Congress faces mass of details in next 10 days

October 10, 1990|By Peter Osterlund | Peter Osterlund,Washington Bureau of The Sun

WASHINGTON -- Now comes the hard part.

After nearly six months of tortuous negotiation, lawmakers have signed off on a broad spending plan that purports to slash $500 billion off the federal budget deficit during the next five years. But they have given themselves just 10 days to write in the thousands of details needed to make the plan a reality.

"It's going to be murder," said Representative Robert T. Matsui, D-Calif., a member of the tax-writing House Ways and Means Committee.

Yesterday, as lawmakers contemplated the deadline they put before themselves, the Ways and Means panel and its counterpart on the other side of Capitol Hill, the Senate Finance Committee, began to meet behind closed doors to try to figure out just what some of those specifics might be.

Throughout the day, the reports trickled out. A two-penny tax on home heating oil and a two-week delay in unemployment benefits -- deficit-cutting proposals from the now-defunct budget summit agreement -- will probably not become law. The $60 billion in Medicare cuts advanced by the original budget accord will almost certainly be scaled back to a reduction in the neighborhood of $40 billion to $45 billion.

Higher "sin" taxes on beer, wine, liquor and cigarettes appear inevitable, although the actual increases may differ from those proposed in the summit agreement. A 10 percent tax on high-priced luxury goods such as yachts, furs and jewelry looks as if it will survive the collapse of the original compromise plan. Gasoline taxes appear certain to jump from the current 9 cents-a-gallon rate, but not by the 12-cent increment originally suggested by congressional and White House negotiators.

Senate Finance Committee staff aides said yesterday that the panel's chairman, Sen. Lloyd Bentsen, D-Texas, would endorse a doubling of the current tax on gasoline, something of a concession from a lawmaker who had opposed a gasoline tax rise in favor of an oil import fee, which would have provided a windfall for Texas oil producers.

Committee aides also said the chairman would support a cut in the tax levied on capital gains, currently taxed at the same rate as earned income, in exchange for an increase in the tax rate imposed on the highest income earners.

Mr. Bentsen would increase the income tax paid by individuals earning over $113,640 a year and couples earning in excess of $217,510 annually from 28 percent to 33 percent. That rise, projected to affect600,000 taxpayers and add more than $40 billion to federal coffers over five years, would be coupled with a reduction to 19.6 percent in the tax rate imposed on income derived from the sale of such assets as stocks, bonds and real estate.

It was not clear whether that pairing would meet with the approval of the White House, not to mention congressional Republicans. Until yesterday, President Bush had long maintained steady public opposition to an increase in income tax rates, although his negotiators did advance a proposal to raise upper-income taxes in exchange for a capital gains tax cut toward the end of the budget summit talks. Republicans in Congress have maintained similarly staunch opposition to income tax increases.

But last week, in a closed meeting of House Republicans, two-thirds of those present voted in a straw poll to support an increase in high-end income taxes in exchange for a cut in the capital gains tax.

And yesterday, the president said publicly for the first time that he could support such a trade-off.

But later in the day, Sen. Bob Packwood, R-Ore., emerged from a White House meeting with Mr. Bush and key congressional Republicans saying that "our uniform position was that we will not go up on the [income tax] rates, no matter what." On Capitol Hill, meanwhile, White House lobbyists put out the word that the significance of the president's remarks had somehow been exaggerated by the news media.

Whatever the truth, it is supposed to be hammered into legislation by Oct. 19, at which point another shutdown of the federal government is threatened if Congress and the president have not settled on the fine points of the budget plan. Those fine points are to be put into writing by more than a dozen congressional committees, populated with lawmakers whose nerves have been rubbed raw by the budgetary clashes of the past few weeks.

The task before them promises to stretch patience further. The new plan requires lawmakers to assign cuts to specific programs, a grim task in the best of times. Agriculture, for example, stands to lose $13 billion over the next five years; federal retirees have been targeted for an $8 billion reduction; and the Guaranteed Student Loan program appears headed for $2 billion in cuts.

Then there's the defense budget. The budget pact, which would trim $40.1 billion out of the current fiscal year's deficit, called for a $10 billion reduction in this year's military allowance, bringing defense spending to about $296 billion. But liberals have said they would like to pare the Pentagon's budget further.

Yesterday, the House Appropriations Committee approved a $297 billion defense bill that would eliminate 77,000 troops and slash Mr. Bush's request for strategic weapons.

"As it sits here today, it's veto bait," said Representative Joseph M. McDade of Pennsylvania, ranking GOP member of the Appropriations subcommittee on defense.

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