Senate Aims for Tax Hike in Budget : Domenici Bypasses White House in Bid for Democrat Votes

Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), adopting a new strategy of negotiating with Senate Democrats rather than the White House, said Tuesday that he hopes to reach agreement this week on a fiscal 1987 budget package that some senators said would include up to $20 billion in new taxes.

“Obviously an awful lot of work is going on behind the scenes,” Domenici said. “We’re not there yet, but we will be there. . . . We are making some significant progress.”

Sen. Lawton Chiles of Florida, the committee’s top-ranking Democrat, agreed with Domenici that the prospects for a bipartisan agreement “look hopeful.” But he added: “There will have to be some revenues in the mix.”

Depends on Defense

Senators involved in the negotiations gave various estimates of the amount of new taxes that probably would be included in the plan, with the figures ranging generally between $15 billion and $20 billion. The amount, several said, would hinge on the increase in defense spending.

Domenici reportedly pressed for allowing 3% defense growth on top of inflation, while Chiles advocated a lower figure. Either would be a significant reduction from President Reagan’s request for 8% beyond inflation.

The chairman stressed that the budget plan would not specify how the new revenues would be raised. That would be left to the Senate Finance Committee, which has jurisdiction over tax legislation.

Oil Import Fee

Among the most widely circulated proposals for new revenues have been an oil import fee, a one-time amnesty for taxpayers who come forward with delinquent payments and a minimum tax on individuals and corporations that use existing laws to escape paying a significant share of their income in taxes.

White House Budget Director James C. Miller III told reporters after a meeting with Budget Committee Republicans that the Administration would be “more than happy to look at” what he described as “revenue raisers” that would not dampen business incentives.

Reagan is on record as opposing an oil import fee. The Administration’s own budget, which was rejected by the committee last week, would raise billions through asset sales and increasing user fees.

Committee Democrats, who still have painful memories of how Democratic presidential nominee Walter F. Mondale was defeated in 1984 after proposing higher taxes, may be unwilling to vote for tax increases unless an overwhelming majority of committee Republicans favor them.

“There is some feeling that there has to be more than a bare majority” of Republicans, Sen. Howard M. Metzenbaum (D-Ohio) said.

However, it appeared late Tuesday that some of the committee Republicans who have most staunchly opposed taxes in the past might vote for them if they were packaged with an acceptable increase in defense spending.

“There’s a general attitude on both the Democratic and Republican side that they want to get a budget this week,” said Sen. Steven D. Symms (R-Ida.), who has vigorously opposed tax increases. “That means we’ll all probably have to give a little bit.”

Virtually No Voice

Although Domenici said that he will “share information . . . and views” with the White House, he made it clear that he is not actively negotiating with the Reagan Administration, as he has in previous years. Without the Republican-controlled Senate Budget Committee as its advocate, the Administration could find itself with virtually no voice in shaping this year’s budget.

Domenici’s decision to sideline the White House in this year’s budget deliberations reflects Senate Republicans’ lingering bitterness over what many saw as a betrayal by Reagan in last year’s negotiations. Senate Republicans spent months winning his support for a politically dangerous budget agreement that included a freeze on Social Security benefits, only to see the President back out of it in favor of making a separate deal with House Democrats that left Social Security untouched.

Also changing the climate for budget negotiations is the new Gramm-Rudman budget-balancing law, which forces lawmakers to reach a $144-billion deficit for the next fiscal year or face painful and sweeping automatic spending cuts. Without spending cuts or tax increases, the Congressional Budget Office now forecasts a $181-billion deficit.