Tax-Spending Pact Farther Off Than Thought Earlier

After an upbeat morning, lawmakers involved in deficit-reduction talks with White House officials said this afternoon that an agreement combining taxes with spending reductions now looks farther away than they had thought.

“I think we were too optimistic . . . of an early resolution,” House Majority Leader Thomas S. Foley (D-Wash.) said as negotiators returned for an afternoon session. “We may not be able to resolve it this week.”

Foley did not say what had caused him to change his assessment of the discussions.

“The mix is not right,” House Minority Leader Robert H. Michel (R-Ill.) said of the formula the negotiators have been discussing. “There’s too much revenue for what you get in real spending (cuts).”

‘Not as Close as We Thought’

Participants had been optimistic only several hours earlier, with Sen. Bob Packwood (R-Ore.) saying, “I think we’ll reach a broad agreement today.”

“I think we just about had it worked out,” said Rep. Trent Lott (R-Miss.), the House minority whip. “Then we started getting to specifics. . . . We weren’t as close as we thought we were.”

Several officials familiar with the talks said the bargainers are now looking at a plan that would cut the deficit about $30 billion this year and $45 billion next year.

The minimum required under the Gramm-Rudman deficit-reduction law is $23 billion this year, but the negotiators hope to come up with a larger figure to help reassure jittery world financial markets.

After the talks conclude, Packwood said, Reagan’s negotiators, particularly Treasury Secretary James A. Baker III and White House Chief of Staff Howard H. Baker Jr., will have to convince Reagan on the plan’s taxes.

Up to ‘the Man Downtown’

He said the Bakers told the congressional group that “there’s no guarantee we can sell” the plan to Reagan if taxes are suggested that he does not like.

“The first thing they said the man downtown (Reagan) is going to ask is, what kind of taxes are in it?” Packwood said.

At the White House, presidential spokesman Marlin Fitzwater said earlier that the President was briefed on the budget negotiations today.

“We feel that important and serious progress has been made. . . . While we can’t predict an outcome, we do think we are close,” he said then.