Congressional leaders and senior Reagan administration officials reached "an agreement in principle" last night to provide $8.1 million in nonlethal aid to the Nicaraguan contras, a breakthrough that could lead to enactment of a $30.2 billion deficit-reduction package by Monday.
Negotiators said a final agreement on the tentative proposal to provide aid to the contras into February would be subject to review by President Reagan and congressional leaders.
"We believe we've reached an agreement in principle subject to looking at it on paper," said Sen. Warren B. Rudman (R-N.H.) following a six-hour meeting between congressional leaders and top administration officials that concluded shortly after 11 p.m.
If the tentative agreement holds up, it could lead to a swift resolution of several other outstanding budget issues and final congressional approval of two pieces of legislation needed to implement the Nov. 20 budget accord between Congress and the White House. That agreement, reached in the wake of the Oct. 19 stock market plunge, calls for reducing the deficit by $30.2 billion in this fiscal year.
The House could act on the two measures as early as today. The first measure, including the contra aid, is a $600 billion omnibus spending bill to fund most government operations through the end of the fiscal year and would trim the deficit by $7.6 billion through cuts in military and domestic spending. The second combines a $9 billion tax increase, asset sales and further cuts in permanent government programs such as Medicare and farm subsidies to provide another $23 billion cut in the deficit.
Senate Majority Leader Robert C. Byrd (D-W.Va.) said last night that the Senate is unlikely to take up the deficit package before Monday, and would probably pass a short-term funding bill to keep the government operating until the deal is signed into law by the president. That would keep the government from shutting down, which it otherwise would have to do because the previous short-term appropriations measure expired at midnight Friday.
Disagreements among congressional negotiators on savings in postal and medical-care programs attached to the tax and spending cut measure must still be resolved.
Negotiators have also not determined whether the omnibus spending legislation will include a provision to enact into law the Fairness Doctrine requiring broadcasters to air different sides of controversial issues. Reagan has said he would veto the deficit-reduction legislation if the broadcast standard is included.
The tentative contra aid deal would provide the Nicaraguan rebels with $3.6 million in further nonlethal aid and $4.5 million more to deliver it. The agreement also settles what had been a contentious issue of whether the new aid could be used to transport residual amounts of previously authorized military aid.
Under the tentative agreement, previously authorized military aid could be commingled with the new "humanitarian" aid shipments for the first 12 days of 1988. In the following week, which would encompass a key meeting of Central American presidents on the regional peace process, no military shipments would be permitted.
Following that period, according to House Speaker Jim Wright (D-Tex.), if Reagan finds that a cease fire has not been achieved because of a failure by Nicaragua's Marxist Sandinista government, commingling of military and nonlethal aid could resume until Feb. 4. On that day, Congress would vote on whether to continue mixed deliveries of nonlethal and military aid.
White House chief of staff Howard H. Baker Jr. was more cautious in describing the agreement. Asked if the president could accept this arrangement, he said, "The deal's not done yet . . . . I think we made good progress today."
The breakthrough came after top congressional leaders held nonstop talks with a group of senior administration officials that included chief of staff Baker, Treasury Secretary James A. Baker III and national security adviser Colin L. Powell that succeeded in narrowing the once-wide differences over providing more nonlethal aid to the contras.
The original House version of the omnibus spending bill provided no new funds for the contras, and the agreement reached last night could yet face major opposition among House Democrats. The Senate version would have provided about $16 million, and permitted mixed deliveries of previously approved weaponry with the new nonlethal aid that is limited to food, shelter, clothing and medical supplies.
The contra aid issue had been the most serious stumbling block in passing the deficit-reduction package, which is all that stands between Congress and adjournment for the year.
Earlier yesterday, in his weekly radio address, Reagan had reiterated his demand that funding for the rebels be included in the package. He cited evidence of a planned military buildup in Nicaragua as proof the Sandinista regime is preparing for "military dominance of the entire region."
Because Congress has failed to pass any of its regular 13 appropriations bills, the government has functioned since the beginning of the fiscal year, Oct. 1, through a series of stopgap funding measures. Without another short-term spending bill, most nonessential federal employes would be sent home in a government shutdown.
Little progress was evident yesterday on several issues in the other bill, a $24 billion "reconciliation" package of tax increases, asset sales and cuts in such spending programs as farm credit and Medicare.
Although House and Senate negotiators settled late Thursday on a $9 billion tax increase bill hitting corporations and wealthy individuals, they have made less headway on spending cuts.
The two sides were far apart in efforts to cut $850 million from the Postal Service budget, and other conferees could not agree on which figures to use to settle differences over Medicaid.
Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) said there had been some progress toward reconciling House and Senate bills cutting Medicare spending.
Bentsen and House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) also were bargaining over reallocation of Medicare reimbursements to hospitals, which was a key point of dispute between the two chairmen. The House bill would shift a greater share of those reimbursements to large urban hospitals, effectively increasing payments to Illinois and three other states. It would reduce payments to rural hospitals, thereby reducing funds to Texas.
"We have agreed on the broad points," Bentsen said after meeting with Rostenkowski.