Deficit Reduction Proposals Seen Going Up ‘in Smoke’

White House and congressional negotiators focused Tuesday on a $30-billion deficit reduction plan that combines equal amounts of spending cuts and taxes, but participants said the talks that began last week in an atmosphere of urgency were meandering in no clear direction.

Democrats have complained that the White House is inflexible on taxes, and Republicans have charged that Democrats are unyielding in their refusal to consider further domestic spending cuts.

As a result of this inability to agree on a basic strategy, every proposal being presented at the closed meetings is going up “in a cloud of smoke,” said one disheartened negotiator, Rep. Silvio O. Conte (R-Mass.).

And partisan friction was building with the approach of the deadline for averting painful automatic spending cuts, now only about two weeks away. Each side has begun speculating that the other might be trying to scuttle the talks for political reasons.

The proposal before the negotiators Tuesday was a plan offered by Senate Budget Committee Chairman Lawton Chiles and his House counterpart, Rep. William H. Gray III (D-Pa.). They suggested raising taxes and cutting spending by $10 billion each this year and added a list of other deficit-reduction measures worth another $10 billion.

Those additional steps would include sale of certain government assets and increasing Internal Revenue Service enforcement--measures that critics quickly denounced as easy but unreliable solutions.

Senate Majority Leader Robert C. Byrd (D-W. Va.) expressed concern about the consequences of a failure to resolve those differences.

“The stock market, like a canary in a coal mine, is warning us that there is a real danger of an economic cave-in ahead unless we all act now,” Byrd said. “We should heed that warning and not dilly-dally around.”

Adding to the pressure is a Nov. 20 deadline to agree on a plan for reducing the deficit by at least $23 billion.

If negotiators fail, they would no longer be able to decide for themselves how to begin balancing the budget; instead, they would face automatic cuts according to the formula set by the Gramm-Rudman law. Half of the cuts would come from defense spending, the other half from domestic programs.

Meanwhile, Congress has not passed any of the 13 annual money bills for the fiscal year that began Oct. 1, but congressional leaders said they hope to begin sending some of that legislation to the President soon.

A stopgap spending measure that has kept the government in business since the beginning of the fiscal year will expire Tuesday.