An article yesterday incorrectly reported that the Congressional Budget Office says GOP spending plans already have tapped into surpluses generated by Social Security taxes. The CBO has said that the spending plans are on target to tap into those funds. (Published 10/20/1999)

After weeks of resisting a face-to-face encounter, congressional leaders agreed yesterday to sit down with President Clinton this afternoon to try to begin settling the budget differences that have left billions of dollars in spending decisions unresolved.

Key congressional Republicans accepted the president's invitation after he vetoed a foreign aid spending measure and vowed to veto other appropriations bills that fail to meet his priorities. GOP leaders, aware they lack the votes to override such vetoes, finally acknowledged they must negotiate directly with a president whom many in their party distrust.

The top-level talks could point the way to a bipartisan resolution of what has so far been an acrimonious budget process, marked by efforts in both parties to score political points. Until now, GOP leaders have been wary about negotiations with the president, in part because of Clinton's past successes in extracting concessions on spending programs.

But with Clinton having already vetoed two spending bills -- and threatening several more -- congressional Republicans have apparently come to the conclusion that they need to deal directly with the White House to bring closure to a budget battle that has exposed divisions in their own party and elicited criticism for alleged accounting "gimmicks."

In accepting the presidential invitation, the Republicans stressed they will consider no deals with Clinton that tap surplus funds generated by Social Security payroll taxes -- even though the Congressional Budget Office says GOP spending plans already have done that.

"We will not agree to a summit that would try to find secret ways to spend the Social Security surplus," said House Speaker J. Dennis Hastert (R-Ill.).

Clinton, too, says he doesn't want to dip into Social Security funds. But his alternative is based on proposed tax hikes that Congress is unlikely to accept.

In the end, fiscal experts predict, Congress and the White House will settle on a compromise that will rely in part on Social Security surpluses -- but involve enough budgetary gimmicks to obscure the picture. For example, Congress has labeled census expenses and routine military maintenance as "emergency" costs, a designation that keeps them from being counted against spending limits. Ultimately it makes little difference, say authorities on Social Security, because the government for years has used the trust fund's surpluses to cover other spending needs without affecting program recipients.

"This meeting may be as much for show as anything else," said Stanley Collender, a budget authority at the Fleishman-Hillard consulting group. "Both sides are looking for a little political cover here."

As they have rushed to finish work on the last of 13 spending bills, Republican lawmakers have substantially narrowed their differences with the administration. In some areas, including defense, veterans health care, space and education, they have approved more money than the president requested.

But the two sides have profound philosophical differences, particularly over education. The administration's priorities include hiring additional teachers and shrinking classroom sizes, while the Republicans favor block grants that states and local authorities can spend as they see fit.

Administration officials have also objected to measures they say would hurt the environment, such as provisions to help the oil and mining industries.

Yesterday, Clinton vetoed the $12.6 billion foreign operations bill and promised more vetoes on other spending measures. He complained the bill contained no money to carry out the administration's obligations under the Middle East peace accord reached at Maryland's Wye River plantation. He said the bill "seems to me to be the next big chapter in the new American isolationism, right after the Comprehensive Test Ban Treaty." The Senate last week rejected the treaty, which was intended to bar nuclear weapons tests worldwide.

Hastert said Clinton's spending requests for foreign aid and other programs can't be met without dipping into Social Security. "The president wants to either raise taxes or raid the Social Security trust fund," Hastert said.

Clinton argues that his spending proposals are affordable because he also proposed $8 billion in tobacco tax increases.

Congressional GOP leaders, saying a cigarette tax hits the working poor especially hard, summarily rejected the idea.

White House officials, however, say the president will pitch the tax proposal again today when the lawmakers arrive at about 5 p.m.

"Obviously we think it's good health policy" as well as a way to raise revenue, White House Chief of Staff John D. Podesta said in an interview yesterday.

Clinton said he would agree to further "continuing resolutions," or stopgap spending measures, to keep the government running beyond Thursday, the final day of a three-week extension that began with the new fiscal year on Oct. 1.

"We have to put politics aside and seek common ground," Clinton said. "We're going to have to make tough choices and we're going to have to make them together."

Armey said GOP leaders pounced on the president's invitation to meet because it marked the first time the administration proposed working jointly with the Republicans to find a way to complete their work without touching Social Security.

"It's going to be a good chance to complete the year and fulfill our mutual goals and objectives," Armey said.