President Bush, still smarting over the crushing defeat of the bipartisan deficit-reduction package, began shutting down all but essential government operations early today after refusing to sign a short-term spending measure approved by Congress to keep the government running for a week.
Bush's action came shortly after the Senate, on a voice vote, gave final congressional approval to a measure that would provide the government with funding for the next seven days and delay implementation of automatic across-the-board spending cuts required by the Gramm-Rudman-Hollings law. Hours earlier, the House had voted 300 to 113 to approve the legislation.
But without Bush's signature, the measure could not take effect, meaning there were no funds to operate most of the government as of midnight Friday.
Lawmakers rushed the bill through Congress in an attempt to keep the government running while they continued efforts to assemble a compromise budget package that would reduce the deficit by roughly $500 billion over the next five years, a package the White House says is needed to prevent economic chaos.
But Bush, in a statement read last night by White House press secretary Marlin Fitzwater, said he would "not be a party" to what he said were efforts by Congress to "once again put off meeting this responsibility for a few more days." Bush said it was "deeply discouraging" that Congress and the administration could not agree on a budget.
Senate Majority Leader George J. Mitchell (D-Maine) said Bush's strategy to shut down the government would prove counterproductive to the goal of reaching agreement on a long-term deficit-reduction package. "I think it's an unnecessary and extremely unwise action," he said. "It will not advance the president's position during the negotiating process and will cause unneeded pain and anguish to thousands of American families."
Negotiations between House Democratic and Republican leaders over a new package resumed yesterday and will continue today, with some lawmakers suggesting the possibility of a new deal that would trade capital gains tax cuts for tax increases for the wealthy.
The White House also scheduled a 10 a.m. meeting with Mitchell, House Speaker Thomas S. Foley (D-Wash.), House Majority Leader Richard A. Gephardt (D-Mo.), Senate Minority Leader Robert J. Dole (R-Kan.) and House Minority Leader Robert H. Michel (R-Ill.).
The bipartisan deficit package, worked out in nearly six stop-and-go months of negotiations between the White House and Congress, fell in a hail of angry rhetoric early Friday morning in the House, losing by a vote of 254 to 179.
Neither Bush nor Democratic congressional leaders delivered a majority of their members in support of the package, which was picked apart by opponents and weakly defended by supporters. The defeat raised new questions about the ability of government to put its own fiscal house in order as well as whether elected leaders had lost touch with the voters.
The failure of the deficit package to clear its first hurdle triggered a day of caucuses and meetings on Capitol Hill and at the White House and of finger-pointing and second-guessing as all sides sought to spread the blame for the embarrassing defeat. Much of the anger, among Republicans and Democrats alike, was aimed at the White House, with Chief of Staff John H. Sununu and budget director Richard G. Darman the principal targets for the way they conducted the negotiations and subsequently sought to win support for the package.
Fitzwater said "we regret" any episodes that contributed to lawmakers' anger.
One Republican said the failure of the budget package also had set off internal bickering within the White House. "The finger-pointing, the back stabbing is really starting," this Republican said.
Bush met with his Cabinet yesterday afternoon for what one participant described as the liveliest Cabinet meeting of his presidency, punctuated by "sharp disagreement" over strategy, criticism by some Cabinet members that Sununu and Darman had misjudged the House and debate over how to handle House Minority Whip Newt Gingrich (R-Ga.), who led the opposition among the Republicans to the package.
Cabinet members also debated whether Bush should withhold his signature from the short-term spending bill or veto it outright, once it reaches his desk. Sources said Sununu favored the first approach, fearing the White House might not be able to sustain a veto, which would be another sign of Bush's inability to carry his troops. Others, including Vice President Quayle, and Treasury Secretary Nicholas F. Brady, argued for a veto as a way to rebuild Republican unity in the House, according to one account.
Republicans remained badly divided after their internal struggle, with administration sniping at Gingrich intensifying and House GOP members "stabbing, shooting and strangling each other," according to another Republican, who added, "I'm not sure anyone will be standing when this is over."
"Things were pretty tough today. Pretty rotten," said Rep. Frederick S. Upton (R-Mich.).
Democrats began work on a new budget package, saying they wanted no part of new negotiations with the White House. "I do not anticipate, and I underscore, do not anticipate, the resumption of anything that would be called summit talks," Foley said.
