Budget Sessions Fail; Each House to Start Passing Bills

House and Senate negotiators, exasperated after two weeks of fruitless efforts to agree on a fiscal 1986 budget, abruptly broke off their talks Tuesday and said they will begin passing spending bills without an overall spending blueprint.

The key issue over which they deadlocked was a Senate proposal to deny next year’s cost-of-living increases to Social Security recipients and other federal pensioners.

“I have concluded that there is no useful purpose to continue this conference” as long as the House conferees do not budge from their insistence on a Social Security cost-of-living increase, Senate Budget Committee Chairman Pete V. Domenici (R-N. M.) said.

However, House Majority Leader Jim Wright (D-Tex.) insisted that there is “a strong moral commitment on the part of the government to those who have paid faithfully into these programs . . . . The House is not prepared to renege on its commitment to Social Security recipients.”

Leaders in both houses expressed concern that the appropriations subcommittees that put together the budgets of federal agencies and programs--generally strong advocates of the areas of government that they oversee--are unlikely to curb spending on individual programs without a formal budget resolution to use as a master plan.

“I think it’s a disaster for the American public and the nation,” House Budget Committee Chairman William H. Gray III (D-Pa.) said.

It was the lack of discipline in such a piecemeal, committee-by-committee approach to government spending that persuaded Congress to establish a formal budget process in the early 1970s. Since then, the budget process has operated in fits and starts, regularly stalling over sensitive political issues. But rarely have negotiators officially walked away from their talks, as they did Tuesday.

At the White House, spokesman Larry Speakes expressed hope that the negotiators “would get back to work . . . the sooner the better. We think that it is possible to resolve the differences.”

But Wright, noting that President Reagan, who supports the Senate package, had pledged during last year’s reelection campaign not to tamper with Social Security benefits, said: “Whether he wants to protect his promise or not, I want to protect mine.”

Pensions a Key Element

Canceling the cost-of-living increase for pensioners had been a key element of the budget plan that the Senate passed by a single vote last month. It amounted to $28.3 billion of the $295 billion in savings that the Senate had hoped to achieve over three years.

By comparison, the budget package that the House subsequently passed by a wide margin included a Social Security increase. The House Budget Committee had projected that its budget would save $259 billion--or $36 billion less than the Senate plan--over three years.

Although the suspension of the budget talks clearly threw congressional deficit reduction efforts into limbo, some conference committee members dismissed it as posturing.

“This isn’t the final move,” Sen. Nancy Landon Kassebaum (R-Kan.) told reporters. “It was choreographed to a certain extent.”

Sen. William L. Armstrong (R-Colo.) agreed: “We’re going to meet again. I don’t know when.” He said he hoped that, when congressmen return to their districts next week for their Fourth of July recess, constituents would pressure House members to move closer to the Senate position.

However, House negotiators insisted that public opinion favors their proposals to increase Social Security benefits enough to keep up with inflation and to allow no increase in new military spending authority. The Senate-passed budget plan allows new defense spending commitments to increase with inflation, projected at 4%.

House members pledged that, as their various committees begin approving spending legislation, they will hold to the guidelines of the House-passed budget proposal. But Domenici expressed doubt that either house could discipline its spending without an overall government budget plan as a guide.

“Even with the best intentions,” Domenici said, “it’s very doubtful to me whether we are even going to make a dent in this deficit.”

Without any change in current policies, the 1986 federal deficit is expected to approach $230 billion. Leading economists have warned that, unless the deficit is cut by at least $50 billion next year, government borrowing--potentially causing higher interest rates--will threaten the health of the economy.

Plans Exceeded Target

Both the House and Senate passed budget plans that exceeded that target--reaching $56 billion in savings in fiscal 1986--but have made almost no progress in their efforts to iron out the dramatic differences in their proposals.

Gray had earlier offered to allow military spending to rise with inflation, if the Senate would agree to a similar increase in Social Security, but Domenici rejected that offer.

In private talks with Gray, sources said, Domenici offered a variety of alternatives--including delaying cost-of-living increases by less than a year and allowing an increase lower than the rate of inflation. Those reportedly were rejected by the House negotiators.