Leaders Grow Gloomy on Budget Compromise : Dole Sees ‘Less Than 50-50’ Chance for Accord; House Chairman Sets 60-40 Odds Against Pact

Key congressional leaders sounded increasingly gloomy Sunday about crafting a compromise budget that will significantly trim the bloated federal deficit, suggesting that lawmakers might have to vote funds to keep the government running in the next fiscal year without benefit of any overall spending blueprint.

Speaking on NBC-TV’s “Meet the Press,” Senate Majority Leader Bob Dole said that Republicans expect to propose a new package of spending cuts this week to try to resolve an impasse with House Democrats over the shape of the fiscal 1986 budget, but the Kansas Republican rated chances that lawmakers would ever reach an accord at “less than 50-50.”

Meanwhile, Rep. William H. Gray III (D-Pa.), who as chairman of the House Budget Committee has locked horns with Dole’s Senate Republicans in joint legislative negotiations over temporarily freezing Social Security benefits and other domestic spending cuts, gave a budget pact even worse odds in a weekend interview on Cable News Network’s program “Evans and Novak.”

“I’m saying right now, we’re at about 60-40 against having a budget,” Gray predicted.

Budget negotiations between conferees from both chambers broke down last week in the midst of a confusing three-way struggle that appeared to leave Senate Republicans not only feuding with House Democrats but also with President Reagan.

Many GOP senators were already furious with the Administration for dropping its support of a Social Security freeze after many of them went out on a political limb to endorse the unpopular but money-saving idea.

Then, on Thursday, White House Chief of Staff Donald T. Regan appeared to aggravate the split with his fellow Republicans. In a speech before a business group, Regan denounced the budget deadlock as “disgraceful” and--without differentiating between parties--accused Congress of being “afraid to come to grips with” the spending cuts.

Obviously still stung by the remarks, Dole suggested that Regan would be more effective if he spent more time working with lawmakers rather than criticizing them in public.

” . . . I think before he starts pounding the table downtown he ought to come up and pound it up on Capitol Hill,” Dole said. “Our view is that we’ve made a lot of hard choices, and we didn’t back away from our hard choices. . . . If you want that job (Regan’s) you have to find time for us, because we’re in this game too.”

Dole said now that President Reagan is out of the hospital, he could still help bring about a solution with some personal lobbying of lawmakers. “My view is that the President can sort of step into the breach now . . . and maybe put it together, if he does it very quickly,” Dole said.

Presidential spokesman Peter Roussel said Sunday that Reagan had begun lobbying members of Congress and urging progress on deficit reduction and breaking of the impasse over the federal budget.

Reagan Works Phone

“The President this afternoon has initiated some phone calls to members of the Senate, asking them to allow a vote on the line-item veto,” an Administration-endorsed measure that faces the threat of a continued filibuster, Roussel said.

If Republican negotiators and Reagan can unite on a budget-cutting proposal, “then I think we’ve sort of reached showdown time,” Dole said. “This is it or it’s not it, and if it’s (a budget compromise) not going to happen, we ought to say so and get on with our work.”

But, adding a downbeat note, Dole indicated that the partisan wrangling had already made it nearly impossible to make a significant dent in the budget deficit even if compromise is reached. “I don’t think we deserve any medals,” Dole said. “Even if we get the Senate package we’re still going to have $200-billion deficits as far as the eye can see.”

The House and Senate budget talks disintegrated into bitter squabbling and personal attacks before they finally broke down altogether, causing many lawmakers to share Dole’s pessimistic view.

Former House Budget Committee Chairman James R. Jones (D-Okla.) predicted: “I don’t think there will be a budget.”

Specter of Elections

With time running out on this year’s session of Congress and next year’s elections already looming, the House and Senate conferees are having great difficulty mobilizing support for proposals that would achieve significant deficit reduction because almost all such proposals would carry unwelcome costs for millions of voters.

