Reagan Turns Down Senate Budget Plan

President Reagan today rejected a budget proposal drafted by Senate Republican leaders and said Congress must find a compromise plan that reduces the deficit before it begins its summer recess.

White House spokesman Larry Speakes said Reagan, in a telephone call to Senate Republican leader Bob Dole, rejected any plan that imposes oil import fees, tampers with income tax indexing or deviates from his stand on Social Security.

Paraphrasing Reagan’s message, Speakes said: “A federal budget for 1986 is essential for maintaining economic recovery. It is up to Congress to act on the budget before they leave for summer vacation.”

Despite the items swept off the bargaining table, Speakes said Reagan “firmly believes there is sufficient ground for a compromise between the Senate and the House that can provide in excess of $50 billion in deficit reductions.”

‘No. 1 Issue’

“Deficit reduction is the No. 1 issue in America,” Speakes said. “The only way to have deficit reduction is to cut federal spending and to do so this year.”

The hard-line position taken by Reagan torpedoed a proposal crafted by Senate Republicans last week to reduce the deficit by $340 billion over three years, and cast new doubt over whether the budget impasse on Capitol Hill can be broken.

Speakes said Reagan hoped his action would help “break the logjam.” White House Chief of Staff Donald T. Regan scheduled meetings later in the day with the chairmen of the House and Senate budget committees to reinforce Reagan’s position.

“Reasonable men and women can agree,” Speakes said. “It’s up to the conferees to meet without delay and act with dispatch. They need to put aside their differences, get down to business and produce a budget.”

O’Neill Needs Signal

The White House broadside came a short time after House Speaker Thomas P. (Tip) O’Neill Jr. said he needed a signal that Reagan would accept taxes and curbs on Social Security before asking House Democrats to approve a budget including those items.

“I’ll be happy to put it to the caucus,” O’Neill said. “But I don’t want to present things that the President is going to veto.”

Dole said Sunday that congressional leaders would have to agree on curbing Social Security cost-of-living hikes and raising revenue with an oil import fee for a budget compromise to be achieved. Dole also said he was willing to delay Friday’s scheduled start of the congressional recess if Reagan and O’Neill reached an accord on the budget.

Speakes said possible postponement of the recess is “a decision up to the leadership.”

The Social Security cost-of-living allowance and tax increases are the sticking points that have caused bitterness at the negotiating table as the House and Senate has tried for weeks to work out differences in their budgets.