Budget Summit Nears Agreement While Spending Reductions Loom
Washington--White House and Congressional negotiators late last week were nearing but still had not reached a spending compromise for the 1991 fiscal year starting Oct. 1.
The lack of a firm agreement left open the possibility that the government would run out of money and deficit-reduction measures would take effect.
The negotiators were meeting Thursday and Friday in an attempt to fashion before sundown Friday, the start of Yom Kippur, a budget package that could be sent to the full Congress on Sept. 30. But while the Congress would not be in session during the Friday and Saturday holiday, participants in the summit did not rule out continuing their deliberations.
News reports late last week indicated that the Bush Administration had scaled back its demands on the most contentious issue--the President's call for a cut in the capital-gains tax rate.
A late-in-the-week agreement, and the subsequent approval of the budget by the Congress and President Bush, would avert $106 billion in spending cuts that were scheduled to be triggered Oct. 1 under the Gramm-Rudman-Hollings deficit-reduction law.
Lawmakers, at least those in the House, also were broaching the option of passing a continuing resolution that would fund government programs, including those run by the Education Department, until Oct. 20. Funding for education programs would be set at last year's levels under such a resolution, which had been approved by the House Appropriations Committee but not considered by the Senate committee as of late last week.
Mr. Bush had vowed to veto such a measure. Without a budget agreement or a continuing resolution in place by Oct. 1, the government technically would be financially unable to operate.
Negotiators have been trying since May to pare $50 billion from next year's budget and $500 billion over the next five years. Gramm-Rudman mandates that cuts would take place if the 1991 deficit is not reduced to $64 billion. But with an estimate of a fiscal-year deficit of $170 billion, lawmakers would have to amend the target.
Education programs stand to lose $8.1 billion annually under a full ''sequester."
But because most such programs are "forward funded"--that is, money appropriated in a fall budget package is not released until the following summer--administrators and policymakers would be able to adapt to the cuts.--mp