Republican leaders present Clinton with their latest budget proposal Offer would reduce suggested changes in Medicare and Medicaid


WASHINGTON -- President Clinton and congressional Republicans huddled for hours at the White House yesterday in a snowbound attempt to bridge the differences in their respective seven-year plans to balance the budget.

The Republicans arrived with an offer that would scale back their proposed trims in Medicare and Medicaid by some $63 billion. But the GOP leaders said flatly that they wouldn't go much lower.

"This is about as close to a last offer as you can get," said House Budget Committee Chairman John Kasich, who was at the White House yesterday. "There is virtually no flexibility left in any of these numbers."

The Republican offer now earmarks $168 billion in Medicare savings, $33 billion less than their last offer, and $85 billion in savings from Medicaid, $30 billion less than they asked earlier.

White House officials would not predict last night if this was going to prove to be satisfactory to the president, but one White House official suggested that Mr. Clinton had moved a bit toward the Republican position on tax cuts.

And from the outside, at least, the chemistry of these painstaking negotiations seemed better than it has in the recent past.

The two sides met at 2:15 p.m. in the Oval Office, where they munched on chocolate chip cookies. At 3:45 p.m., each side broke for an hour and half to caucus.

The Republicans, led by Senate Majority Leader Bob Dole and House Speaker Newt Gingrich, went to the Roosevelt Room, where they met with Mr. Kasich and Senate Budget Committee xTC Chairman Pete Domenici. Meanwhile, Vice President Al Gore, Senate Democratic Leader Tom Daschle, Treasury Secretary Robert E. Rubin and other aides remained with the president.

During that time, Senator Dole returned to the Senate chamber, where he informed his colleagues that he was encouraged by a new "spirit of cooperation and credible negotiation" taking place.

"They're at the point where they are shaping decisions they've got to reach if we're going to have a balanced budget," White House press secretary Mike McCurry said last night.

Mr. McCurry also quoted one participant of the meetings -- he wouldn't say which one -- as saying: "At moments, it seems like we're close to a deal. At other moments it seems we're close to seeing the talks break up. But that's the nature of negotiations."

At 6 p.m., the talks did adjourn. Mr. McCurry said a session was scheduled for today at 11 a.m.

Yesterday was supposed to be the first day back on the job for most furloughed federal workers in Washington, but the reality -- they spent the day at home because of the storm -- foreshadowed what might lie ahead unless each side gives even more ground.

During the weekend, Mr. Clinton presented a plan to balance the budget by 2002, an issue that had divided the White House from Congress and led to two government shutdowns.

But the president gave the Republicans only half of what they wanted. Mr. Clinton's latest budget achieves balance, but because he is committed to sparing programs for the poor and elderly, it proposes far smaller tax cuts than the GOP is demanding.

Under the agreement signed Saturday, the two sides have until Jan. 26 to resolve their differences. If they don't, Republicans say they won't shut the government down again, but they'll begin extracting budget savings from agencies they consider nonessential or bloated, such as the Department of Commerce, the Department of Energy and the Environmental Protection Agency.

"We will 'cherry pick' to provide money for services Republicans like -- and cut off the others," said House Appropriations committee chairman Robert Livingston.

Of the entire budget, Congress really only has control of about half: the so-called discretionary spending that finances defense and provides operating money for the other federal agencies.

The rest goes toward paying interest on the national debt -- $240 billion a year -- and underwriting the "entitlement" programs, such as Medicare, Medicaid and welfare, which grow automatically unless Congress and the president agree to change them.

The president has vowed repeatedly that he will not sign legislation that uses cuts in entitlements to deal with the deficit. White House officials maintained this would leave congressional Republicans with two choices: forgetting about tax cuts this year or backing off their insistence that budget had to be balanced on paper by the year 2002.

Mr. Clinton held fast on his budget priorities, but the Republicans chose a third option: They shut down the government rather than abandon their two main goals.

This is the strategy they vow to continue after Jan. 26, absent a compromise. Republicans insist that this time they won't play havoc with popular programs such as national parks -- and won't leave federal workers in limbo.

"We will do it piece by piece, program by program," said Rep. Robert L. Ehrlich, Jr. a Baltimore County Republican. "We're not going to hurt the workers anymore."

Yesterday, Republican party chief Haley Barbour offered a preview of what 1996 will sound like on the Republican side if no budget blueprint is adopted.

Noting a shift in the polls -- Americans no longer blame Congress more than the president -- Mr. Barbour said, "Finally, the American people are beginning to realize that the only thing between them and a balanced budget is Bill Clinton."

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