Negotiators Define ‘Outer Edges’ of Debt-Cutting Plan

After weeks of political shadow boxing, White House and congressional negotiators Tuesday defined what one participant described as the “outer edges” of the areas where they hope to forge an eventual agreement on deficit reduction.

“I’m encouraged by the tone and the earnestness” of Tuesday’s closed session, House Majority Leader Thomas S. Foley (D-Wash.) said. Rep. Leon E. Panetta (D-Monterey) said: “We’ve staked out the outer edges.”

However, while negotiators say they are encouraged that they are finally discussing specifics, those outer parameters--defined by a Republican plan that was put on the table Friday and a Democratic response offered Tuesday--still leave much room for disagreement.

‘Splitting the Differences’

Rep. Trent Lott (R-Miss.), assistant House minority leader, said that negotiators may begin “splitting the differences.” They will continue their talks today, even though the rest of Congress is taking a Veterans Day holiday.

Both the Democratic and GOP plans claim savings far in excess of the $23 billion needed to avoid automatic cuts that are scheduled to go into effect under the Gramm-Rudman deficit reduction law. The Republican proposal promises $30 billion in deficit cuts and Democratic sources say that their package could slash the federal shortfall by more than $33 billion.

But, as they have from the beginning, the two sides continue to disagree over how much of that reduction should come from higher taxes and how to balance cuts in domestic spending against those that would be made in the defense budget.

With President Reagan’s apparent backing, Republicans are saying that they will accept no more than $6 billion in unspecified new taxes. Democrats are demanding twice that much, sources said.

Democrats also propose paring $5.4 billion from defense spending, while Republicans argue that the Pentagon budget should be reduced by only $4.1 billion, with cuts in domestic programs taking up the slack.

Social Security Exempt

Both sides said they have agreed not to discuss limiting cost-of-living increases scheduled to go into effect for recipients of Social Security and other federally sponsored programs.

The Oct. 19 stock market crash added new urgency to solving the old problem of a burgeoning federal deficit that some have forecast will reach almost $180 billion this fiscal year, up from about $150 billion last year. To reassure financial markets, the Republican White House and the Democratic-controlled Congress agreed to negotiations to cut the deficit. And, according to President Reagan, everything but Social Security was to be “on the table.”

The immediate goal is to come up with more than $23 billion in reductions by Nov. 20. Unless they meet that deadline, the negotiators will face the automatic spending cuts--half from defense and half from domestic programs--required under the Gramm-Rudman law.

Because the choices that face the negotiators are so tough, some said Tuesday that the ultimate plan that emerges from the talks will have to represent a bipartisan compromise that melds the two parties’ ideological positions and forces each to take a share of the political heat.