Reagan Opens Attack on Democrats Over Budget Plans

President Reagan on Tuesday opened a drive against Democratic proposals for tax increases to reduce the federal budget deficit, saying that “the only thing worse than deficits is high taxes.”

Reagan, speaking to a luncheon of Senate Republicans, called for “an end to the boondoggle, to the waste and the last-minute resolutions” that he said are common to the budget process.

But congressional Democrats quickly fired back, as Senate Majority Leader Robert C. Byrd (D-W.Va.) accused the President of engaging in “Congress-bashing.”

Summer Campaign

Reagan, beginning an extensive summer campaign, will press for a constitutional amendment requiring a balanced budget and for line-item veto power that would allow him to reject parts of spending bills. However, neither proposal appears to have a realistic chance of winning approval from Congress, where the Democrats control both chambers for the first time since 1980.

In another session Tuesday, with regional economic writers, Reagan dismissed speculation that the budget campaign is an attempt to divert national attention from the Iran- contra scandal.

“I think that spotlight has been growing so dim in recent days that, when you get a mile and a half away from the Potomac River, there are an awful lot of people that have gone back to their favorite television shows” rather than watch the televised congressional hearings on the Iran-contra affair, he said.

The White House repeated its longstanding contention that Reagan never saw a memorandum dated in April, 1986, which proposed to divert profits from the secret sale of arms to Iran to rebel forces in Nicaragua.

“The President did not know about the memo. . . . There is no evidence to the contrary,” White House Chief of Staff Howard H. Baker Jr. said.

The memo, found last November in the files of former White House aide Lt. Col. Oliver L. North, was termed a potential “smoking gun” in a weekend report in the Washington Post.

Reagan, insisting that “there ain’t no smoking gun” linking him to the diverted millions, said Tuesday: “I’ve never heard so much hearsay in all my life that wouldn’t be permitted in a courtroom for a minute and a half. And it’s taken as gospel by those who want to go farther with this.”

On Capitol Hill, meanwhile, House and Senate Democrats failed again Tuesday in efforts to develop a budget resolution for fiscal 1988, which begins Oct. 1. They are stymied because the Senate Democrats want to spend $8 billion more for defense than the House Democrats will approve.

Nevertheless, House Speaker Jim Wright (D-Tex.) said after a private meeting of Democratic leaders from both chambers of Congress: “We’re on the trail (of an agreement).”

The verbal war over the budget is being fought on two fronts: a political struggle between the two parties and a civil war among congressional Democrats unable to agree on military spending.

The House and Senate Democrats are calling for more than $18 billion in tax increases in their separate budget proposals.

Reagan has vowed to veto any tax increases and has promised to take his case to the people. “Using taxes to cure deficits is like using leeches to cure anemia,” he said at the luncheon Tuesday.

Byrd counterattacked for the Democrats, accusing the President of trying to evade his share of responsibility for the federal budget deficit, which is expected to be $175 billion by the end of this fiscal year, Sept. 30.

“It’s like having a big banquet and getting out of town before the waiter brings the ticket,” Byrd said. “The legacy will be left to the next President.”

Wright, striking a similar tone, said: “It’s disappointing and somewhat pathetic that the President (is) replaying his diatribe against Congress. The budget crisis is of Mr. Reagan’s own making.”

Republicans, on the other hand, gave the President’s message a warm welcome. “We need all the tools the President talked about--a constitutional amendment to balance the budget, the line-item veto and budget process reform--but we’ve also got to make the tough choices. We’ve got to cut spending,” Senate Minority Leader Bob Dole (R-Kan.) said.

Staff writer David Lauter contributed to this story.