WALL STREET: THE WILD DAY AFTER : Reagan, Congress to Discuss Deficits; Discord Continues

President Reagan, reacting to the stock market’s historic plunge, bowed to longstanding requests Tuesday and said he or his aides will meet with members of Congress from both parties to tackle the nation’s budget deficit and other economic problems.

But the President continued to defend his own deficit-cutting program, which relies on domestic spending cuts and avoids any new taxes, and blasted legislation sponsored by congressional Democrats that would raise $12 billion in new revenues this year.

Reagan made his offer to meet with members of Congress--a proposal he had spurned several times earlier this year--after discussing the nation’s economic picture with Federal Reserve Chairman Alan S. Greenspan, Treasury Secretary James A. Baker III and White House Chief of Staff Howard H. Baker Jr.

Bickering Over Budget Trims

But in an indication that bipartisan compromise remains a distant goal, James C. Miller III, Reagan’s budget director, bickered earlier in the day with House Budget Committee members over how to trim this year’s budget deficit by $23 billion and head off an automatic, across-the-board spending reduction that neither side wants.

The President, who signed an order Tuesday giving preliminary approval to the automatic budget cuts, told reporters on the White House lawn: “It is preferable, if possible, that the executive and legislative branches reach agreement on a budget deficit reduction package.

“Accordingly, I am directing that discussions be undertaken with the bipartisan leadership of the Congress for that purpose.”

The President said that either he or his aides would participate in such meetings, which have not yet been scheduled.

At the same time, Reagan reiterated his opposition to new taxes and blamed the Democratic-controlled Congress for the nation’s large budget deficit. Yet he acknowledged that a variety of budget proposals would be debated in the meeting with members of Congress and said: “I am willing to look at whatever proposal they may have.”

The President’s unexpected decision was praised by leaders of both parties. Earlier in the day, Democrats and Republicans alike had urged Reagan to convene such a meeting, largely to reassure financial markets that the government is serious about reducing the budget deficit.

“This is very good news for the country, given the events of yesterday on the stock market,” said Sen. Lawton Chiles (D-Fla.), who chairs the Senate Budget Committee and had introduced a resolution calling for an “economic summit” with Congress and the White House.

Urging both sides to “cool the rhetoric,” Chiles said that “it is no longer a time for finger-pointing, for partisanship. It is time we come together, sit down, and find a solution to this problem that threatens the stability of so many economic markets.”

Welcomes Attitude Change

Senate Majority Leader Robert C. Byrd (D-W.Va.) said that the President’s decision to meet with Congress is “a real breakthrough. . . . I welcome this change of attitude.” But he also criticized Reagan for coupling his announcement with renewed criticism of Democrats.

“This is truly a time for nonpartisanship, if we expect progress in these talks to be made,” Byrd said. “There must be a determination to put politics aside, once and for all.”

Republicans also praised the President’s change of heart.

“I think it’s time we have a new compact with Congress,” said Senate Minority Leader Bob Dole of Kansas. “I hope this statement will reassure American investors that we are going to deal with this problem . . . in a bipartisan way.

“We could blame the Democrats (for the stock market’s problems), we could blame Republicans, Germans, Japanese, we could blame the Federal Reserve Board,” he added. “But the time for that is past. It’s time for action, and I hope this meeting comes quickly.”

Earlier, it appeared that such a meeting would not take place. White House officials charged that Democrats had requested an economic summit mainly to lobby for increased taxes. Throughout the day, Reagan and senior officials--striving to avoid creating an atmosphere of crisis--took pains to create an impression of “business as usual” and stressed that no special meetings were taking place as a result of the market performance.

Reagan, expressing puzzlement at the gyrations of the stock market, said: “I think everybody has been caught by surprise in this.” Commenting during a photo session at the start of a meeting with Indian Prime Minister Rajiv Gandhi, the President said: “Creating 14 million new jobs, eliminating inflation, or virtually eliminating it, bringing it down, lowering interest rates, increasing the prosperity of the market . . . I just wouldn’t understand that would hurt the stock market.”

Asked if his economic policies had caused the market crash, the President said: “With regard to the deficit, why don’t they fix the blame, as I have tried to, where it belongs: with a legislature which has gone on now for more than 50 years defending deficit spending?”

The Administration’s hard line continued on Capitol Hill, where Budget Director Miller clashed with members of the House Budget Committee over ways to cut the nation’s deficit, as required by the Gramm-Rudman deficit-reduction law.

If neither side can agree on how to make the cuts within 30 days, the law will automatically trigger a $23-billion “sequestration,” or across-the-board budget cut.

“We are going to hold to our guns,” Miller told reporters at the White House after his morning meeting with Reagan. “The President has given the order, no taxes. We think spending should be cut. . . .” Both sides expressed abhorrence of a sequestration, which would cut defense spending 10.5% and non-defense programs, excluding Social Security, Medicare and other “non-discretionary” accounts, by 8.5%, according to Miller. But neither side seemed close to a compromise.

As the bickering continued, Rep. Pat Williams (D-Mont.) reminded both sides of the crisis roiling the world’s financial markets: “If this conversation were taking place 48 hours earlier, it would be different. But the world has changed since then.”

Staff writer James Gerstenzang contributed to this story.