Budget Crisis Talks Set : Bush, Congress Agree to Open Deficit Summit Tuesday : Discussion to Include New Taxes

President Bush and congressional leaders agreed today to open negotiations on a deficit-reduction package that may include tax increases as well as deep spending cuts.

White House spokesman Marlin Fitzwater announced the talks after Senate and House leaders met with Bush for more than an hour in the Oval Office to discuss the widening 1991 budget gap.

Fitzwater said the negotiations will begin next Tuesday. He said whether taxes are included in any compromise was “a matter for the negotiators to consider.”

Although Bush won the White House pledging “no new taxes,” he abandoned that pronouncement this week in face of the spiraling federal deficit.

“Severe action needs to be taken,” Fitzwater said today, blaming the nation’s worsening deficit situation on rising interest rates, reduced revenues to the Treasury and a previous underestimate of the costs of the savings and loan bailout.

“The table is clean,” Fitzwater said, suggesting that tax increases could be part of the eventual compromise. “We are setting the stage for open and fruitful discussions.”

Fitzwater said Bush will not participate directly in the meetings but will monitor them closely and “will be involved as necessary.” He said the three-way negotiations will be conducted by teams from the House, Senate and White House.

Congressional leaders, speaking with reporters outside the White House after the meeting, generally steered away from questions about tax increases.

House Speaker Thomas S. Foley (D-Wash.) said: “I think there is an understanding we’d like to avoid” the automatic spending cuts that would be triggered in the absence of a budget agreement.

“No decisions have been made other than to begin discussions next week,” Senate Majority Leader George J. Mitchell (D-Me.) said.

And House Minority Leader Bob Michel (R-Ill.) said there are limits to what negotiators can do, faced with the need to make up to $100 billion in cuts.

Budget slashes of such magnitude run the risk of being “injurious” to the economy, Michel said.

Foley said he has appointed Rep. Richard A. Gephardt of Missouri, the Democratic majority leader and an outspoken critic of the Administration, to chair his delegation to the talks. The Speaker’s other negotiators are: Rep. William H. Gray III (D-Pa.), the majority whip, and Reps. Dan Rostenkowski of Illinois, Jamie Whitten of Mississippi and Leon Panetta of Carmel Valley, the Democratic chairmen of the Ways and Means, Appropriations and Budget committees, respectively.

Michel said the House Republicans attending will be Reps. Newt Gingrich of Georgia and the ranking Republicans on those same three tax-writing and finance committees, Reps. Bill Archer of Texas, Silvio O. Conte of Massachusetts, and Bill Frenzel of Minnesota.

Mitchell said Sen. Wyche Fowler (D-Ga.) will be his “personal representative” to the talks, along with Sens. Robert C. Byrd (D-W. Va.), Lloyd Bentsen (D-Tex.) and Jim Sasser (D-Tenn.), the chairmen of Appropriations, Finance and Budget respectively.