Budget Fight Again Brings Fiscal Crisis

WASHINGTON —  A nightmarish legislative gridlock once again threatens to bring government operations to a halt by the end of the week if the nation’s lawmakers fail to forge the compromises on critical money measures that have eluded them thus far.

If the partisan mess is not untangled by Thursday--the latest “drop-dead date,” in the parlance of lawmakers--virtually all federal agencies will run out of spending authority, the lucrative 16-cent-a-pack cigarette tax will be cut by half and the government will run out of the cash it needs to meet $16 billion in interest payments due Friday.

Warning From Dole

” . . . Unless we do something, we will default on our obligations for the first time in history,” Senate Majority Leader Bob Dole (R-Kan.) warned over the weekend.

The key to the impasse is a high-stakes game being played by Republicans and Democrats in the Senate and House alike as they attempt to persuade each other to accept competing plans to cut spending and eliminate government red ink.

The issue has preoccupied Congress ever since Republicans Phil Gramm of Texas and Warren B. Rudman of New Hampshire pressured the Senate five weeks ago to attach their plan requiring a balanced federal budget by 1991 to a measure raising the national debt ceiling from $1.8 trillion to more than $2 trillion.

But the Democratic-led House significantly altered the Gramm-Rudman plan, and the politically popular but fiscally complicated notion is still bouncing back and forth between the two chambers--leaving much of the rest of congressional business caught in the middle.

Raiding Social Security

By coincidence, several significant spending controversies all come to a head Thursday:

--The Treasury Department, which has raided the Social Security trust fund to raise cash since the government’s borrowing power ran out more than one month ago, says it will be depleted of both money and financing gimmicks--and, for the first time ever, will be unable to pay government bills.

--A stopgap spending bill, passed by Congress to fund the operations of virtually all government agencies, will expire. Lawmakers passed the temporary bill just before the start of this fiscal year on Oct. 1 because they had yet to agree on final funding levels for most departments. Six weeks later, they are still bickering, and a debate over whether to slash even temporary spending levels is delaying attempts to extend the life of that measure for an additional three weeks.

--The 16-cent-a-pack cigarette tax will revert to 8 cents unless Congress acts to extend it. President Reagan is opposed to retention of the higher tax level, but congressional leaders are counting on the extra revenue to bolster a $55-billion deficit-cutting package that is required to implement a budget agreement worked out last summer. The higher tax would bring in an estimated $4.9 billion over the next three years. Attempts to fine-tune the so-called reconciliation bill, which includes the cigarette tax, also have been delayed.

House and Senate negotiators will resume efforts today to reach a compromise on their balanced-budget bills. Both measures outline a series of descending annual deficit targets, which, if not met, would require automatic spendings cuts in most government programs.

Embarrassing Constraints

Republicans insist that the Democratic plan was devised to force politically embarrassing spending constraints on the White House. It would exempt several expensive poverty programs from the automatic cuts and would force the deficit to be slashed deeper and faster than would the GOP plan.

On the other hand, Democrats contend that the Gramm-Rudman program was devised to delay tough and politically difficult budget-cutting requirements until after the 1986 elections, in which Republicans fear they may lose their slim hold on the Senate.