Budget Talks Stall as Red Ink Pushes Deficit to $151 Billion

Budget talks between Congress and the White House stalled Thursday even as the Treasury Department reported that deficit spending has already hit $151.7 billion for the first eight months of the current fiscal year.

“I’m fearful we’re in some kind of stalemate,” said Sen. Pete V. Domenici (R-N.M.) of efforts to get the deficit under control.

The latest budget figures, swollen by $42.6 billion in red ink during May, pushed the deficit far above the $110-billion Gramm-Rudman ceiling that Congress claimed to be hitting last fall. The deficit is nearly equal to last year’s budget gap.

For several years, the deficit had been roughly unchanged at about $150 billion. But it is now on the rise because of the soaring borrowing needs of the S&L; cleanup operation and because tax revenues are falling.

As a result, the deficit is likely to reach as much as $200 billion this year and is expected to climb to more than $230 billion in fiscal 1991, unless Congress takes steps to narrow the gap.

The $50.7 billion in cuts proposed by the White House for the next fiscal year, attacked by congressional Democrats as little more than a rerun of Bush’s original budget blueprint, relies on about $17 billion in reductions in Medicare and other federal benefit programs and $20 billion in added revenues to achieve the bulk of its savings, but it proposes only relatively small cuts in Pentagon spending.

The talks Thursday were mostly cordial, participants said, but tensions flared at the end of the early afternoon session between Richard G. Darman, director of the White House Office of Management and Budget, and Senate Budget Committee Chairman Jim Sasser (D-Tenn.) over Sasser’s earlier comments to reporters dismissing the Administration’s plan.

“I know there’s one person who thinks it stinks,” Darman said, according to participants, going on to attack Sasser’s own budget proposal as vague and unrealistic.

“There’s more than one who thinks (yours) stinks,” Sasser told Darman.

Senate Republican leaders indicated that they plan to offer a new spending proposal soon designed to keep the budget talks between Congress and the White House from breaking down.

“Negotiations are going to continue,” Domenici said.