A divided Reagan administration sent conflicting signals to Congress yesterday on the sensitive election-year question of whether President Reagan will veto the pending omnibus government spending bill because of water projects that lawmakers have tacked onto it.
While the White House publicly threatened a veto, Interior Secretary William P. Clark privately suggested to Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) that Reagan wanted in the bill some of those water projects that were proposed in his February budget, administration and congressional sources said.
The conflicting signals came as a House-Senate conference committee was meeting to iron out differences in the huge spending bill, the most important piece of business remaining for this Congress. Conferees left for the weekend without finishing and are to resume Tuesday.
Administration officals said Reagan met yesterday morning with top aides, including chief of staff James A. Baker III and Office of Management and Budget Director David A. Stockman, to discuss a possible veto of the measure if Congress leaves the water projects attached.
Such a veto might force another government shutdown like the one that sent 500,000 federal workers home early on Thursday. A Reagan veto in 1981 also produced such a shutdown.
Officials said Stockman argued strongly that Reagan should veto the measure if the water projects remain attached because the bill would ignore 3 1/2 years of effort by the administration to alter the way water projects are financed.
Specifically, Stockman noted, the administration has been pressing for greater state and local cost-sharing of water projects and user fees for navigation projects, neither of which are provided for in the legislation.
Other aides at the meeting said a veto might not be worth it, since the first-year cost of the water projects is relatively small. As of yesterday, the first-year cost had been whittled to less than $100 million. But Stockman prevailed, officials said, and Reagan authorized him to send a strong veto signal to Congress.
Stockman then prepared a letter to Senate Appropriations Committee Chairman Mark O. Hatfield (R-Ore.) threatening the veto. The letter said inclusion of the water projects "would cause the president's senior advisers to recommend a veto." One official said this is the "99th-degree language on a veto, as strong a signal as can be sent."
As the letter was on its way to Hatfield, White House spokesman Larry Speakes made public Reagan's position by reading portions of the letter to reporters, saying Reagan had "major problems" with the water projects and urged Congress to strip them from the bill.
Administration sources said Clark had a different understanding, however. They said Clark believes that Reagan wants some of the Bureau of Reclamation water projects he proposed in his February budget, including several in Colorado and Arizona, that are in the big spending bill.
Congressional sources said Clark told Baker yesterday that Reagan was undecided on a veto. An administration official familiar with Clark's conversation said the secretary did not specify what Reagan would do but told Baker that the president wanted the spending bill to include projects in the February budget. The official said Clark had not seen Stockman's letter.
A White House official, who asked not to be identified, said Reagan's position on a veto is "firm." The official said any Cabinet members sending contrary signals "don't know what they're talking about."