BUDGET BATTLE COULD LINGER INTO ELECTIONS.

Byline: Carl P. Leubsdorf

AFTER two months of the great budget battle of 1995-96, it's clear that congressional leaders and President Clinton have made more progress in coping with the politics of the impasse than with its substance.

That was evident even before talks between the Republican Congress and the Democratic president broke off Tuesday over continuing sharp differences on such issues as Medicare, Medicaid and tax cuts.

Clearly, neither side can claim victory. Polls indicate Clinton has lost his initial advantage with the public. But each major participant may still be able to claim some substantive and political success.

The president's earlier gains were helped by GOP miscalculations. The attempt to increase Medicare fees and Speaker Newt Gingrich's claim he was partly motivated by an alleged snub on Air Force One clouded GOP efforts to focus on its popular goal of a balanced federal budget.

But the high profile battle also enabled the president to reinforce his standing with key Democratic constituencies and to demonstrate a determination at odds with his image of seeming indecisive.

By accepting the seven-year balanced budget goal, Clinton was able to narrow his differences with the Republicans and reduce the GOP's advantage on an issue where the public clearly backs its goal.

And the timing of his decision to present his own seven-year balanced budget plan may have been prompted by a recognition the prolonged impasse was beginning to erode his standing.

Though an agreement might have been more helpful, Clinton has laid the basis for a yearlong effort to persuade voters concerned about details in the GOP budget that only his re-election can prevent the full implementation of the Republican agenda.

But Gingrich and his fervent House GOP troops can claim some success too, despite a stumbling start and the risk of showing themselves insensitive to human needs.

For starters, Clinton finally endorsed their ultimate goal of a balanced federal budget by 2002 that uses the calculations of the Congressional Budget Office.

This was clearly something Clinton was reluctant to do, because of his belief that many Americans would be hurt by making cuts over seven years, rather than spreading them out over 10 years.

Now, the GOP can go to the voters, say that it forced the president's hand, and blame him for the talks' ultimate failure.

Besides, the GOP is doing better on the substantive front than on the political front. In fact, it is winning the long-term battle to force substantial reductions in the size and scope of the federal government.

Though Clinton's seven-year balanced budget plan is unacceptable to the GOP because of its differences on Medicare, Medicaid, domestic spending and tax cuts, it accepts deeper cuts in domestic programs than the president was previously willing to accept.

And the appropriations bills the president has accepted follow the GOP priorities of domestic cuts and military increases. Though Gingrich has not fared well personally, the GOP agenda is doing pretty well.

The biggest winner so far may be Senate Majority Leader Bob Dole, who benefits both from his pragmatic approach to the highly ideological struggle, and from helping to advance the balanced budget goal.

That may explain why the latest "USA Today"-CNN poll shows both that Dole's approval has shot back up and that he has overcome Clinton's lead in their 1996 presidential matchups.

Those statistics indicate that while Dole's decision to push for reopening the government prompted a sharp reaction from some conservative critics led by Texas Sen. Phil Gramm, it was seen by the public as a positive step toward a goal Americans favor.

Aides to Gramm noted before these poll numbers became known that opposition to Dole's effort was likely to be stronger among the more conservative electorate that votes in Republican caucuses and primaries.But the poll showed Dole maintaining a big lead over GOP rivals.

What remains to be seen, if Dole is the GOP nominee, is whether he can persuade voters that Republicans should have total control of the budgetary process rather than sharing it with Clinton.

In any case, the effort to control the budget seems destined to be a principal battleground in the November election.