Early budget deal foreseen by Democrats Pact would include smaller tax rise and Medicare cuts

October 08, 1990|By Peter Osterlund | Peter Osterlund,Washington Bureau of The Sun

WASHINGTON -- Democratic leaders predicted yesterday that Congress would settle on a new budget agreement in time to avert the brunt of a full-scale shutdown of the federal government tomorrow.

The leaders predicted that the new budget plan, which would lessen the reduction in Medicare benefits and the increase in excise taxes contemplated by the budget accord unveiled last Sunday, would be ready for a House vote last night. The Senate was to take up the plan today.

"We're hopeful," said House Manority Leader Richard A. hTC Gephardt, D-Mo. "We're hopeful this will get Republican support."

But during a rare Sunday session, the communication between the two parties was mostly limited to finger-pointing for the Friday midnight shutdown of the government, which shuttered federal tourist attractions and halted all but essential weekend federal activities nationwide.

President Bush effectively directed the halt to federal activities when he announced that he would not sign a stopgap spending bill passed Friday that would have kept the government in operation for a week, during which time congressional leaders hoped to break the budget impasse.

House Speaker Thomas S. Foley, D-Wash., said President Bush's veto Saturday of the bill was "a bad mistake" that had slowed the talks. But Vice President Dan Quayle, appearing on ABC-TV's "This Week With David Brinkley" program, said Mr. Bush was not the problem, "The problem is Congress."

Mr. Quayle predicted that any new budget plan would include 90 percent of the elements built into the budget deal President Bush unsuccessfully lobbied for last week. With those changes, he said, the new plan "will ultimately pass."

"We now know what the problems were with the old one," agreed Sen. Jim Sasser, D-Tenn., chairman of the Senate Budget Committee, on the same program. "The new budget agreement in my view will address the problem of the overly large Medicare cuts . . . and also will address the revenue part of the package."

Few of those changes, it seems, will be apparent in the new spending plan, which is to include only broad spending levels, leaving it to individual congressional committees to "fill in the blanks" later. The tactic is intended to make it easier for rank-and-file lawmakers to vote for the budget plan, sparing them the prospect of voting for painful spending cuts and tax increases before they have been vetted through the regular committee process.

The budget plan, which lays out the spending and revenue outlines of the federal budget for the 7-day-old fiscal year, does not require the president's signature or approval. But it does determine the general shape of the spending and taxing bills later fashioned to implement the plan. Those bills, in turn, must bear the president's signature before they can become law.

Mr. Bush has said that he will not sign a stopgap money bill -- thus keeping the government shut down -- until Congress passes a budget to his liking.

"The deadline that we're talking about is on Tuesday morning," said Mr. Foley. On Tuesday, hundreds of thousands of workers are scheduled to return to work from the holiday weekend. Most will be sent home unless Congress and President settle on a deficit plan.

Although Mr. Bush spent Sunday conferring by telephone with his chief of staff, John H. Sununu, and Treasury Secretary Nicholas F. Brady -- part of the administration team that negotiated the defeated budget pact -- yesterday's budget talks took place among key lawmakers and staff.

According to sources close to the talks, all sides had tentatively agreed on a $500 billion, five-year package that would trim the current year's deficit by $40 billion -- the same dimensions as the package administration officials and congressional leaders shook hands on last Sunday.

But the emerging congressional package calls for $50 billion worth of savings in mandatory spending programs such as Medicare over the next five years. The original budget pact, by comparison, called for $60 billion worth of savings from the Medicare plan.

Key Democrats said that the new budget plan would suggest a $42 billion savings: $10 billion or $12 billion to come in the form of higher premiums paid by beneficiaries, $30 billion or $32 billion to come from lower payments to doctors and hospitals. Whatever the specifics of the mix, it was designed to curb opposition to the budget pact from those who argued that the $60 billion cut was too stiff.

Likewise, the emerging agreement calls for about $124 billion in new revenues over five years, as compared with the $134 billion figure cited by the original budget plan. Among the items in the original agreement likely to be modified during the committee process: a 12-cent motor fuel increase and a 2-cent tax on home heating oil.

Democrats, seeking to ensure that the new package taxes better-off individuals at a higher rate than it taxes the less-well-to-do, said that it would be likely to include an increase in the income tax levied on the highest-income wage earners from the current 28 percent to 33 percent.

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