Deficit Conferees Report Optimism, Little Progress

Congressional and White House negotiators ended their third week of deficit-reduction talks Friday expressing optimism but giving little new evidence of progress.

As both sides emerged from a morning of talks, their mood was decidedly more upbeat than it had been Thursday, when each had accused the other of backtracking in its demands.

“There’s a narrowing of differences and real cause for optimism,” Sen. J. Bennett Johnston (D-La.) said. “But there’s no agreement yet.”

Negotiators ‘Closer’

“We are closer than we’ve been, in spite of the difficulties yesterday,” White House spokesman Marlin Fitzwater agreed.

By some accounts, the two sides were back where they had been Wednesday, with only a few billion dollars separating them in their positions on tax increases, domestic spending cuts and reductions in the Pentagon budget.

At that time, it had appeared that the ultimate plan would involve between $9 billion and $10 billion in higher taxes, would cut projected defense spending by more than $4 billion and take about $5 billion from entitlement programs.

“We’ve gone 85 yards on the field. The last 15 yards are the toughest,” said Rep. Leon E. Panetta (D-Monterey), one of the Democratic congressional negotiators.

Racing a Deadline

When talks resume Monday, the negotiators will be racing to beat a Friday deadline for coming up with a package that reduces the deficit by more than $23 billion. If they cannot agree, the Gramm-Rudman law will automatically hack it by that much with indiscriminate spending cuts that both sides dread.

Allowing the law’s cuts to take effect would also send a bad signal to already-nervous Wall Street investors because it would indicate that Washington has lost its ability to tame a deficit projected to reach almost $180 billion this year.

It was the Oct. 19 stock market crash that finally brought the White House and Congress to the bargaining table. In the wake of the market’s sudden drop, President Reagan indicated for the first time that he would be willing to consider tax increases beyond the relatively modest $4 billion proposed in his own budget.