Senators to Tell Reagan: It’s Tax Hike or Defense Cuts

Senate negotiators, raising the stakes in their deadlocked budget talks with both the Reagan Administration and the House, said Wednesday that they will propose a plan that would force President Reagan to accept a tax increase or face a cut in defense spending.

“If the President doesn’t want to do the tax, the consequence is not to get the defense number,” said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.). The White House earlier had rebuffed Domenici’s efforts to write a budget that would informally link defense spending increases to higher taxes.

Reagan, in his news conference Wednesday night, expressed concern that Congress is considering “large and dangerous cuts out of our national defense,” but he repeated his opposition to tax increases that Domenici said are needed to soften those reductions.

“When it comes to taxes, let’s get into the spirit of the times,” Reagan said, adding: “I’ve said it before and I’ll say it as often as it takes: I’ll veto any tax hike that comes across my desk.”

Under the new approach, which may be presented in a House-Senate conference committee on the budget today, Congress would make a yet-unspecified amount of Pentagon spending conditional on Reagan’s approval of a tax increase. The House and Senate already have passed separate versions of a fiscal 1987 budget that differ most sharply in their allotments for defense.

Congress Could Proceed

If Reagan vetoed the tax increase, as he has pledged to do, Congress could proceed with a budget that would include significantly less than is required to keep the military’s purchasing power abreast of inflation. Without taxes, “it would appear to me that defense is going to suffer rather dramatically,” Domenici said.

Although Domenici’s plan would offer Democrats the tantalizing prospect of forcing Reagan’s hand simultaneously on the two budget issues where he has been most adamant, key House Democrats nonetheless expressed reservations about it. At least some of the additional taxes, House negotiators said, must be used for deficit reduction or for domestic spending.

“You can’t do it just on defense,” House Budget Committee Chairman William H. Gray III (D-Pa.) said. “I don’t think the House would support that.”

May Be Reluctant

He also suggested that Democrats may be reluctant to approve higher taxes--an issue that Reagan has proven skilled in using against them--when it would almost certainly face a veto. “What does it mean if you can’t implement it?” he asked.

But Domenici’s plan--which first had been suggested by Gray as “a possible idea”--marked the first new approach in House-Senate negotiations that have been stalled for almost two weeks over military spending.

Where the House approved $285 billion in new defense spending authority, which is about $2 billion less than the Pentagon received this year, the Senate would give the military $301 billion, enough to keep pace with about 3% inflation. By comparison, the Administration had asked $320 billion, which would provide about an 8% after-inflation increase, and has refused to consider additional taxes to finance the defense spending growth.

House, Senate Plans

Both the House and Senate budget plans include $7.3 billion in taxes beyond the $6 billion originally proposed by Reagan.