As Clinton administration officials and congressional budget writers intensified efforts to resolve their budget fight, a White House spokesman said today that President Clinton remains committed to seeking a cigarette tax increase.

Republican congressional leaders emerged from a White House budget meeting Tuesday evening saying that Clinton had agreed to abandon his effort to pay for extra spending for schools and other programs by raising taxes, including a proposed 55-cent-a-pack increase in the federal cigarette tax. But White House spokesman Joe Lockhart said today that Clinton had only conceded that the GOP-controlled Congress was not supportive of the full 55-cent proposal. "The president indicated he recognized the Republicans might not go for all 55 cents of the tobacco tax, but certainly we still believe it is an important part of our health care agenda to reduce teen smoking, and we're going to see what we can do as far as getting what we can there," Lockhart said. Twenty days into fiscal 2000, White House budget chief Jack Lew was expected on Capitol Hill today to begin sorting through differences ranging from foreign aid to hiring teachers and buying park lands. At an 80-minute White House meeting Tuesday evening, the two sides agreed to try resolving their differences in a week. If they haven't, White House officials say Clinton may veto the $268 billion defense bill a step that could increase his leverage by adding it to the measures from which savings could be extracted to pay for increases elsewhere in the budget. "We'll hopefully get this thing wound up in a reasonable time," House Speaker Dennis Hastert, R-Ill., said. "I think there's a sense of urgency about getting this done and getting it done by next Tuesday when the president would have to start vetoing bills if it's not done," House Minority Leader Dick Gephardt, D-Mo., said. So far, disputes have blocked the enactment of eight of the 13 annual spending bills for fiscal 2000, now 20 days old. Clinton told the lawmakers that today he would sign a sixth bill covering veterans, housing and environmental programs. But five of the bills either have been vetoed or face veto threats, and it is those measures that bargainers would focus on. Republicans have been adding billions of dollars to those bills, narrowing their differences with Clinton to less than $10 billion – out of a total of about $145 billion in annual spending that lawmakers control. The measures cover the departments of Health and Human Services, Labor, Education, Interior, State, Justice, Commerce and other agencies, plus foreign aid and the District of Columbia budget. But arguments remain over policy – for example, whether to give states more leeway over money Clinton wants to use to hire additional teachers. In recent weeks, Republicans have made leaving Social Security surpluses alone a major goal of their budget fight with Clinton. The president has agreed, though at one point he also proposed using the surpluses if Republicans would agree to do so. Clinton and Democrats have insisted that even without the president's spending demands, Republicans rely heavily on budget gimmicks and are on track to spend Social Security surpluses – which Republicans deny. But participants left the White House meeting saying they would look for non-Social Security savings to pay for extra spending. "Their key goal is to not spend the Social Security surplus," White House budget chief John Podesta said. "We've said that we share that, notwithstanding the fact that we question whether their gimmicks and numbers add up." Both parties have used Social Security's surpluses to cover spending for decades, without affecting the system's ability to pay benefits. The pension system trades its excess cash for Treasury bills, and if the cash is then spent it has no effect on Social Security itself. But looking ahead to next year's elections, each party is eager to cast itself as a defender of the massive pension program for the elderly and disabled. And growing surpluses in the non-Social Security part of the budget – along with an increased use of ideas like delaying some spending until fiscal 2001 – have made it possible to stay away from the Social Security money. The discussions will include proposals – largely supported by both sides – to extend expired tax breaks for corporate research and development and other purposes. The two sides also said they will discuss rolling back some reductions in Medicare reimbursements to hospitals and nursing homes that were enacted as part of the 1997 budget-balancing deal between Clinton and Congress. Despite recent sharp clashes over the Senate's rejection of a nuclear weapons test ban treaty and some of Clinton's judicial nominations, participants said the mood during the Cabinet Room meeting was cordial. Before getting down to business, they briefly discussed football and cowboy boots, which Vice President Al Gore was said to be wearing. Despite their differences over spending for hiring teachers, purchasing park lands and other issues, neither side was ready to let the dispute escalate into an attention-grabbing government shutdown. With a stopgap bill keeping agencies open set to expire Thursday night, Congress sent Clinton a measure extending that deadline through Oct. 29 while lawmakers work through budget differences. The president was considered certain to sign it.

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