Sununu Cites Deposit Fee Precedent : Says Idea of Charge on Money in Banks, S&Ls; Is Still Alive

White House Chief of Staff John H. Sununu contended Sunday that precedents dating back to the New Deal support the principle of the controversial Treasury Department proposal to levy a fee on bank and savings and loan deposits.

That plan, suggested last week as a way to bail out the ailing savings and loan industry, quickly drew a chorus of criticism from many quarters. But Sununu said the proposal is still alive, although it is only one of several money-raising options that are under consideration at the Treasury and have not yet been submitted to the White House.

Following the lead set by President Bush at his press conference Friday, Sununu gave no details on the other options during a discussion of budget problems on ABC’s “This Week With David Brinkley.”

The budget Bush will discuss in an address to Congress on Feb. 9 will demonstrate, Sununu said, “that we can address the priorities . . . without taxes,” in accordance with the “no new taxes” pledge on which Bush campaigned, and meet limits on the deficit set by the Gramm-Rudman-Hollings law.

Indicating that the Bush budget will anticipate increased revenues from economic growth, Sununu said Bush will sketch a budget that “focuses on priorities . . . takes some of the added revenue and deals with the Gramm-Rudman-Hollings requirement, reduces the deficit below $100 billion, and lays out an agenda for how it’s going to happen.”

The White House hopes that the Democratic Congress will be “part of developing a solution” to meet budget needs, and that “different slices of Congress” will not be “positioning themselves to deal with eventual failure,” he said.

Warning on Attitude

“If that’s the attitude going in,” he added, “then none of us will succeed.”

Sununu did not endorse the fee of 25 to 30 cents on each $100 of deposits in a bank or savings and loan. But he avoided criticizing it even as he conceded that the Administration had blundered by consulting congressional leaders on “a whole host of alternatives” without making a public presentation of the range of options.

The result, he said, was that opponents “put the worst foot forward” and discussion of the overall problem was submerged.

Sununu traced the principle of the deposit fee back to 1933, the first year of President Franklin D. Roosevelt’s Administration, when the newly created Federal Deposit Insurance Corp. financed its program of insuring bank deposits by charging banks a fee. The tentative Treasury plan would provide the hard-pressed Federal Savings and Loan Insurance Corp. with funds to meet a deficit estimated between $50 billion and $100 billion.

Further criticism of the idea came Sunday from Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, who appeared on NBC’s “Meet the Press” and called the proposed fee “a tax on savings” that was “really very foolish.” He appeared to be less opposed to a suggestion that the savings and loan bailout be financed in part by charging a fee of 1% or 2% at the initiation of a mortgage.

Bentsen also registered strong opposition to the proposed 50% pay increase for members of Congress, judges and top officials of the executive department. It will become law unless both houses of Congress reject it by Feb. 8. A vote is expected in the Senate, but not in the House.

“But to have a 50% pay raise at a time of a budget deficit I think is wrong and I’ll be voting against it,” Bentsen said.

Question Bush Plan

Two budget-wise members of Congress who appeared on the Brinkley program before Sununu’s interview, Sen. Ernest F. Hollings (D-S.C.) and Rep. William H. Gray III (D-Pa.), both questioned whether President Bush will be able to produce a budget that comes under the Gramm-Rudman-Hollings deficit ceiling without relying on new taxes.

Hollings, a co-author of the deficit-reduction measure, calculated the actual deficit for the next budget year at about $150 billion. He maintained that the gap between the actual deficit and the $100-billion deficit target set for fiscal 1990 by the Gramm-Rudman-Hollings law should be bridged by imposing a 5% national value-added tax like that in effect in several European countries. He estimated that it would raise about $70 billion.

Gray, former chairman of the House Budget Committee, said the Bush Administration is “in a box on the question of deficit reduction” because of reliance on economic growth to provide additional revenues.

Instead, Gray said, the Administration should tell Congress: “Yes, we will support new revenues; we will support $13 or $14 billion,” and then work out a revenue program in consultation with congressional leaders.