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Reagan Urged to Join Deficit Talks : President Rejects Call by Dole and Democrats to Push Stalled Conference

November 05, 1987|KAREN TUMULTY | Times Staff Writer

WASHINGTON — Senate Republican leader Bob Dole (R-Kan.), joining top Democratic lawmakers in calling for President Reagan to play a more active role in the deadlocked deficit-reduction negotiations, said Wednesday that Reagan should convene the negotiators at the White House to show "a willingness to do what we need to do . . . to face up to one of the tough issues of our time."

"Unless we take some action soon, there is going to be a feeling, on Wall Street and around the world, that we are not going to come to grips with this very serious problem," Dole said.

But the White House rejected Dole's appeal. Reagan plans to meet with negotiators only when they are "close to achieving results," White House spokesman Marlin Fitzwater said. And Reagan himself, rebuffing the Democrats specifically, said they are just "looking for excuses for having created all these deficits."

An Ominous Turn

The exchange underlines an ominous turn in the effort to stave off a larger economic crisis: For world financial markets, action on the deficit is becoming a litmus test of Washington's ability to shake off years of paralysis and deal with its economic problems. Yet as stalemate continues between the White House and Congress, the possibility is growing that instead of compromising, both sides will let the automatic spending cuts decreed by the Gramm-Rudman deficit reduction law take effect in two weeks.

In the wake of the stock market crash, with its suggestion that a wider economic debacle could lie ahead, the size of the current deficit reduction package has come to be considered less important than the way it is achieved. No one expects reductions to be significantly larger than those mandated by Gramm-Rudman, some $23 billion in the current fiscal year, which began Oct. 1.

But a failure of Congress and the President to agree on their own package of spending cuts and higher revenues could be taken as a destabilizing signal that the government cannot deal with the problem, many analysts say.

Such a move "would say to the financial community that Washington is unwilling to run the ship, that we're willing to let the ship take its course with no captain," warned Rep. Tony Coelho (D-Merced), the House assistant majority leader. "Wall Street tried to use a sledgehammer (when the stock market plunged) a week ago Monday, but that didn't wake anybody up."

When the Gramm-Rudman law was originally passed in 1985, the prospect of automatic cuts was viewed as the ultimate horror--scary enough, it was widely believed, to force the President and members of Congress to put aside their differences and agree on taxation and spending priorities.

Now, as negotiators make only limited progress toward agreement, some in Congress are almost welcoming the mechanism as a way out of their difficulties. The automatic cuts, scheduled to be implemented on Nov. 20, would take the problem out of politicians' hands and assure $23 billion in spending cuts according to a formula that would divide the reductions equally between defense and domestic programs.

'Dangers and Attractions'

"They are like a siren's song. There are all kinds of dangers and attractions at the same time," said Rep. Leon E. Panetta (D-Monterey), one of the House negotiators. "There are these hidden attractions, but my gut view is that if (the cuts go) into effect, it will be a reflection of a failure by Congress to agree on priorities."

"A week ago I would have said we will come to some consensus to avoid the (cuts). Now I am not at all confident that that's the case," said Sen. Pete Wilson (R-Calif.). "Right now, it's beginning to look more and more to me like we will get the (automatic reductions)."

"You know what's good about (letting the law take effect)? It's real cuts. . . . Republicans would go along with it even though it hits defense," said Rep. Trent Lott (R-Miss.), a House negotiator who has been one of the Adminstration's strongest allies in arguing for further domestic spending reductions instead of cuts in the Pentagon's budget.

'Some Small Progress'

House Budget Committee Chairman William H. Gray III (D-Pa.) noted after Wednesday's private talks that the negotiators are making "some small progress" in their discussions of where to cut spending. But he acknowledged that in their second week of bargaining, the two sides remain "a long way from wrapping up any package."

Gray added that negotiators have only a few days left to make a deal.

House Majority Leader Thomas S. Foley (D-Wash.) told reporters that negotiators have tentatively decided that spending cuts should equal revenue increases.

However, they continue to disagree over the trickier issues of balancing the cuts between military and domestic programs and of deciding how much of the additional revenues should come from taxes and how much from such things as special user fees or the sale of federal assets. Both sides also remain leery of tampering with such expensive but popular programs as Social Security and other entitlements.

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