Congress would raise U.S. debt limit, Kasich declares Finance panel head says GOP doesn't want default or new shutdown

January 15, 1996|By LOS ANGELES TIMES

WASHINGTON -- A leading House Republican said yesterday that Congress would let the government take on new debt to avoid a possible cash crisis next month, an about-face from GOP efforts to use the federal debt limit as a lever over the White House in budget negotiations.

"We're going to raise the debt ceiling," predicted House Budget Committee Chairman John R. Kasich of Ohio. "In my opinion, we should. My sense is you don't want to mess around with defaulting here in the United States."

In addition, Mr. Kasich sought to rule out another broad shutdown of federal programs when a temporary spending measure expires Jan. 26. Rather, he endorsed a more selective strategy of funding programs that Republicans support, while withholding cash from others they do not.

"We will not shut down the government again," he said on NBC-TV's "Meet the Press."

The comments by Mr. Kasich, a key House advocate of a balanced budget, are a strong signal that Republicans are weary of the series of budget crises and shutdowns that have alienated many Americans, according to polls. However, a core group of House GOP hard-liners, including dozens of freshmen, could be reluctant to abandon using the debt limit or another shutdown to pressure the Clinton administration in the budget talks.

The White House yesterday welcomed the more conciliatory approach toward raising the nation's $4.9 trillion debt limit -- with no strings attached -- but threatened a tough response to the emerging GOP strategy of piecemeal appropriations bills.

"If they continue to go after what the president believes are important programs for this country the president will continue to veto those" bills, White House Chief of Staff Leon E. Panetta said on CBS-TV's "Face the Nation."

Programs in jeopardy under a GOP strategy of targeted spending bills could include areas of education; environmental regulation; the Commerce Department; and the national service programs, some of President Clinton's pet projects.

Deep policy differences over tax cuts, Medicare, Medicaid, welfare and other issues continue to impede a broad budget deal, officials said, with Republicans seeking a bigger tax cut, stricter limits on spending and a smaller role for the federal government than the White House wants.

The GOP objective is "cutting taxes, it's dismantling programs like Medicare and Medicaid, changing them radically," complained House Minority Leader Richard A. Gephardt, Democrat from Missouri, appearing on "Meet the Press." "We're universes apart," Mr. Kasich declared. Mr. Kasich's comments on the debt limit come as the issue of the nation's borrowing cap once again is coming into the spotlight, with a potential crunch looming early next month.

Just last November, when Congress approved a bill to raise the limit -- with an attached proviso that the White House also accept GOP budget guidelines -- Mr. Clinton vetoed the measure. Immediately thereafter, Treasury Secretary Robert E. Rubin employed accounting maneuvers to prevent the nation from defaulting on its debts.

Despite Mr. Rubin's moves, Treasury officials have warned that a new squeeze is expected. If the debt ceiling is not raised or Mr. Rubin cannot find other ways around the limit, the government would not be able to pay all its bills.

"I hope that John [Mr. Kasich] is right on this issue, because I think it's unthinkable, pushing this country to default on its good faith and credit," Mr. Panetta said.

The White House has proposed an $87 billion tax cut, compared to a $177 billion cut recommended by Republicans, which would benefit families with somewhat higher incomes, along with investors who realize capital gains.

"In order to fund that size tax cut, they are asking for additional cuts in Medicare and Medicaid and the welfare area. And that is not acceptable to us," Mr. Panetta said. "And so that's where there is this fundamental difference. If they will come down on the tax cut, do a modest tax cut, protect Medicare, we have a deal."

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