"There's no appetite on the part of the House Democratic Caucus to be working with John Sununu and Richard Darman at this time," one Democrat on Capitol Hill said.
Democratic sources said they would try to alter the most controversial elements of the bipartisan agreement. Those elements include new taxes, especially the series of economic-growth incentives favored by the White House and higher gasoline taxes; higher Medicare premiums; changes in unemployment insurance; and possibly the level of defense spending.
One possibility that Democrats and some Republicans were looking at was to reopen the question of whether to trade a cut in capital gains taxes, long favored by Bush, for an increase in tax rates for the wealthy, favored by the Democrats. White House negotiators scuttled such a deal during the final hours of the negotiations last week.
Several sources said that Gingrich and some of his allies were among those now looking favorably at such a trade, but Sununu and Darman, who were reportedly guided by their bitterness toward Gingrich over his role in opposing Bush, continued to oppose the idea.
"Newt and his people have no plan for victory, so they say give in," an official close to the negotiations said. "That won't work."
But other Republicans in Congress also were beginning to talk openly about such a deal, and Democrats said that could make it possible to alter other sections of the original agreement and still meet the overall target of $500 billion in deficit reductions over five years.
Fitzwater described Bush as "disappointed" by the House defeat of the bipartisan package. Bush had gone on television Tuesday night to rally support, but his speech appeared to have minimal impact. Congressional offices reported an increase in calls from constituents but said the calls were mostly in opposition to the plan.
"He went out in front and made the best case he could, told people why he thought it was important and that's all he can do," Fitzwater said.
He also said there would be no retribution against Republicans who opposed Bush and the package. Sources familiar with the Cabinet debate said Sununu and Darman were urged not to let their anger at Gingrich block efforts to bring Republicans back together. "They're so annoyed at Gingrich, they're not thinking clearly," one source said.
Republicans also found that tracking polls on key House races showed a deterioration in the position of Republican incumbents and challengers in the past five days, setting off alarms within the party.
With Bush under fire for failing to deliver the House Republicans, Bush tried to turn the issue back on Congress. "The hour of reckoning is at hand," Bush said. "At midnight the Congress of the United States must face up to the shutdown of government services and resulting confusion that will be strewn across this land because we could not produce a budget." He urged Congress to "act now, tomorrow, as soon as possible to produce a budget that reduces the deficit, avoids recession and puts our economy on the path of sustained growth."
Fitzwater accused budget negotiators of reneging on a deal by trying to fund the government on a short-term basis, saying it was part of the agreement produced last Sunday. But Mitchell said Fitzwater was incorrect, saying the White House wanted the two sides to agree not to pass such short-term measures but that he had balked. The agreement said it was Bush's intention not to sign such bills.
Democrats were debating a number of budget alternatives yesterday. They planned to work at least part of the holiday weekend to complete work on a new package, which would have the same goals of reducing the deficit by $500 billion over five years as the failed plan but with different components.
The broad outlines of one emerged late yesterday as described to Democratic members of the House Budget and Ways and Means committees in closed-door meetings, although sources said it was one of several under consideration.
As the budget agreement would, this alternative, one of several under consideration, would pare about $40 billion of the federal budget deficit in the fiscal year that began Monday, lawmakers said. It envisions raising as much as $129 billion in new tax revenue over five years, about $5 billion less than the budget agreement.
About $40 billion in savings, just two-thirds of the amount the budget pact would have cut, would likely come from Medicare, one of the most contentious issues in the fight over the earlier deal. That figure appeared to satisfy liberal Democrats. "They're looking at something that's reasonable," said Rep. Henry A. Waxman (D-Calif.), chairman of the House Energy and Commerce subcommittee on health.
Most domestic programs would be held to the projected rate of inflation. Military spending was under discussion, lawmakers said.
House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) assured Democratic members of his panel that they would decide the tax components of the package, participants said.
Reps. Beverly B. Byron (D-Md.), Lewis F. Payne Jr. (D-Va.) and Thomas J. Bliley Jr. (R-Va.) were the only members of the Maryland and Virginia House delegations who voted against the stopgap, seven-day funding bill yesterday.
Staff writers Ann Devroy and Tom Kenworthy and Helen Dewar contributed to this report.