CNN - Hopes for budget deal wither - Jan. 10, 1996 CNN U.S. News

Hopes for budget deal wither

Clinton, GOP say stalemate may continue until elections

January 10, 1996
Web posted at: 9:30 p.m. EST

WASHINGTON (CNN) -- The chances of the White House and GOP striking a budget accord worsened Wednesday, with both sides saying the crisis may end only with the November elections, and that they were riven by deep ideological differences.

With budget negotiations in recess for a week and federal employees due to resume work Thursday, President Bill Clinton said the battle between him and the Republican-led Congress over budget policies and priorities should be resolved by voters.

Clinton said enough spending cuts have been proposed for eliminating the federal deficit by 2002 as demanded by the Republicans. But fissures over the future of social programs are keeping the two sides from agreeing and voters need to decide which direction to take, he said.

"If we're going to walk away from the fundamental commitments of Medicare, we ought to have an election about that," Clinton told reporters ahead of a cabinet meeting on the status of the budget negotiations.

Senate Majority Leader Bob Dole said voters may well have to settle the budget dispute. "It may be that we're so far apart on philosophy on changing fundamentals in the government, more power back to the states and back to the people, that we may have to wait for an election," Dole said in a CNN interview. "I don't suggest that, but that's a possibility."

Gingrich first to voice pessimism

In a sense, both Clinton and Dole were endorsing House Speaker Newt Gingrich's statement earlier Wednesday that the budget stalemate might last until the elections.

"I think the odds are better than even as of today that there will be no agreement," Gingrich said at a Republican fund-raiser in Casper, Wyoming. "I am, for the first time in a year, pessimistic about the likelihood of our getting an agreement."

Predictions that budget negotiations might fail caused the Dow to plummet by nearly 100 points. Bond prices took a tumble as well, as investors began to believe the budget issue would not be settled until after the election.

A new public opinion poll indicates Clinton may benefit if the budget issue carries over into the 1996 presidential election campaign. A Washington Post-ABC News poll shows that some 57 percent of voters support Clinton's approach to the budget, compared to 36 percent who said they like the Republican plan.

Dole said the efforts to come to a budget agreement with Clinton were "not futile." But he emphasized that Republicans would not sign on to a budget plan they considered a bad deal. "If it's not good for the country, we're not going to decide on it," Dole said.

Chances of a further compromise uncertain

Budget negotiators Tuesday suspended talks for a week, indicating that deep differences in policy issues were standing in the way of an agreement.

Democrats said the talks stalled because congressional Republicans wanted a massive tax cut for wealthy Americans more than they wanted a balanced budget.

The budget talks "have already achieved a balanced budget," Senate Minority Leader Thomas Daschle, D-South Dakota, said at a briefing Wednesday afternoon. "What we haven't done is find a way to pay for the Republican tax cut." (213K AIFF sound or 213K WAV sound)

House Majority leader, Dick Armey, R-Texas, insisted the GOP could compromise no more. "If we try to move one inch beyond that, I think we're going to be in big trouble with our own." (119K AIFF sound or 119K WAV sound)

White House officials accused Republicans like Armey of making statements designed to undermine the negotiations, which have been suspended at least until next Wednesday.

"Obviously a lot of people on the staff outside of these negotiations who in one way or another would like to see them collapse for their own particular purpose. I don't think that serves any particular purpose," said White House Chief of Staff Leon Panetta.

GOP leaders Wednesday said they may try to pass veto-proof legislation with the help of conservative Democrats.

In the absence of a budget accord, there's a possibility of a third partial government shutdown starting January 27, when a temporary funding measure expires.

Two sides come closer on numbers

But even as the two sides remain widely separated by policy differences, they seem to be bridging the gap on numbers.

On Medicare, the Republicans want seven year savings to total $168 billion compared to Clinton's $125 billion. But aides say the president is now prepared to experiment with various Republican proposals aimed at moving some more wealthy and healthy older Americans from Medicare to private managed-care programs.

On tax cuts, the Republicans came down from $245 billion to $177 billion over seven years. The president's last public proposal was for $87 billion, but sources say both sides may be willing to compromise, especially since the president is signaling a readiness to accept a targeted capital gains tax.

On Medicaid, the Republicans want to shift responsibility from the federal government to the states. Clinton is still resisting that proposal, but both sides are hoping that a delegation of bipartisan governors can work out some common ground.

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The AP contributed to this report.