Bush Opens Deficit Talks on Bleak Note : Budget: He warns the economy is ‘not as strong or secure as it should be.’ Future sessions are likely to focus on the risk of huge program cutbacks.

President Bush opened negotiations on reducing the federal deficit Tuesday by presenting congressional leaders with a bleak assessment of the economy as “not as strong or secure as it should be.”

Lawmakers attending the closed meeting said that Bush urged White House and congressional negotiators to act soon to narrow the deficit gap, telling them: “If there’s no solution, it will mean higher interest rates, lower economic growth and deep spending cuts across the board.”

By choosing an uncharacteristically downbeat tone for his opening statement, Bush made it clear that the driving force behind the budget negotiations is to prevent automatic spending cuts of as much as $100 billion from going into effect this fall.

In future sessions, both the White House and congressional leaders are expected to focus on the risk that the Gramm-Rudman budget balancing law could trigger devastating across-the-board cutbacks of 20% to 45% in hundreds of federal programs. Pointing to that far worse alternative should help budget negotiators bend recalcitrant lawmakers into line behind a less stringent agreement that is bound to include such politically unpopular measures as higher taxes and reductions in federal benefits.

In the 100-minute opening session at the White House, congressional leaders promised to work toward a budget deal. But there were still signs of mutual suspicion between Democrats and Republicans, indicating a long, hot summer of meetings.

Democrats emphasized that they expect the Bush Administration to take the first step in proposing higher taxes as part of a deficit agreement so that Republicans cannot later blame Democrats for any tax increase. Senate Majority Leader George J. Mitchell (D-Me.) said he told Bush that lawmakers would first like to hear “suggestions from the Administration on how to deal with (the deficit) problem” before making “suggestions of our own.”

Republicans, however, said it is unreasonable to expect Bush to make the opening move. “That would not work,” Senate Minority Leader Bob Dole (R-Kan.) told reporters. “It will work itself out. We’re all adults.”

The most difficult task in reaching an agreement, according to Rep. Leon E. Panetta (D-Carmel Valley), the House Budget Committee chairman, is finding a way “to share the heat.”

In explaining the reasons for calling the budget meetings, Richard G. Darman, director of the White House Office of Management and Budget, told the lawmakers that next year’s deficit, without action to bring it down, is now expected to be at least twice as high as the $64-billion ceiling that would trigger mandatory cuts under the Gramm-Rudman law. If borrowings to help clean up the savings and loan mess are added, the budget deficit could exceed the target by as much as $135 billion, Darman said.

In January, when the Bush Administration presented its own budget proposal for the fiscal year that begins on Oct. 1, White House officials estimated that they could meet the Gramm-Rudman target with only $36.5 billion in spending cuts and tax increases.

“They laid out the magnitude of the problem,” Senate Budget Committee Chairman Jim Sasser (D-Tenn.) said, referring to Tuesday’s meeting. The White House “economic assumptions are more realistic now than in times past. . . . They tried to have a rosy scenario in January.”

Bush, in the meeting attended by 21 congressional leaders and several other senior Administration officials, said there is no immediate crisis facing the economy. But he warned that an agreement is needed to head off future dangers, White House officials said.

“We are fortunate that the economy continues to grow,” a statement by White House spokesman Marlin Fitzwater quoted Bush as saying, “but it is important to act while the economy is still growing, for growth is not as strong or secure as it should be.”

The next meeting of the budget group--which includes Democratic and Republican leaders from Congress along with Darman, White House Chief of Staff John H. Sununu and Treasury Secretary Nicholas F. Brady--is scheduled for Thursday on Capitol Hill. House Majority Leader Richard A. Gephardt (D-Mo.) will chair all sessions that Bush does not attend.

Participants told reporters that there was no discussion of specific proposals at the meeting.

Bush reiterated the White House position that the budget negotiations should aim at an agreement to substantially reduce the deficit over the next several years, while beefing up the ability of the White House to enforce budget discipline and avoiding any actions that might weaken the economy. Lawmakers, however, are reluctant to give up their control over spending by agreeing to a White House line-item veto or a constitutional amendment for a balanced budget.

Lawmakers predicted that the negotiations could easily last until August and some suggested that the political obstacles are so great that it might require convening a lame-duck session of Congress after elections this November.

Pennsylvania Rep. William H. Gray III, the third-ranking Democrat in the House, noted that it took six weeks to find common ground in the late 1987 budget talks even though they were conducted in the crisis atmosphere after the October stock market crash. He suggested that this year’s negotiations could last much longer.