Compounding the reluctance to adopt potentially unpopular proposals is the fact that the deficit--enormous as it has become--does not yet appear to have generated serious economic problems for most Americans. And the threat of a jump in interest rates as a result of the government’s sopping up so much debt comes across as only a vague possibility in the public mind.

As a result, congressional leaders wonder if the impasse will ever be broken. “At the moment, I’m very pessimistic,” Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said as last week ended with no sign of renewed negotiations.

“We could perhaps make some more movement,” agreed House Budget Committee Chairman Gray, “but at some point, we have to say this is the bottom.”

Without the overall spending blueprint that a budget provides, Congress would proceed with its regular spending bills, just as it always does. But it would operate without the cost-cutting imperatives contained in an overall budget, and that could send the deficit soaring still higher.

Cuts Held Unlikely

Spending for each federal agency and program would be shaped by House and Senate committees whose members are typically active supporters of the programs under their jurisdiction. The agriculture committees, for example, consist largely of rural congressmen who are unlikely to cut farm spending without an overall budget that told them to do so.

Rep. Leon E. Panetta (D-Carmel Valley), a former Budget Committee member who advises the House Democratic leadership, recalled that congressional leaders initially hoped that the enormity of the deficit--nearly $230 billion next year if nothing is done--would generate some legislative give and take.

“But instead of becoming more flexible,” Panetta said, “everybody became more locked into their position.”

The “torpedo that really sank them,” Panetta said, was the deal struck the previous week when the Democrats who control the House agreed to allow new military spending commitments to grow with inflation next year, and President Reagan withdrew his support for the Senate’s proposal to allow no cost-of-living growth in Social Security benefits.

“It would be better if the President stuck behind us, rather than behind Tip O’Neill,” said Sen. Charles E. Grassley (R-Iowa) of Reagan’s agreement with the Democratic Speaker of the House.

“The water clearly has been poisoned at this table by that agreement,” California Rep. George Miller (D-Martinez), one of the negotiators, said as the talks broke off last week. “If the Senate needs time to go off and lick its wounds, fine.”

And House Democrats were somewhat uneasy about giving up on holding down defense spending, an issue that put them squarely on the side of public opinion. Moreover, as part of their deal with Reagan, they were called upon to propose further domestic spending cuts, which would be hard to sell to the powerful House committee chairmen who would have to carry them out.

Perhaps more importantly, the agreement between Reagan and the congressional leaders blocked the negotiators from the two biggest areas for potential cuts--defense spending and Social Security. With the Administration vowing to veto any proposed tax increases, many believe there simply are no opportunities left for putting a significant dent in the deficit.

“That ties your hands, and you’re left with that one-third of the budget that’s already been squeezed over the past four years,” Panetta said. “In this business, you have to have maximum flexibility.”

If Congress passes a spending blueprint in which defense and Social Security cuts are off limits, Jones said, “it’s going to be a relatively superfluous budget. . . . It clearly won’t solve the problem. It just postpones the day of reckoning.”

By the time the negotiations broke off last week, the House and Senate negotiators had already ceased to grapple with the larger issues. Instead, they busied themselves with proposals designed chiefly to needle their political opponents.

Certain States Targeted

House negotiators, for example, supported provisions that would hit particularly hard at states with large tracts of federally owned land--states such as Domenici’s New Mexico. Over three years, their plan would eliminate $300 million in federal payments to the states in lieu of property taxes, impose $150 million in additional fees on farmers who graze livestock on federal property and reduce by almost $2 billion the amount of mineral receipts the federal government gives to states.

“They were going to do a little number on Pete Domenici,” said Sen. Alan K. Simpson (R-Wyo.), the Senate’s second-ranking Republican and a Westerner whose state counts on the same federal programs.

On the other hand, Gray pointedly questioned the sincerity of Senate proposals to save money by killing the Economic Development Administration, a program set up during former President Lyndon B. Johnson’s “Great Society” and aimed at easing unemployment in poverty-stricken areas.

Even after the Senate voted to have the EDA expire in fiscal 1986, it agreed to give the agency $31 million more this year--almost all of which would go to projects in states where Republican senators face reelection.