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Budget Conferees Aim at 2-Year Cuts : First Talks Held by White House, Congress Panel

October 28, 1987|JOSH GETLIN | Times Staff Writer

WASHINGTON — White House and congressional budget negotiators, saying the government should adopt a multiyear plan to reduce the nation's $148-billion deficit, held their first working session Tuesday but reported little progress beyond an agreement to tone down partisan statements and continue their meetings until they come up with a bipartisan plan.

The negotiators, mindful that Wall Street and other shaky financial markets are scrutinizing their sessions for signs of significant economic reforms, touched broadly on the deficit-cutting options available to them and agreed on "ground rules" for later discussions, according to participants in the two-hour meeting on Capitol Hill.

'No Blows Have Been Landed'

"It was a good start," said Rep. Silvio O. Conte (R-Mass.), the ranking Republican on the House Appropriations Committee. "It's like a heavyweight championship boxing match. Everybody's sparring, but no blows have been landed, which is good."

Earlier in the day, President Reagan said that he was willing to "put aside partisan rivalries" and work with congressional leaders, because "these meetings come at a critical moment. The stock market has alerted us of potential dangers on the economic horizon."

Several hours later, however, Democrats and Republicans violated the partisan truce they had pledged to maintain. Each side took political swipes at its opponents' budget-cutting plans, blaming the other for the nation's huge deficit.

Still, the two parties appeared to share some common ground. Both Democrats and Republicans said confidence would not be restored on Wall Street unless the meetings produced a long-term agreement to reduce the deficit, perhaps by as much as $50 billion over two years, according to Sen. Pete Domenici (R-N. M.), a member of the Senate Budget Committee.

Although the government is required by law to reduce the deficit by $23 billion this year, "that is probably not enough" to restore the confidence of the financial markets, he said. "We clearly should get a healthy, two-year package if we're to have any impact. That's the kind of signal they need to see from us, that we can put our financial house in order."

'Long-Range Reforms'

Sen. J. Bennett Johnston (D-La.), the ranking Democrat on the Senate Appropriations Committee, agreed, saying the meeting should produce an agreement to go beyond the $23 billion and "yield real, long-range reforms this time."

"I think Wall Street now understands the fakery that's been going on with the budget act, the way we haven't addressed the real underlying problem, and it would be a shame if we have to come back here next year and deal with the same problem all over again."

Others cautioned that the meetings should not raise too many expectations, especially that the government could cut far more than $23 billion from the deficit this year.

Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, said it would be "a terrible mistake" if the meetings raised such hopes and then failed to meet them.

'Driven by Psychology'

"It may be too much to expect, even though we should try to cut more," he added. "The problem is that this stock market, with all its problems, is being driven by psychology as much as substance. I don't want expectations to get out of hand."

Bentsen and other participants were tight-lipped about the economic reforms they planned to bring to the table. But Democrats, who have sponsored legislation in the House and Senate that would raise taxes to help reduce the deficit, said they would be opening the negotiations with those proposals.

"Sure, that's where I start from," Bentsen said. "But I'm certainly willing to listen to what the other side has to say. We're not going to insist on only one position. There will have to be some compromise."

Democrats and Republicans agreed that the meetings should produce a deficit-cutting plan that would avoid the automatic, across-the-board cuts of $23 billion from defense and domestic programs that would take place on Nov. 20 if this year's deficit reduction target is not reached. But, as before, they continued to disagree on the ingredients of such a reduction.

Last week, James C. Miller III, Reagan's budget director, indicated that the White House would consider an across-the-board freeze on spending for most federal programs. That plan was bitterly attacked by the Democratic-controlled House Budget Committee, which said it would play havoc with key domestic programs and lead to massive layoffs of military personnel.

Republicans, in turn, lashed out at Democratic-sponsored legislation, scheduled for a vote Thursday, which would raise $12 billion in new taxes. Members of the House Republican Policy Committee called the bill "an ill-timed move" that would undercut the prospects for a bipartisan compromise on the budget.

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