Must Compromise on Budget Plan, Reagan Told

President Reagan stumped for passage of a controversial Republican budget-balancing plan Wednesday, but a key GOP Senate leader said that approval of the plan would force Reagan to compromise with Congress on his defense buildup and on his staunch opposition to a tax hike.

“We’re going to have to give and he’s going to have to give,” Budget Committee Chairman Pete V. Domenici (R-N. M.) said shortly after the Republican-led Senate voted 74 to 25 to reaffirm its support of the so-called Gramm-Rudman budget-slashing package.

House Rejects Senate Plan

Hours later, the Democratic-controlled House emphatically stuck by its competing version of budget-balancing legislation, voting 248 to 177 to reject the Senate plan, written by Republicans Phil Gramm of Texas and Warren B. Rudman of New Hampshire.

A House-Senate conference committee last week broke off attempts to reach a compromise between the two measures, but House Democrats sought a return to the conference table.

Sen. Bob Packwood (R-Ore.), chairman of the Finance Committee, said that the only way to break the deadlock before it leads to another government cash crisis next week is for congressional leaders to bypass formal negotiations and cut a deal with President Reagan.

The monthlong budget deadlock has delayed much-needed congressional approval of a hike in the national debt ceiling to $2 trillion from $1.8 trillion, thus forcing the Treasury Department to dip into Social Security trust funds and resort to other unorthodox financing schemes to keep the government running.

Checks to Bounce Soon

Treasury officials said that they have run out of bookkeeping maneuvers and warned that government checks will start bouncing next Thursday or Friday if government borrowing power is not augmented by then.

Reagan, speaking to political supporters at the White House, blamed congressional inaction on the budget-cutting plan for pushing the cash-strapped Treasury into “very dangerous territory.”

“I believe it is essential that the House and Senate agree on a version . . . that provides for an assured path to a balanced budget without tax increases and without attacking our defenses,” Reagan said.

Domenici, speaking to reporters, said that implementation of the budget-cutting plan would force Reagan to give in “on things he considers holy and sacred.”

The senator said his Republican colleagues feel so strongly about their budget-cutting plan that they are willing to risk next week’s threatened money crisis rather than significantly alter the proposal to satisfy Democrats and end the deadlock blocking the debt ceiling hike.

“We’re attempting to prove this is so serious we’re willing to let the government default,” Domenici said.

Annual Deficit Targets

Both the Democratic and Republican plans would require the budget to be balanced by setting a descending series of annual deficit targets. But the Democratic plan would exempt more social programs from spending cuts. It would also require faster and deeper deficit cuts than the GOP measure. Democrats and Republicans have accused each other of drafting plans designed more to make political points than effect fiscal reforms.