Republicans in Congress Offer Deficit Compromise

Congressional Republicans proposed on Friday a $30-billion deficit-reduction compromise with more taxes than President Reagan wants and more domestic spending cuts than Democrats support.

The offer was made to the Democrats after a White House meeting at which Senate Republicans urged Reagan, apparently unsuccessfully, to reconsider his opposition to cutbacks in Social Security benefits.

House Minority Leader Robert H. Michel (R-Ill.) presented the new plan as the second week of budget talks was coming to a close. He said the reaction was better than he thought it would be.

Sen. Bennett J. Johnston of Louisiana, one of the Democratic negotiators, called the plan “a constructive step forward” but said he thought it needed more taxes.

“It cannot be, of course, accepted in its current form,” he said.

The President didn’t endorse it either. “He doesn’t like taxes,” said Sen. Bob Packwood (R-Ore.), senior Republican on the Senate Finance Committee.

The GOP proposal calls for reducing the deficit by $30 billion in fiscal year 1988, which began Oct. 1, and $45.5 billion in fiscal 1989. It would raise $9.4 billion in taxes and fees this year and $14 billion next year. In addition, $5 billion in federal assets would be sold each of the two years.

The plan envisions cuts in federal pension and benefit programs of $5.1 billion this year and $10.2 billion next year, without specifically ruling out Social Security or any other reductions in cost-of-living increases.

The rest of the domestic budget would be frozen for the first half of fiscal 1988, and then limited to annual increases of 2% after that.

The resulting military budget this year would be $284.4 billion, well below what Reagan requested but about $1 billion above the amount the Democratic-controlled Congress approved in its budget resolution.

To bring the proposal to its total figures, the Republicans estimate that the cutbacks would save $1.2 billion and $3.8 billion in debt payments, since the deficit would be lower.

“I believe it’s one the President and the Administration could accept,” said Rep. Trent Lott (R-Miss.), the assistant House minority leader. “I’d certainly be willing to go to them and urge them to accept it.”

But Lott said if Social Security cuts became part of the final proposal, “I’m out of there.”

“Social Security has never been on the table. It remains off the table,” said Rep. Thomas S. Foley, (D-Wash.), the House majority leader and chairman of the talks.

The Social Security issue was raised in the morning meeting with Reagan by the Senate Republicans, who earlier proposed in the talks limiting all cost-of-living increases in federal programs, including Social Security.

Asked if the President was urged to consider Social Security cuts, Packwood responded, “As part of an acceptable package.”

The White House publicly reasserted its position that Social Security was “off the table.”

Assessing the talks generally, Foley said Friday was a profitable day. “We’re moving forward,” he said. “There is a sense that we’re moving toward a more specific examination of the issues . . . more specific decisions.”

However, he said he did not expect a final agreement until the end of next week, “if then.”

The negotiations were begun in the wake of last month’s Wall Street crash, with the goal of reassuring the financial markets that the federal government was bringing its huge annual deficits under control.

The minimum target is to reduce the fiscal 1988 deficit by $23 billion, the amount required by the Gramm-Rudman law. That would leave about $144 billion in red ink this year, slightly less than last year.

If the talks fail to win enactment of an adequate deficit-reduction package, Gramm-Rudman would automatically cut federal agency budgets until $23 billion in savings is achieved. Those cuts would take place Nov. 20, but the law allows a chance to restore the funds if alternative deficit-reduction plans can be done within 10 days.

Because of the budget stalemate, the government has been operating on temporary spending authority since the fiscal year began Oct. 1.

The Senate on Friday approved and sent to Reagan by voice vote a new stopgap spending bill to keep the government running until Dec. 16. The President has said he would sign the bill.