Clinton, Congress Closer To Compromise On Budget Lawmakers Scramble To Strike Deal Before Start Of Summer Recess

Sensing that a dramatic agreement could be near, Clinton administration officials and Republican congressional leaders edged closer Saturday to a compromise on tax cuts and a balanced budget by 2002.

But by evening, both sides acknowledged they expected a final handshake no earlier than today.

In back rooms of the Capitol kept off-limits by armed police officers, top-level bargainers sorted through a host of issues that have divided them for months. Participants revealed little as they brushed past reporters in hallways choked with summertime tourists.

The discussions ranged from whether a proposed $500-per-child tax credit should apply to low-paid workers who owe little or no income tax, as President Clinton wants, to whether a new children’s health initiative should be limited to $16 billion over five years, as many Republicans prefer.

“There are still a few very tough issues on spending and the tax side,” said Gene Sperling, one of Clinton’s top economic advisers, a view confirmed by GOP aides.

“We’re sitting here thinking it could move with dispatch, or go the other way,” said House Majority Leader Dick Armey, R-Texas.

The talks picked up steam on Friday as the two sides agreed to restore welfare coverage to thousands of disabled immigrants and children, as Clinton had demanded. House Speaker Newt Gingrich, R-Ga., and Senate Majority Leader Trent Lott, R-Miss., were pushing for agreement as early as this weekend so the bills could be muscled through Congress by next Friday, the scheduled start of legislators’ summer recess.

Hoping to build momentum for whatever package emerges, at least eight congressional leaders and administration officials planned to appear on weekend television news shows. The first broad tax-cutting bill since 1981 would pare levies by about $135 billion over the next five years for millions of families with children, companies and investors. It is also likely to contain nearly $35 billion in tax breaks for college students, a top priority for Clinton.

The spending measure is aimed at eliminating deficits for the first time since 1969 with about $140 billion in savings. About $115 billion of it would come from the Medicare health insurance program for the elderly and disabled, mostly by reducing payments to hospitals and other health care providers.

Most of the rest would come from reducing payments to hospitals under Medicaid, the health care program for the poor.