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Savings in Medicare, Veterans' Benefits Studied : Budget Talks Focusing on Entitlements

November 02, 1987|ROBERT ROSENBLATT | Times Staff Writer

WASHINGTON — White House and congressional budget negotiators are looking hard for possible savings in Medicare, veterans' benefits, food stamps and other government entitlement programs, sources said Sunday.

Benefits in these areas once were thought to be politically untouchable but they are being reviewed now as negotiators search for a $23-billion package of budget savings that would send a reassuring message to U.S. financial markets.

Also under discussion are possible changes in cost-of-living increases for both active and retired civilian and military personnel.

No Firm Accord Yet

But there is no firm agreement yet on a package mutually acceptable to the Reagan Administration and the Democrats who control both houses of Congress, according to informed officials who asked not to be quoted by name.

"Everything is in a very preliminary stage," a knowledgeable source said. "There is no detailed message to take to the White House from the conference."

Another official said: "They're not really that close to a deal."

President Reagan will meet today with the congressional leadership to discuss the progress of the talks, which have focused thus far on spending reductions. The Democratic leaders will seek more assurances from Reagan that he will accept significant tax increases as part of a deficit-reduction deal.

The President has said that everything is negotiable, but in his radio talk on Saturday he referred only to the need for spending cuts without mentioning new taxes. The Democrats want taxes to supply $12 billion of the $23 billion sought for reducing the deficit.

All parties agree that the individual rate cuts in the 1986 tax reform act should not be altered.

Congress Acts on Taxes

Last week the House approved a tax program that includes extension of the 3% telephone tax; limits on home mortgage deductions to interest on loans of less than $1 million and changes in estate taxes. The Senate Finance Committee approved a $12-billion plan of its own, but with differences from the House bill.

"We're giving the Administration a choice of taxes, since they say taxes are negotiable," one congressional official said. "But we haven't heard anything specific back from the White House."

The negotiators have completed a week of discussions. If Congress and the President fail to agree on a budget package by Nov. 20, the Gramm-Rudman balanced-budget law will take effect, mandating across-the-board cuts in both military and domestic programs--cuts that both the White House and Congress want to avoid.

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