Clinton, GOP agree to put budget differences aside; They are expected to back plan leaving Social Security alone


WASHINGTON -- President Clinton and Republican congressional leaders agreed last night to try to resolve their differences within the next week and approve a budget that for the first time in decades would not borrow from the Social Security surplus.

In an upbeat report of their hourlong meeting, the Republican leaders said the president had also agreed to stop pushing for his proposed 55 cents-a-pack cigarette tax increase. Clinton promised instead to work with them to find other ways to pay for additional spending he favors.

"This is a moment we've been looking for," Senate Majority Leader Trent Lott said after the meeting at the White House. "We're rolling up our sleeves, and we're going to work out the remaining details and disagreements. And that's the way it should be."

Democratic leaders and White House officials expressed similar optimism about ironing out their remaining disagreements with the Republicans on the budget for the fiscal year that began Oct. 1. Clinton and the lawmakers also committed themselves to try to produce other, related legislation, including a proposal to restore cuts made two years ago to the Medicare program.

"We believe the most important thing we can do is to protect Social Security and find ways with which to ensure that those investments are paid for," said Senate Minority Leader Tom Daschle, a South Dakota Democrat. "We're going to work with our colleagues to make that happen during the seven days ahead."

The tone belied the difficulty of the task. Wide policy disagreements remain between the lawmakers of the two parties and the White House on such issues as education, the environment and law enforcement.

What's more, the search for enough money to finance additional spending will be extremely difficult.

The president's chief of staff, John Podesta, made clear that Clinton had not ruled out a cigarette tax increase, though Podesta said such an increase would probably be smaller than what Clinton proposed.

"We'll have to continue to discuss some ideas we may have on how to provide a tobacco policy which is good health care policy and also deals with some of these budget issues," Podesta said.

In addition to working on the budget issues, and trying to fix problems created for Medicare by the 1997 Balanced Budget Act, Clinton and the lawmakers agreed to develop a package that would extend expiring tax credits, and a bill to raise the minimum wage that might cut some business taxes. Clinton, who began the year hopeful that Congress would work with him to reform Medicare and Social Security, has not given up on those goals, the Democrats said.

"The president talked a lot about doing something to extend the solvency of Social Security," said House Democratic Leader Richard A. Gephardt.

Clinton urged the lawmakers to reconsider a proposal to add the interest savings from paying down the debt to the Social Security trust fund.

Republicans have been cool to that idea. However, they all but declared victory last night in their desire for a low-key, noncombative end to the budget process.

"It was a very energetic and, I thought, enthusiastic meeting, full of optimism and commitment within those clearly defined budget parameters," House Majority Leader Dick Armey said.

The meeting had opened in an atmosphere of deep mistrust between the two sides.

In their remarks before the session, both sides alluded to battles that have severely strained their relationship. The mood worsened last week, after the Republican-led Senate voted to defeat the nuclear test ban treaty, rather than delay action on it. It was a setback for the president, who had made the treaty a top priority of his foreign policy.

Before the meeting, there was little sense of the deadline panic that has sometimes accompanied such talks in previous years. Congress approved yesterday -- and Clinton will sign -- a bill to extend until Oct. 29 the temporary measure that has kept the government running since the fiscal year began.

Only five of the 13 spending bills needed to run the government have been enacted. The president agreed last night to sign a sixth bill, providing money for veterans, housing and the space program.

But Clinton indicated that he would withhold action on two other spending bills passed by Congress that deal with agriculture and defense. He has vetoed two additional spending bills; three more have not been approved by Congress.

The Republican leaders say they are determined to pass all the remaining spending measures and send them to Clinton by tomorrow. They also want to avoid a repeat of the partial government shutdowns in 1995 that outraged voters, most of whom blamed the Republicans.

But largely because they have forsworn the tactic of allowing the government to run out of money, the Republicans have lost almost all leverage with the president in budget talks. They approached him last night with great wariness.

The Republicans say they are resolved to avoid a deal with Clinton that includes tax increases. To underscore that point, Republican leaders put to a House vote yesterday a five-year package of $100 million in tax increases included in Clinton's budget. The president's tax increases would fall mostly on tobacco.

"This taxing and spending has got to stop," House Majority Whip Tom DeLay said. "We have to make tough decisions to restrain spending."

The tax package failed by a margin of 419 to 0, with the Democrats joining the Republicans to vote against what they called an effort to embarrass the president.

The Republicans think "because they've slapped him in the face, he'll be a lot more amenable to a discussion," said Rep. Jim McDermott, a Washington state Democrat.

The Republicans seized on the tactic of refusing to dip into surplus Social Security revenue as a way to impose discipline on the spending process and prevent Clinton from forcing them to agree to his spending priorities.

If they succeed, it would be a feat made possible for the first time in three decades by the elimination last year of the deficit in general government revenue.

"Nobody has ever tried to do this before that I know of: complete a budget without touching a dime's worth of Social Security and without raising taxes," Armey said. "It's tougher than it's ever been before."

Setting themselves up as protectors of Social Security could also potentially inoculate Republicans from long-standing Democratic accusations that they do not support the popular government retirement program.

Republican leaders have considered a variety of accounting devices to try to make the non-Social Security dollars meet their budget needs.

Many of their ideas have been quickly shot down. The most contentious was a proposal to delay the payments of tax refunds to the working poor.

That idea was squelched in part by the withering criticism of Gov. George W. Bush of Texas, the leading Republican presidential candidate.

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