NEWS ANALYSIS : Budget Battle Sparks Struggles Over Strategy

WASHINGTON —  From Capitol Hill to the White House, the air is filled with noise. But it is the sound of preparation for battle, not of battle itself.

And they are quietly adjusting their positions to gain maximum strength for the real showdown both sides believe is still weeks away: the search for a final compromise that apparently will not begin until after the GOP passes its revolutionary budget bill and President Clinton vetoes it.

In public, the White House and congressional Republicans are escalating their rhetorical salvos over the budget, which this year encompasses not only slashing federal spending but also cutting taxes, reshaping Medicare and much more.

Behind the scenes, meanwhile, strategists on both sides are concentrating less on their opponents than on their own ranks. They are gauging the mettle of their troops, measuring the political risks of compromising versus hanging tough.

To some extent, bluster before compromise is business as usual for Washington.

This year, however, the stakes are so high, the proposals for change so sweeping and the forces being unleashed potentially so uncontrollable that no one can predict the outcome with certainty.

Stanley E. Collender, a budget expert with the Price-Waterhouse accounting firm in Washington, pointed out that in an ordinary political year, the opposing sides could be counted on to split their differences, agree on a plan and claim victory.

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“But this is not a normal year,” he said. “It’s not clear where everyone’s line in the sand is.”

For the Republican majorities in the House and Senate, who proclaimed a revolution and labored for 10 long months to remake Washington and put the country’s financial books in order, this is for all the marbles. On the line are their promises to reform welfare, reshape Medicare, “devolve” power from Washington to the states and--above all--balance the federal budget in seven years.

For Clinton, what is at stake is not only his chance for reelection in 1996 but the judgment history will pass on him as President.

What sharpens the drama still more is the realization by each side that there are risks both in compromising and in hanging tough.

Even in the House, where commitment to the full Republican revolution is strongest, there are signs of nervousness.

Privately, House Speaker Newt Gingrich’s senior lieutenants acknowledge that “nervous Nellies” in their ranks fear that the GOP could go too far. These members hear disturbing reports from constituents, for example, that the Medicare plan has stirred anxiety among politically potent elderly voters. There is concern too about public reaction to the GOP tax cuts and to proposals affecting the environment and other sensitive issues.

Thursday’s vote in the House not to include severe restrictions on enforcement of environmental regulations in the spending bill for the Environmental Protection Agency was a warning to GOP leaders that such reassurances may not always suffice. Though GOP leaders, including House Majority Whip Tom DeLay (R-Tex.), Gingrich’s chief vote-counter and enforcer of the party line, were committed to the restrictions, 63 Republicans defected to help kill the proposal.

What gives some outside analysts pause is that, whatever nervousness may exist in the Republican ranks, the leadership shows no sign of reassessing its position or backing away from the brink.

That may simply reflect the Republicans’ strength: In the end, they may well force Clinton to accept a budget that contains the great bulk of what they want.

The line between confidence and overconfidence can be fine, though. And on Thursday night House Republican leaders were discussing a maneuver that could move them closer to the brink.

A new resolution extending the federal debt ceiling must be approved soon to avoid a government shutdown. Until now, both sides have kept such extensions largely outside the budget fray, fearing that injecting them into politics could shake the financial markets and alarm voters.

House Republicans were mulling the idea of coupling a debt extension with some measure from the wish list of their militant freshman members--abolishing the Commerce Department, for instance, or imposing work requirements on welfare recipients. Such an addendum, with its in-your-face connotation for Clinton, could push the White House to a veto.

Thursday morning, Republican leaders agreed to yield by seeking a short-term increase in the debt ceiling. But late in the day, a group of zealous freshmen was circulating a petition urging the leadership to stand firm.

On the White House side, there are similar impulses toward brinkmanship but similar pulls and tugs between compromise and intransigence.

Senior presidential aide George Stephanopoulos, in an interview Thursday, suggested that the GOP is a prisoner of extremist members and would be unable to make reasonable compromises on the budget.

“They are prisoners of the ‘contract [with America],’ ” he said. “Newt is the ultimate Dr. Frankenstein and the contract is his monster. The freshmen can’t go for a deal. Absent a financial crisis, I can’t see how there’s going to be a deal. I’d put the chance at less than one-third.”

But there are problems in the Democratic ranks just as there are among Republicans.

In the past few days, the White House has mounted a new effort to corral Democratic support from Capitol Hill to give the President a strong hand when negotiations begin.

Chief of Staff Leon E. Panetta, Stephanopoulos and Treasury Secretary Robert E. Rubin have called and visited the Hill, bending their efforts to line up that support, beginning with the 68 House Democrats who voted for a compromise budget backed by a group called the “coalition.”

At the core of this group are 22 conservative “blue dog” Democrats, with whom Rubin met this week. “This group is obviously key,” said one Administration official.

Their plan would eliminate the deficit over seven years, with smaller reductions in Medicare and Medicaid, farm subsidies and the tax credit for the working poor than in the GOP plan. Their plan includes no tax cut.

Members of the group, who often have voted with the GOP majority, acknowledge that they are flattered by the Administration’s new attention and say that they hope to stand by Clinton.

“We want to be helpful,” said Rep. Gary A. Condit (D-Ceres), leader of the group. “This gives the President a chance to seize a bloc of Democrats, so he doesn’t need to just negotiate with Republicans.”

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But in a sign that these lawmakers will not pledge allegiance blindly, he added that the Administration needs to fill them in on its bottom line. “We want to know what the specifics are,” he said.

Clinton’s aides have also been trying to reach out to more liberal Democrats and have been taking substantial heat for it. In a session with the Democratic caucus this week, Panetta heard some frank expressions of unhappiness from several members, including Rep. Rosa DeLauro of Connecticut, Richard J. Durbin of Illinois and Joseph Kennedy of Massachusetts.

If Clinton will not agree to a plan acceptable to most Democrats, he could end up repudiated by his own party, Kennedy declared. “This could be Jimmy Carter revisited.”

Times staff writers Janet Hook, Jonathan Peterson and Paul Richter contributed to this story.