US finally breaks deadlock on budget

RUPERT CORNWELL

Washington

President Bill Clinton and Congress last night reached a stopgap budget agreement ending the six-day shut down of the federal government and committing both sides to negotiate to achieve a balanced budget within seven years.

The deal, which permits government spending to resume at 75 per cent of previous levels, runs until 15 December. By then the Republican-controlled Congress should have sent to the White House the full set of 13 spending bills covering the 1995/96 fiscal year which began on 1 October.

The shutdown laid off 800,000 "non-essential" workers, a third of the federal work force, and closed social security offices, passport and veterans' services as well as federally run monuments and tourist attractions, from the Grand Canyon to the Statue of Liberty.

On both sides the initial reaction was less to claim victory than sheer relief that an impasse had been resolved.

The outcome is a compromise that saves everyone's face, leaving President and Congress alike with their options open before the battle proper starts over the route to a balanced budget by 2002.

The Republicans have won their basic point, of committing Mr Clinton to a seven-year time frame, on the basis of figures provided by the respected and neutral Congressional budget office. However Mr Clinton has delivered on his pledge to protect vital social programmes by inserting wording into the deal that there will be "adequate funding" for the Medicare and Medicaid health schemes, pensions and veterans.

The outcome was "a satisfactory conclusion to a tense situation", Bob Dole, the Senate Majority leader, said. Speaker Newt Gingrich hailed the deal as "among the greatest moments in recent American history". Most relevantly, the President "fully supports the agreement and will sign it," Tom Daschle, leader of the Democratic minority, declared on the Senate floor as the compromise was announced.

Initially the stand-off had been overwhelming blamed by the public on the Republicans in Congress. But in the last 48 hours the tide has been turning, while Democratic defections on Capitol Hill raised the spectre of a humiliating override of a presidential veto.

Meanwhile, Mr Dole pulled off a narrow victory in a keenly awaited straw preference poll of Florida Republicans which reinforces his position as front-runner to win the party's nomination to challenge Mr Clinton next year.

Mr Dole got 33 per cent of votes cast by 3,400 delegates, ahead of Senator Phil Gramm of Texas with 26 per cent, and former Tennessee governor Lamar Alexander with 23 per cent. The winners of the two such previous polls, Ronald Reagan in 1979 and George Bush in 1987, went on to gain the nomination and then the White House.

"We won and that's what matters," Mr Dole's aides said. More important, the result turns the Republican contest into a three-man race. It may well may force some weaker and poorly financed candidates, such as Senator Arlen Specter of Pennsylvania and Congressman Bob Dornan of California, to drop out entirely in the next week or so.

As the wrangling in Washington continued, Republicans delivered a fresh show of strength in the once solidly Democratic South when Mike Foster, a millionaire, won a landslide victory to become only the second Republican Governor of Louisiana in 122 years. He defeated his black Democrat opponent, Cleo Fields, by a crushing 64 to 36 per cent.