open,” Clinton said. “It is open. It will stay open. I am committed to continue working with them until we get the job done.”

Republicans, also reluctant to look as if they are in the way of an agreement, sounded a similar refrain: “If he’d like to negotiate again, I’m sure we will be glad to,” said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), adding that Clinton would have to make fundamental changes in mandatory spending programs, such as Medicare.

Whatever the gap that divides the two sides, political analysts believe Republicans are reluctant to award Clinton the prize of a budget deal before his State of the Union speech scheduled for Tuesday.

White House aides have said the address will have an added partisan--and more confrontational--edge if there is no accord by then.

For their part, Republican leaders expressed extreme displeasure with the administration’s latest plan, which they said pushed too much of the cutting toward the end of the century and beyond, reducing the likelihood that it will be accomplished.

Increasingly, Republicans also have been talking about teaming up with Democratic conservatives to pass a bipartisan budget plan, or simply waiting until after the November election to plot the next move.

“Life goes on with or without a budget negotiation,” House Speaker Newt Gingrich (R-Ga.) said earlier this week.

At the same time, Republican leaders are faced with conflicting pressures as they consider the possibility of life with no budget deal.

The approaching Jan. 26 expiration of a temporary funding measure has raised a strategic predicament, with Republicans generally opposed to a broad shutdown, but still considering which programs to fund and for how long.

Many of the regular appropriations bills have been hung up by controversial riders--or amendments--carrying a conservative wish list: anti-abortion restrictions, regulatory limits in the environment and labor areas, and other contentious issues.

It will be a big defeat for GOP conservatives and concession to party pragmatists if those riders get stripped off. Domenici indicated that some of the fall-back budget strategies in the House won’t fly in the Senate.

“Our appropriators are going to make every effort to keep the government open, albeit at a lower level of funding than the president might expect,” he said. “And that’s probably the way we’re going. In the meantime, we’re working at trying to get the remaining bills passed by getting some of the riders off and the like.”

Also, frustrated hard-line members are taking issue with Kasich’s remarks on national television that the GOP was prepared to raise the nation’s debt limit with no strings attached.

Rep. Christopher Cox (R-Newport Beach) said that a conference call this week among GOP congressional leaders showed no support for Kasich’s argument that Republicans should not oppose an increase in the debt ceiling.

Cox also said that Republicans are confident they will be able to prevent Treasury Secretary Robert E. Rubin from using other federal assets to forestall the next crisis, which could occur by mid-February.

As some see it, a new, unexpected shock--such as a plunge in financial markets or voter backlash in public opinion polls--is the element that would be needed to salvage the budget negotiations.

“The chances are beyond murky. I think they’re gone,” said Stanley E. Collender, a budget expert in the Washington office of the Price Waterhouse accounting firm.

Optimists still believe that the two sides have more to lose by giving up on a deal than they have to gain. That is why nobody is willing to say that the process is finished.

“Neither side wants to cancel the party,” said Robert Reischauer, former director of the Congressional Budget Office and a senior fellow at the Brookings Institution. “Both sides want to appear that they have moved further than the other in trying to reach an accommodation--because they realize there is a big political price to be paid for failure.”

Times staff writers Janet Hook and Paul Richter contributed to this story.

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Revising the Budget

President Clinton insists he has gone more than halfway to compromise with congressional Republicans on balancing the federal budget. Not so, say the Republicans; they claim it is Clinton who is dragging his feet. What follows are summaries of how far each side has actually moved on four key issues since Clinton vetoed the budget that the Republican Congress sent him in November.

MEDICARE

Republicans’ initial budget: $226 billion in savings

Republicans’ last offer: $168 billion

Movement: $58 billion

Clinton’s initial budget: $97 billion

Clinton’s last offer: $124 billion

Movement: $27 billion

Remaining differences: $44 billion

Policy differences: Republican budget provides incentives for the elderly to use managed-care health programs, allows the elderly to set up tax-deferred accounts to meet future medical expenses, cuts payments to doctors and hospitals and raises premiums. Clinton proposes weaker incentives to move into managed care, opposes the medical savings accounts, makes smaller cuts in payments to doctors and hospitals and raises premiums less.

****

MEDICAID

Republicans’ initial budget: $133 billion in savings

Republicans’ last offer: $85 billion

Movement: $48 billion

Clinton’s initial budget: $38 billion

Clinton’s last offer: $59 billion

Movement: $21 billion

Remaining difference: $27 billion

Policy differences: Republican budget calls for turning Medicaid into a block grant to the states and eliminating the federal guarantee of benefits to all who qualify. Clinton has insisted on keeping the federal guarantee but has indicated willingness to give states more flexibility in administering the program.

****

WELFARE

Republicans’ initial budget: $64 billion in savings

Republicans’ last offer: $60 billion

Movement: $4 billion

Clinton’s initial budget: $38 billion

Clinton’s last offer: $41 billion

Movement: $3 billion

Remaining difference: $19 billion

Policy differences: Republicans propose turning welfare into a lump sum payment to states, eliminating the federal guarantee of benefits to all who qualify and imposing strict work requirements and a five-year limit on benefits. Clinton would retain the guarantee and impose a less restrictive five-year limit.

****

TAXES

Republicans’ initial budget: $245 billion in cuts

$17 billion in increases

*

Republicans’ last offer: $203 billion in cuts

$26 billion in increases

*

Total movement: $42 billion in cuts

$9 billion in increases

*

Clinton’s initial budget: $87 billion in cuts

$40 billion in increases

*

Clinton’s last offer: $101 billion in cuts

$55 billion in increases**

*

Total movement: $14 billion in cuts

-$15 billion in increases**

*

Remaining differences: $102 billion in cuts

$29 billion in increases**

Policy differences: Republicans’ top priorities are a $500-per-child tax credit and a reduction in taxes on capital gains. Clinton has endorsed more narrowly targeted child tax credit and informally indicated willingness to accept a cut in capital gains taxes.

** Clinton’s latest offer would raise $15 billion more via tax increases than his initial offer--a step in the wrong direction, Republicans say.

Source: Congressional Budget Office