Spending Cut Hangs Up Budget Accord

White House and congressional negotiators neared agreement on their long-awaited budget accord but foundered on Republicans’ continued insistence on an across-the-board cut in government spending.

Hoping to break the logjam, House Speaker J. Dennis Hastert (R-Ill.) on Tuesday night called President Clinton, who is traveling in Turkey, to press him to accept the GOP proposal to cut spending less than one-half of 1%.

John Feehery, a spokesman for Hastert, said that administration negotiators had indicated they would only accept a significantly smaller cut, which Republicans considered an empty gesture. “We want something more significant than that,” Feehery said.

That, however, is about the only issue remaining to be settled in the broad budget agreement that has been weeks in the making. “The bill is pretty well ready to go,” said Senate Appropriations Chairman Ted Stevens (R-Alaska). “We just need the offsets.”

As negotiators broke up for the night, the two sides reported that they were narrowing their differences on further spending cuts needed to finance Clinton’s added budget requests.

Separately, negotiators reached agreement on a bill that would extend the life of a series of tax breaks that otherwise would expire this year, including a five-year continuation of the research and experimentation tax credit sought by high-technology companies.

The measure also would continue for three years a provision that would allow high-income taxpayers to claim personal tax breaks--such as the $500-a-child tax credit--when they compute how much they owe under the alternative minimum tax, which is imposed on wealthy Americans.

Approval of the broader spending agreement by the House and Senate this week would pave the way for Congress to adjourn for the year. Lawmakers had hoped to be heading home in late October but got bogged down as the budget talks hit a series of snags.

In recent days, negotiators have cleared away differences over such contentious issues as education, the environment, foreign aid and abortion. By contrast, their differences over the across-the-board reduction seem minor, but it has emerged as an important symbolic issue for Republicans sensitive to charges that they have made too many concessions to Clinton on spending.

Initially, Republicans had called for a 1% across-the-board cut, but Clinton opposed that as unnecessary and a bad way to cut the budget. Republican leaders then scaled back their demand progressively, eventually agreeing to the modest reduction on the table Tuesday.

But White House Budget Director Jacob “Jack” Lew took a hard line on the issue Tuesday, saying Clinton believes that making across-the-board cuts without regard to the merits of each program is the wrong way to put together a budget--and angering Republicans in the process.

“Why go toward an across-the-board cut when there are far better solutions?” asked Linda Ricci, Lew’s spokeswoman, noting that the administration had proposed a package of spending cuts and other offsets to match the savings Republicans proposed.

The GOP provision was part of about $6 billion in spending cuts that Republicans said were needed to help pay for spending increases that Clinton has requested. Without them, lawmakers would be forced to use part of the Social Security surplus to finance the overage.

GOP negotiators said the across-the-board cut was needed to win support from many Republicans who thought the budget deal added too much spending for Clinton’s priorities, and to reassure them that at least some of the savings are real cuts and not just accounting gimmickry.

“We have to find real offsets in order to satisfy people who are complaining we are increasing spending, which we are,” said Stevens. Indeed, Sen. Pete Domenici (R-N.M.), the influential chairman of the Budget Committee, for the first time indicated Tuesday night that he might not be able to support the budget agreement if it does not include an across-the-board cut.

Even if the deal comes together and is approved by the House, floor action in the Senate may be held up by a filibuster by senators representing northern Plains dairy states, who are angry over an agreement by negotiators to scrap the Agriculture Department’s new pricing rules for milk, which favored their farmers.

Senators from Minnesota and Wisconsin have been threatening to tie up the Senate with various delaying tactics unless the dairy compromise is undone. Senate leaders are certain they have the votes to squelch any filibuster, but it could take several days to sort out.

Another possible problem was a demand by Sen. Robert C. Byrd (D-W.Va.) to let coal mines continue stripping mountaintops and dumping the waste into valleys and streams.

The administration was threatening to veto such a measure on environmental grounds.

Meanwhile, House Democrats expressed anger over Clinton’s decision to accept a GOP provision that would bar U.S. aid to family planning groups that lobby for abortion rights abroad. The concession was part of a deal to win money to pay America’s back dues at the United Nations.

Lew and Larry Stein, the chief White House lobbyist, defended the agreement at a closed-door meeting of the House Democratic Caucus. Abortion rights groups have protested the decision vigorously since it was announced Sunday night.

The negotiations over the proposed offsetting spending cuts were being carried on by Lew and Domenici, who is serving as spokesman for the GOP leadership on the issue.

Among the cuts that the two sides reportedly were considering was a proposal to delay by three days the military paychecks due Sept. 29, pushing them off to fiscal 2001, which begins Oct. 1. The maneuver would “save” $2 billion in fiscal 2000.

Besides the research and experimentation tax credit and the protections for upper-income taxpayers, the compromise tax measure also would extend for 2 1/2 years several other expiring tax breaks, including a credit for firms that hire former welfare recipients or poor people.

To keep agencies open while talks continue, Republicans planned today to push through the sixth short-term spending resolution since the Oct. 1 start of fiscal 2000. This one would fund the government through Nov. 24.