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Promises Strenuous Effort in Talks With Congress : 'Deficit Cuts Must Be Forever,' President Says

November 01, 1987|ROBERT A. ROSENBLATT | Times Staff Writer

WASHINGTON — "Deficit cuts, like diamonds, must be forever," President Reagan said Saturday as he promised a strenuous effort in his Administration's emergency budget negotiations with Congress.

Meanwhile, the first week of the budget summit ended without a definitive plan for achieving the goal of narrowing the deficit by $23 billion.

The participants, who are looking for spending cuts as a first step, maintained an air of determined optimism, however.

"I think we made progress; we're down to tough issues." Rep. William H. Gray III (D-Pa.), chairman of the House Budget Committee, said after an unusual Saturday meeting of the negotiators at the Capitol. The talks resume Monday.

Reagan eased his longstanding threat to veto a tax increase after the collapse of the stock market.

"The world is looking to Washington for leadership," Reagan said in his Saturday radio address. "So I say to the leaders in Congress: Let's roll up our sleeves, pull together. The things we want aren't all that different--a better life for all Americans."

The negotiators, 14 members of Congress and three Administration officials, have been seeking ways to restrain spending in a wide range of government programs. Medicare and farm subsidies are considered prime targets, although no final decisions have been made.

"When we cut spending, it must stay cut," Reagan said. "No coming back the next year with new programs or replacing old reductions with new increases. From now on deficit cuts, like diamonds, must be forever."

Reagan did not mention taxes, although the Democrats insist that $12 billion of the reduction must come from taxes. The House last week narrowly approved a plan with $12 billion in taxes, which the President repeatedly vowed to veto before the market plunge.

The current negotiations are aiming for a compromise budget package that can be a substitute for the House-passed version.

Since the collapse of the stock market, the Administration has softened its opposition to raising taxes. If the negotiators reach a deal, it probably will call for new revenues of $10 billion or more--approaching the Democrats' goal of $12 billion--but it is not yet clear what kind of taxation would be acceptable to the White House.

The President's budget plan proposed raising an extra $3 billion from a variety of sources, including increased fees on the coal industry to offset the cost of black lung benefits, higher taxes on hazardous-waste dumps and some funds expected to result from improved collections due to expansion of the Internal Revenue Service. How to raise another $9 billion in a manner acceptable to the President will be the subject of hard bargaining.

The budget summit is working against a deadline of Nov. 20. If by then the President and Congress have not agreed on ways to shrink the debt by $23 billion, the Gramm-Rudman budget-balancing law will force stringent, automatic cuts in both military and domestic programs. Only Social Security, veterans benefits, military pay and welfare programs would escape being scaled down.

Rep. Pat Williams (D-Mont.), in his party's response to Reagan's broadcast, said the deficit will be retired "in a manner that is balanced, moderate and that protects middle America. We want to pass a balanced approach of appropriate spending cuts and fair revenue increases which will reduce the deficit and send a firm message of reassurance."

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