Why US government nearly closed up shop

A widening split between Congress and the White House over which parts of American society should bear the brunt of budget-cutting lies at the root of the fiscal impasse that threatened to shut down parts of the federal government.

This political hot potato - capable of searing any politician who mishandles it - is being tossed back and forth along Pennsylvania Avenue, with Democrats and Republicans pinning blame on each other.

The immediate crisis was eased when the House voted 221 to 176 to give President Reagan an extension to Dec. 15 of the funding resolution which had fed government money into federal programs through Nov. 20.

The Senate was expected to follow suit. A swift presidential signature would allow the federal government to resume full operations and would send weary legislators and Mr. Reagan off to Thanksgiving vacations.

Fundamentally, however, the problem would remain unsolved and unclarified, perhaps until President Reagan unveils his proposed fiscal 1983 budget next January.

That proposal should cut through the murk of confusion surrounding fiscal 1982 and provide firm guidelines as to how much, and where, Reagan wants to clip the wings of government spending in the future.

Critics of the President's approach, including House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts, contend that he cannot boost defense outlays, cut taxes hugely, and expect Congress to enact further cuts in programs affecting the poor, aged, and other vulnerable Americans.

These critics - centered among Democrats but including some Republicans - stress that 70 percent of the $35.2 billion trimmed from the budget last summer comes out of benefits for the poor, jobless, and handicapped.

Strong sentiment rises in both House and Senate to spread budget cuts more evenly to include defense, an area the President has largely shielded from spending trims.

The dispute sharpened after disclosure that Budget Director David A. Stockman had been forbidden by the White House to put the defense budget under the same microscopic survey to which he was subjecting social programs.

Mr. Stockman, in his now-famous interview published in the Atlantic Monthly, spoke of greed and waste at the Pentagon and gave the impression he was thirsting to get his hands on the defense budget later on.

Stockman contends that both defense outlays and entitlement programs - social security and other income transfers to groups of Americans - must be cut, or future budget deficits will soar out of sight.

The budget for fiscal 1982, which ends Sept. 30, 1982, is expected to wind up from $80 to $100 billion in the red, compared with $57.9 billion for fiscal 1981 . Highest deficit on record was $65.6 billion, chalked up in 1976 under President Ford.

Reagan has given up hope of balancing the budget by 1984, but strives to shape a 1983 budget - largely through future spending trims - that will make next year's deficit smaller than that of 1982.

By this means he hopes to convince the investment community, symbolized by Wall Street, that his program will work. Distrust of Reaganomics has been a major factor in pegging interest rates abnormally high.

A missing ingredient, according to Wall Street critics, is some restoration of tax revenues to the US Treasury, either through the imposition of new taxes or postponement of some part of the Reagan tax cut program.

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