Armey Signals New Budget Confrontation

House Majority Leader Dick Armey (R-Texas) warned Sunday that the House will not raise the federal debt limit that allows the U.S. government to pay its bills unless President Clinton accepts a “substantial” share of the conservative GOP agenda.

“I don’t think it would pass” unless it contains GOP measures “decreasing the size and intrusiveness of government,” Armey said.

Armey’s statement, made as Congress prepares to reconvene today, suggests that conservative House Republicans may be ready to confront the Clinton administration again on another fiscal front, despite having to abandon the partial government shutdown as a tactic for winning a favorable compromise in negotiations over the federal budget.

There were indications, however, that Armey and his allies might have difficulty making the tough position stick. Only last week, House Budget Committee Chairman John R. Kasich (R-Ohio) said Republicans would pass a debt-limit extension by Feb. 15. And a leading Senate Republican, Trent Lott of Mississippi, said Sunday that the debt-limit measure would not be saddled with conditions that would provoke Clinton to veto it.

Thus, the threat seemed to be a reflection of divided opinion among Republicans on how to proceed as the budget stalemate with Clinton drags on. It also showed little easing of partisan passions over the holiday recess.

GOP congressional leaders, including Armey, have already said there will be no new move to shut down federal agencies when the next of a series of budget negotiation deadlines expires this week. Until Armey issued his warning, Republicans and the White House had seemed to be moving toward agreement on raising the debt ceiling.

Raising the borrowing limit to cover outstanding obligations is normally a routine procedure in Congress, but it was caught up in the partisan budget siege last fall.

Since then, Treasury Secretary Robert E. Rubin has been diverting money from two retirement funds for federal employees in order to prevent a default on payments. He has said he will have to use more extraordinary measures unless Congress raises the $4.9-trillion limit before Feb. 15, when interest due bondholders will push the federal debt beyond that mark.

But Armey, speaking on NBC-TV’s “Meet the Press,” said that “John Kasich’s willingness to vote for it to the contrary, it’s not coming through the House unless it carries with it something that is a substantial share of our agenda of decreasing the size and the intrusiveness of government.”

He said he would like to attach conditions terminating the Commerce Department and restricting Treasury secretaries from using employee retirement trust fund money to avert federal defaults.

White House Chief of Staff Leon E. Panetta immediately denounced the idea.

“Let’s not play games with the future of this country or the economy of this country,” said Panetta, who also appeared on the NBC program. “Raising these kinds of blackmail approaches to try to get their agenda adopted just has not worked. It’s been a disaster.”

Lott, speaking on ABC-TV’s “This Week With David Brinkley,” sounded a less-threatening note than Armey, saying that while the debt-ceiling legislation might not pass Congress “clean” of conditions, as the White House insists, it should not be confrontational enough to prompt a Clinton veto.

In November, Clinton vetoed a debt-extension measure saddled with spending restrictions.

On another highly contentious issue, Sen. Alfonse M. D’Amato (R-N.Y.), appearing on “Meet the Press,” said he saw nothing inappropriate in holding a high-profile position in Senate Republican leader Bob Dole’s presidential campaign at the same time he is leading the investigative hearings into the roles of the president and First Lady Hillary Rodham Clinton in the controversial Whitewater real estate project.

Of his campaign work and Whitewater committee chairmanship, D’Amato, who campaigned door to door for the GOP front-runner in New Hampshire on Saturday, said that “one has nothing to do with the other.”

He also said he will seek more money to extend the Senate Whitewater probe for several months beyond the committee’s scheduled Feb. 29 conclusion.

D’Amato’s role as a Dole campaign official has begun attracting increasing attention as the presidential campaign has heated up. The Senate Whitewater panel has sharply criticized the president, the first lady and top White House aides for their conduct in the affair as well as for an alleged lack of candor and cooperation with investigators.

“Washington is a marvelous environment for coincidence, but it is no coincidence that Al D’Amato is the chairman of Bob Dole’s presidential campaign,” Mark Fabiani, special White House counsel on Whitewater, said Friday in an interview.

And Clinton advisor James Carville charged on the NBC program that the “timing of everything this committee has done” has been coordinated with Dole’s primary campaign.

D’Amato said in his TV interview that he does not raise any allegations related to Whitewater when he is talking to voters for Dole. “So, I mean, that’s how I campaign, and certainly one has nothing to do with the other. It really doesn’t.”

D’Amato also said that Hillary Clinton is welcome to testify before his committee at any time. The committee recently has focused on her work as a private lawyer for Madison Guaranty Savings & Loan in Arkansas, the failed thrift at the center of the investigation. But D’Amato indicated the committee would not subpoena the first lady.