Struggling budget negotiators appear closer to an agreement

September 10, 1990|By Los Angeles Times

ANDREWS AIR FORCE BASE -- Democratic and Republican negotiators, struggling to overcome their long-standing budget differences, appear to be moving closer to an agreement that would make a significant dent in the federal deficit.

"They are narrowing the gap," said one official close to the negotiations. "There's a long way to go and it could still all fall apart, but I see grounds for optimism."

In a hint of a possible breakthrough, President Bush invited the negotiators to the White House for a meeting today.

Officials said the session could be canceled unless they had significant progress to report.

Budget bargainers -- including White House budget director Richard G. Darman, Secretary of the Treasury Nicholas F. Brady and more than a dozen lawmakers from both parties -- have set a target of cutting spending and raising taxes by enough to slash the fiscal 1991 deficit by $50 billion and to save roughly $500 billion over the next five years.

As administration officials and congressional leaders entered the third straight day of almost non-stop meetings yesterday, it was not clear whether they could achieve such an ambitious goal.

In a day of intense back-and-forth bargaining, Democrats were moving closer to the GOP position that the Pentagon budget should not be hacked abruptly during the current Persian Gulf crisis, sources said.

Democrats had originally proposed as much as $15 billion in military cuts next year, while Republicans wanted to hold the reductions to about $4 billion. Both sides, however, were still looking at ways to achieve substantial military cuts over the next few years.

Meanwhile, according to aides who spoke only on condition that they not be identified, the two parties were looking at about $10 billion in cuts from benefit programs such as Medicare and farm subsidies.

When the talks began Friday, Republicans proposed more than $15 billion in such cuts, while Democrats suggested reductions limited to just more than $7 billion.

Lawmakers, however, were having difficulty working out ways to satisfy White House demands that any budget agreement must include mechanisms to ensure that it can be enforced over a five-year period.

As negotiators continued to work into the evening, other major hurdles also remained.

Without an agreement, the deficit for the fiscal year that begins on Oct. 1 is expected to soar to as much as $250 billion.

Both parties have proposed raising taxes and fees by roughly the same $25 billion next year, but they continued to have widely different ideas about how to hit that target.

Democrats favor raising income tax rates for the wealthy to go along with boosts in taxes on alcoholic beverages, tobacco and energy consumption, while Republicans proposed a variety of revenue raisers, including tax increases for wine and beer and limits on state and local tax deductions.

They also insisted that a cut in taxes on capital gains must be part of any package.

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