President Reagan Monday rejected the key elements of the Republican-controlled Senate’s latest budget offer, leading Senate Majority Leader Bob Dole to declare angrily that “the ballgame is over” for meaningful deficit reduction this year.
White House spokesman Larry Speakes said Reagan does not support three central provisions of the plan offered last week by the Senate Budget Committee: a $5-a-barrel oil import fee, delays in Social Security cost-of-living increases and delays in tax indexing. The first two items would violate presidential campaign pledges on tax increases and Social Security, while the third would allow inflation to temporarily force some taxpayers into higher brackets.
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 reduction (in fiscal 1986). . . . The only way to get true deficit reduction is to cut federal spending and do so this year,” Speakes said.
Similarly, White House Chief of Staff Donald T. Regan told reporters after a meeting with top congressional budget negotiators that he is optimistic there will be “a pretty good cut in the budget.”
“We thought it over. We made our decision,” Regan said. “Now it’s up to the House and Senate to see what they can do on the rest of the budget.”
The President, facing the prospect of a deep rift with the Senate, will meet today with Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) and House Budget Committee Chairman William H. Gray III (D-Pa.) to discuss the remaining possibilities for cutting the deficit.
Domenici also plans one day of private talks with top-ranking House negotiators before deciding what course to pursue.
But Senate leaders, frustrated after seven weeks of fruitless attempts to get the House to accept large and painful cuts in domestic spending, were pessimistic that they could reach an agreement that would significantly reduce a deficit projected to reach almost $230 billion next year. Moreover, they suggested that they may not even continue the effort.
“If we choose to try to get a budget (without the options that Reagan ruled out), nobody should be fooled,” Domenici said. “I believe any chance for this year of getting a real, significant, reliable, credible deficit-reduction package is gone.”
Dole, a Kansas Republican, agreed that the best congressional negotiators could hope for was “a watered-down approach to deficit reduction.”
Moreover, the majority leader warned, if Congress fails to agree on an overall spending blueprint Reagan’s tax reform plan will be threatened, because lawmakers probably will spend the rest of this year haggling over individual appropriations bills.
“There will be no tax reform this year unless there’s a budget,” Dole said. “That seems fairly certain.”
Even more pressure will be felt on the attempt to forge a budget compromise as time runs out this fiscal year. Congress is scheduled to start its five-week summer recess Thursday; it will return less than a month before fiscal 1986 begins Oct. 1.
Paradoxically, the greatest support for Reagan’s decision came from the Democratic-led House. Earlier this month, House members succeeded in forcing the President to back away from his reluctant support for the Senate’s initial budget plan, which would have denied next year’s increases in Social Security and other federally sponsored pensions.
Last week’s Senate counteroffer--to give the increases every other year, rather than annually--was not any more palatable to House members.
“As far as I am concerned, the President’s statement clears the air,” said House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.). “If I, as a leader of the opposition, can accept his decision, I believe that his own party should find a way to do the same.”
Dole agreed with Speakes that the budget negotiators probably could come up with a budget package that could meet their earlier target of at least $50 billion in deficit reduction next year. But he argued that a sluggish economy had made that earlier goal inadequate and that the White House decision rules out the avenues for longer-term control over the deficit.
New Cuts, Taxes
Domenici agreed: “The budget that America ultimately needs won’t be resolved without further cuts, reform in the entitlement programs and (taxes). If not now, then later--but it will come. My only fear is that it will come too late, when the economy has faltered, and then we will be unable to do anything.”
Only a few weeks ago, the Senate’s Republican majority was pleading with Reagan to put his full political weight behind its budget effort. Now, after his reversal on Social Security and his decision to oppose the Senate’s latest offer, he apparently is seen as more an obstacle than an aid.
“As far as we’re concerned, we’ll determine the course we’ll follow without any help from the White House,” Dole said, adding: “There probably will be not too many Republican senators listening to pleas from the White House” on other issues.
Similarly, Domenici noted that when Chief of Staff Regan offered to help find additional spending cuts, “I was very gracious and told him that we appreciated it, but we didn’t need his help.”