Administration is preparing 1996, '97 budgets at same time Moderate Democrats, GOP seek common ground


WASHINGTON -- Here is how convoluted the budget talks have become: The Clinton administration said yesterday that it is preparing its 1997 budget for delivery Monday to Congress, even while it makes a last, desperate effort with moderates in Congress to save a 1996 budget that was supposed to go into effect four months ago.

No one can recall the last time Washington was talking about two budgets at the same time. In fact, negotiators in the White House say the whole idea of handling two at once is so overwhelming that they are meeting the legal deadline for submitting a budget by simply offering an outline.

It will be a scant 25 pages long, instead of the 2,000 or so that usually arrive from the White House.

And, rather than wait for congressional Republicans to declare it dead on arrival, they are doing that themselves and promising a fuller version by March 1. The 1997 budget year begins Oct. 1.

Meanwhile, moderate Democrats and Republicans held a series of meetings yesterday to determine whether they could put together a bipartisan majority to pass some kind of a balanced budget for the current fiscal year.

Late yesterday afternoon, 15 moderate members of the House -- the so-called Blue Dog Democrats, who have pressed for months for a balanced budget with no tax cut -- met with President Clinton, but few at the White House expressed much optimism that a deal could come together.

With little prospect for a budget deal -- and the likelihood that the government will limp along on "continuing resolutions" that provide enough money keep agencies functioning -- Leon E. Panetta, the White House chief of staff, and other members of the administration's team are focusing more attention on raising the debt limit.

Last week, Treasury Secretary Robert E. Rubin said that after March 1, he would no longer be able to perform the financial gymnastics that have kept the country from defaulting on its debt since last November.

Republican leaders have given mixed signals about their willingness to raise the $4.9 trillion ceiling, which restricts how much money the Treasury can borrow to pay debts that the government has already incurred.

So far, the nation's bond markets have largely shrugged off the possibility of default, assuming that some kind of a deal will eventually be struck.

But waiting until the end of next month to settle the issue, which now looks likely, means that whatever deal might be attempted in return for a higher borrowing ceiling would come just before a possible default.

"It's dangerous to begin that process unless you really have it wired," Mr. Panetta said.

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