Gulf Crisis Could Push U.S. Deficit to Record : Economics: Military expenses and higher oil prices could add $18 billion to the debt, budget director says.

Military expenses and oil-price boosts associated with the Persian Gulf crisis could push next year’s federal budget deficit to a record $250 billion--$18 billion more than the last official estimate, White House Budget Director Richard G. Darman said Wednesday.

Despite Darman’s unofficial projection, Republicans and Democrats who emerged from separate budget strategy sessions said they are sticking to the so-called 50-500 plan--a goal of lopping $50 billion off the fiscal 1991 deficit and $500 billion off cumulative deficits over the next five years.

“If you’d ask a guess of what the . . . (deficit) tendency is at the moment, I would say it’s probably closer to $250 billion” than the last official estimate of $232 billion, Darman told reporters. The highest federal deficit ever recorded was $221 billion in fiscal 1986.

Before Darman’s remarks, some in Congress had suggested that both parties might lower their sights and seek smaller cuts in the deficit because of increased military costs resulting from the deployment of troops in Saudi Arabia following Iraq’s Aug. 2 invasion of Kuwait.

However, both House Majority Leader Richard A. Gephardt (D-Mo.) and White House Chief of Staff John H. Sununu, who met with House Republicans along with Darman, said they remain committed to the “50-500” plan.

“We’ve always been at ‘50-500,’ and that’s where we remain,” Gephardt said.

Neither Gephardt nor House Republicans would disclose details of the deficit-reducing plans that they discussed Wednesday.

Congressional budget negotiators Friday will begin a new round of deficit-reduction talks, sequestered at Andrews Air Force Base in nearby Maryland. The negotiators are facing a self-imposed deadline of Sept. 10 to reach an agreement on deficit reduction.

Congress must agree on a debt-reduction package by Oct. 1 to forestall across-the-board budget cuts of $100 billion that would be imposed automatically under the Gramm-Rudman balanced budget law.

Although the Gramm-Rudman law would require Congress to trim the deficit by $64 billion to avoid the automatic cuts, there is widespread expectation that the target will be lowered as part of any deficit-reduction pact.

House Speaker Thomas S. Foley (D-Wash.) and Sununu said they hope the negotiators can reach a budget accord before President Bush addresses a joint session of Congress next Tuesday, following his weekend summit meeting with Soviet President Mikhail S. Gorbachev.

Although the direct costs of the military buildup in the Persian Gulf are significant, Darman told reporters that “the potentially more significant costs are if the economy slows” in the months ahead.

“If the effect of the oil prices and if the psychological uncertainty . . . slows (economic) growth to, let’s say, the 0% to 1% range, then that would translate into a $250 billion base-line deficit,” Darman said. That figure includes next year’s share of the cost of the bailout of the troubled savings and loan industry, he said.