WASHINGTON - Democratic leaders may decide to steer President Clinton's budget package through the Senate this month by bypassing the narrowly divided Senate Finance Committee, the bill's next scheduled battleground, members of Congress said late last week.

That possibility emerged late Thursday after the House approved the $500 billion package by 219 votes to 213, a slim victory that the President and Democratic leaders squeezed out through hardball politics and heavy deal making. Senate aides said the political maneuvering will only increase as the bill faces the even tougher fights ahead in the Senate.

After the House vote, Finance Committee Chairman Daniel P. Moynihan, D-N.Y., and other committee members conceded that bypassing the committee under procedures outlined in budget law is an increasing possibility. Committee members would be stung by such a move, but Moynihan said he would agree to it if that was necessary to get Clinton's economic program passed.

But he and other committee members said that, instead, they have been trying to negotiate a compromise bill that answers the criticisms of conservative Democrats whose votes are critical to producing a bill.

The threat of having the bill taken away from the committee has become, in fact, a big motive behind the search for such a compromise, which in broad outline could be expected to dilute President Clinton's energy tax and substitute deeper is in entitlement programs, Moynihan said.

But municipal lobbyists are concerned that a compromise could cut back on Clinton's bond initiatives as well.

Several lobbyists said the permanent extensions of expired tax provisions in the House bill, including the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds, may have to be pared back if the finance panel decides to trim down the energy tax to placate two outspoken critics, Sen. David Boren, D-Okla., and Sen. John B. Breaux, D-La.

"If they, as Boren and Breaux are suggesting, will come up with a compromise that calls for reduced spending and reduced taxes, then [cutting back] the extenders might be a part of that reduction in spending," said a Washington, D.C. lawyer.

Another bond proponent said "the Senate has a history of not doing permanent extenders," and in the current situation, "I see no departure from that" pattern of approving temporary extensions.

Boren, for his part, issued a statement after the House vote that strongly suggested he would rather work out a compromise with other Democrats than see the committee bypassed with no opportunity to shape the bill at all.

"The action by the House makes it even more important that the bill be changed in the Senate so the final package will rely more upon spending cuts than tax increases." Boren said. "Some progress has been made in the House with the adoption of the entitlement cap proposal, but much work remains to be done."

The permanent extensions and other features of the House bill most likely would be preserved, however, if the committee failed to agree on a compromise bill by its June 18 deadline. the date by which the fiscal 1994 budget resolution requires the committee to report out a bill increasing taxes and cutting entitlement spending by $300 billion.

With no bill from the finance committee, the Senate Budget Committee and Senate leaders could be expected to introduce the House bill as an alternative during Senate floor debate because it fulfills the requirements of the budget directive, Senate aides said.

Senate minority leader Bob Dole, R-Kan., Clinton's chief antagonist on the Finance Committee and in the full Senate, said Thursday he believes that is exactly what Democratic leaders plan to do if Boren and Breaux continue to hold out against the energy tax in the Finance Committee.

"It's ironic that in the year of supposed ~change,' the Democratic majority will go to the mat to protect the tax-and-spend status quo." he said. Dole is himself a master of hardball politics who led a Republican filibuster in April that killed the President's $16.3 billion job stimulus bill.

Dole vowed to continue his all-out campaign to torpedo the budget package in the Finance Committee as well on the Senate floor, and called for a groundswell of public opposition to its $250 billion of net tax increases. Taxpayers "should be putting senators on the hot seat during the next three weeks," he said.

Besides dodging the Dole-led Republican attack, Finance Committee Democrats have plenty of other concerns to juggle in trying to forge a compromise, including maneuvering to influence the outcome of negotiations with the House over any final version of the bill.

Sen. Kent Conrad, D-N.D., another swing vote on the committee. said last week it would be "a big mistake" for the committee to forefeit its right to act on the bill, in light of several House tax bill provisions that are antagonistic to conservative Senate Democrats who, like himself, are from farm states.

Any move to cut back on the bond extensions might also be done with an eye on the House, said a municipal lobbyist. Senate lawmakers may want to approve only temporary extensions "to get leverage in conference," the lobbyist said.

According to that strategy, if the House wants to maintain the permanent extensions in its version of the tax bill, it would have to give in to the Senate on some other point.

"We're in for a fight" in the Senate on permanent extensions, said John C. Murphy, the executive director of the Association of Local Housing Finance Agencies. But he predicted that House-Senate conferees, in the end, would agree to make the extensions permanent.

Most sources said it was too early to tell whether there would be an opportunity to add bond simplification provisions to the package during debate in the Finance Committee. But the municipal lobbyist said the Senate lawmakers may be willing to put some of those items in the measure to make up for the defeat of the job stimulus bill with its $8 billion of state and local infrastructure aid.

The simplification provisions that bond proponents have been pushing for include a proposal that would increase to $10 million the $5 million small-issuer exemption from the arbitrage rebate requirement. Another one, which is favored by Moynihan, would eliminate the $150 million limit on the amount of bonds that a 501(c)(3) organization may have outstanding at any one time.

The House bill also includes provisions to create a new type of exempt facility bond that would be used to finance businesses in enterprise zones, and to eliminate the requirement that bonds issued for high-speed rail projects receive an allocation under the private-activity volume cap for 25% of each issue.

Lobbyists said they did not expect the Senate to make any major changes to those provisions.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.