Senators Proposing Budget Compromise : Plan Cuts Deficit by $60 Billion, Retains Social Security Freeze

Senate budget negotiators, in the first sign of a break in the weeklong stalemate over the fiscal 1986 spending plan, offered Wednesday to compromise with the House on military spending and poverty programs but stuck close to their position on denying cost-of-living allowances for Social Security recipients.

The proposal, which calls for $60 billion in deficit reductions in 1986, would achieve greater savings over the next three years than the resolutions adopted by the Democratic-controlled House and the Republican-led Senate. Both of those called for savings of about $56 billion next year.

$101-Billion Deficit

Under the proposal, the deficit could fall as low as $168 billion next year and $101 billion by 1988 if the economy rebounds strongly and interest rates remain low.

But the offer did not appear to have settled differences between the conferees--and may have made negotiations slightly more difficult, because House members were not immediately given a chance to consider the proposal.

In an unusual sequence of events, Senate Budget Committee Chairman Pete V. Domenici (R-N. M.) finally outlined his offer after House negotiators had left to vote on several bills in the House chamber. Domenici blamed the mix-up on a 40-minute delay in copying the three-page Senate plan, but a spokesman for the House conferees fumed that Domenici ended up explaining the proposal to reporters before House negotiators had seen it.

Domenici, frustrated by the delays himself, complained: “We can send people to the moon, but we can’t keep a Xerox machine working.”

In an attempt to reach agreement on the touchy issue of Social Security cost-of-living increases, the Senate proposed an additional expenditure of $2.1 billion so low-income beneficiaries would not be harmed by the Senate-proposed benefit freeze.

In addition, the Senate proposal would meet the House half way on direct military outlays but would increase the Pentagon’s budget by the amount of inflation, now estimated at 4%.

Poverty Program Funds

Under the plan, nearly all low-income programs and other programs for which the House proposes higher spending than the Senate--such as Medicaid, food stamps, student aid and Supplemental Security Income--would be funded at levels close to those recommended by the House.

However, on non-poverty programs, such as the Small Business Administration and mass transit, the Senate continued to insist on cutbacks deeper than those accepted by the House.