Reagan Willing to Compromise on '86 Budget

Times Staff Writer

President Reagan and Senate Republicans, still deadlocked over how much money should be allocated for defense, agreed Friday to establish a working group of senators and Administration officials to develop an overall compromise on the fiscal 1986 budget.

Although Reagan did not drop his opposition to any of the cuts in defense spending sought by the Senate GOP leaders, his willingness to negotiate with them was widely viewed as the first sign of flexibility on the subject that he has shown.

"What it begins is an effort . . . to seek some way to arrive at an accommodation and to present it to the President to see if it is in any way acceptable to him," said White House spokesman Larry Speakes. "It's going to take some convincing of the President on these issues, but he understands you have to move in this direction in order to present a budget."

Senate aides, refusing to be identified, said Reagan realizes that his budget proposal combining sharply higher defense spending with deep cuts in domestic programs has virtually no support in the Senate, even among members of his own party. As one Senate source put it, "The news is the President is now ready to address these things, and he's admitting it publicly."

The Republican-led Senate Budget Committee last week approved a budget plan designed to trim $57 billion from the expected $200-billion-plus deficit projected for fiscal 1986. The Budget Committee's plan would limit the growth in defense spending to the pace of inflation next year, which is projected at 4%.

'Positive and Constructive'

The budget working group--hailed by Senate Majority Leader Bob Dole (R-Kan.) as a "positive and constructive" step toward ending the current stalemate--was established at Dole's suggestion after a nearly two-hour lunch meeting between the President and a dozen Republican senators in the family dining room of the White House.

In the past, joint committees of White House officials and congressional leaders have developed budget compromises that ultimately proved to be acceptable to the President. According to sources, Dole is hoping to reach consensus earlier than usual this year--even before an expected Senate vote on the budget early next month.

The budget group is expected to be made up of at least five Republican senators and five Administration officials, including Budget Director David A. Stockman. The group's first meeting is expected to be held as early as next Tuesday.

Weinberger Against Cuts

It was not known whether Defense Secretary Caspar W. Weinberger will be represented on the negotiating panel. Unlike Stockman, Weinberger has been adamantly against any cuts in the President's proposed $286-billion defense budget, which calls for a 6% increase after allowing for inflation.

So far, planners in the Senate Budget Committee have not decided what specific defense programs would be cut in order to reach their projected goal of a 4% defense spending increase. But Speakes said they were told by the President that he would consider defense cuts only if they were discussed in terms of specific programs. He added that Reagan will not agree to cut any program that is important for national defense.

"If you're going to cut X billions of dollars out, he would look to see where those cuts can be made and to assure himself that it would not do harm to the national security," Speakes said. "He's going to honestly assess it on a program-by-program basis."

Reagan Wants Specifics

Reagan's demand for specifics will place a difficult burden on the Senate negotiators. Traditionally, members of Congress who have agreed upon the need for trimming defense spending cannot always agree on the programs to be cut. They usually try to protect programs that benefit their districts.

But Speakes insisted that the President's insistence on program-by-program cuts does not reflect a strategy designed to divide the senators. "It's not a ploy on our part," he said. "It is simply a better way to look at defense spending."

Many leading Republican senators have expressed support for a package of defense spending cuts recently proposed by Sen. Warren B. Rudman (R-N.H.) that would trim civilian military employment. Rudman contends that his plan has considerable support at the Pentagon.

President Angered

Speakes noted that the President has been angered by those in the Senate, mostly Democrats, who advocate trimming defense spending and then using the money to restore domestic programs that were to be eliminated under the spending blueprint submitted by the White House. As Speakes put it, Reagan "would not like to see his defense projection decreased and, by a like number, increases in domestic spending."

Although Reagan also opposes the Senate Budget Committee's proposed freeze in cost-of-living increases for Social Security recipients, he has previously said he would consider such a freeze if it were enacted by Congress. Speakes said the President's position on that issue has not changed.

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