BILL FORGED TO THWART 3RD FEDERAL SHUTDOWN.

Byline: David Hess and Robert A. Rankin Knight-Ridder Tribune News Wire

White House and congressional leaders agreed Thursday on the terms of a bill that will keep unfunded federal agencies open for seven more weeks and avert a third shutdown that could have idled thousands of workers and angered taxpayers.

The House approved the measure on a 371-42 vote Thursday night, and the Senate was expected to pass the bill today.

President Clinton, though unhappy about reduced spending levels for the Environmental Protection Agency and several other programs, sent word that he would sign the measure.

The bill marks a fresh tack for Republicans in their ongoing battle with Clinton over spending priorities and balancing the budget.

Twice before, in aborted efforts to wring major concessions on the budget from Clinton, Republicans forced government shutdowns - and then watched their poll ratings drop as voters blamed them for the inconvenience that followed.

So instead of trying to strong-arm Clinton into adopting their agenda, GOP leaders now say they will squeeze what they can get now from federal programs and leave deeper cuts in spending and sweeping changes in Medicare and other major programs for a later time - after the November elections.

"We don't believe it's possible to get a (comprehensive) budget agreement with the president," said House Speaker Newt Gingrich, R-Ga. "But we can make a down payment" on a balanced budget.

Both Clinton and the Republican Congress can claim a measure of victory from the deal.

Clinton clearly gained the biggest tactical victory. He blocked the GOP revolution's drive to overhaul the major federal benefit and welfare programs and shift power sharply from Washington back to state capitals. It appears he forced the postponement of those philosophical questions until November's elections.

Yet Republicans racked up significant achievements as well. This deal forces Clinton to accept up to 25 percent lower funding than fiscal 1995 levels for nine Cabinet departments and several major agencies. The funding restrictions could save as much as $31 billion if kept in effect for the remainder of the fiscal year.

More importantly, the GOP drive set the themes of the 1996 political debate and forced Clinton to adopt the GOP goal of balancing the federal budget in seven years. That forces him to plan for sharply lower spending than he anticipated when he won the presidency in 1992.

A separate but related impasse over raising the existing $4.9 trillion ceiling on the federal debt was left unresolved Thursday. Unless Congress authorizes the Treasury to borrow new billions by March 1, the government could go into default - which could destabilize financial markets and force up interest rates enough to plunge the faltering economy into recession.

The Senate will take up a bill to lift the debt ceiling as its first order of business upon its return from recess on Feb. 26, but GOP leaders say they may add conditions to it that Clinton may be unwilling to accept.

Several conservative Republicans oppose raising the debt limit unless the president agrees to additional spending restraints in Medicare, Medicaid, welfare and other entitlement programs - the big disputes that blocked a comprehensive budget deal all year.

"There's no way in hell I'm going to vote for a permanent debt ceiling increase without major changes in entitlements and a budget agreement," said Rep. Christopher Shays, R-Conn., a leader in the drive to force Clinton to yield on the budget.

But an increasing number of Republicans, including some of the conservative freshmen who initially opposed any compromise on the debt ceiling, have been spooked by Wall Street's reaction to a threatened default and by polls indicating that the public would blame them for it.

The new short-term spending bill contains two items supported by the anti-abortion lobby that GOP leaders said were necessary to win enough Republican support in the House to pass it.

One would reduce by about one-third American contributions to foreign countries and to the United Nations for family-planning and population-control programs. The other would end federal funding to the National Institutes of Health for live human embryo research.

Ginny Terzano, a White House spokeswoman, said the research restriction would have limited impact because NIH "doesn't do this kind of research." Initially, Republicans sought to ban fetal tissue research, but White House objections forced them to drop the provision.

Acting just a day before a previous stopgap bill was due to expire, Congress proposed to provide money through March 15 for nine federal departments and several major agencies that employ some 280,000 workers and provide work for tens of thousands of private contractors nationwide.

Money would be provided for the departments of Health and Human Services, Education, Labor, State, Commerce, Justice, Veterans Affairs, Interior, Housing and Urban Development, along with the federal judiciary, the Environmental Protection Agency, National Aeronautics and Space Administration and hundreds of other agencies through mid-March.

In addition, foreign aid programs would be funded through the rest of this fiscal year, ending Sept. 30.

To reduce chances of a presidential veto, the bill would also provide money to continue Clinton's cherished "Cops on the Beat" program for towns and cities, drug courts to encourage rehabilitation and treatment of first-time, nonviolent drug offenders, the AmeriCorps program in which young people earn college tuition for community service, and the advanced technology program to help American companies compete against foreign rivals.

The measure does take a slap at two of Clinton's Cabinet secretaries, Energy boss Hazel O'Leary and Commerce chief Ronald Brown, by imposing strict limits on their travel budgets. Both have raised hackles among House Republicans for extensive travel, both in the United States and abroad, with large entourages. The bill would restrict their travel budgets to "no more than 110 percent" of their average travel expenses between 1990 and 1995.

The stopgap measure cuts off all funding for 10 small programs in HHS and the Education Department, including such ones as dropout prevention programs and cultural programs to promote Native Hawaiian and Alaskan arts.

AT A GLANCE

Main provisions of the legislation to extend the government's spending authority:

Funds foreign aid programs through Sept. 30 at levels approved by Congress for 1996. Funding for international family planning programs is not available until July 1, and after that at no more than 65 percent of the current rate.

Funds Commerce, Justice, State, Veterans Affairs, Housing and Urban Development departments and other agencies through March 15 at levels approved by Congress for fiscal 1996.

Funds Labor, Health and Human Services, Education, Interior and other agencies at 1995 levels.

Programs Congress is seeking to terminate would be funded at 75 percent of 1995 levels. Among programs funded at 75 percent of 1995 levels are Americorps, the Advanced Technology Program, Cops on the Beat, drug courts and the Ounce of Prevention Council.

Other provisions would:

Restrict spending on travel by Cabinet secretaries - except for the secretaries of state and defense, the CIA director and the U.N. ambassador - to 110 percent of average spending between 1990 and 1995. Republicans have been criticizing the travel of Energy Secretary Hazel O'Leary.

Restrict federal spending on embryo research.

Increase maximum Pell Grant award to $2,440 per individual, a $100 raise.

Direct sale of a House office building.

Order sale of 7 million barrels of oil from the Strategic Petroleum Reserve, raising $100 million.

Terminate 10 minor programs, including various education grants and a dropout prevention program and funding for Native Hawaiian and Alaska Native Cultural Arts.

Freeze new grant activities at a level not to exceed 75 percent of the prior monthly rate for several dozen programs, including the National AIDS Program Office, Youth Gang Substance Abuse, Homeless Service Grants, the Federal Council on Aging, Bilingual Education Support Services and the National Vaccine Program.

SOURCE: Associated Press

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Unhappy about diminished spending on several programs, President Clinton announced Thursday he would sign the stopgap bill. Associated Press At a glance (see text)