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Inside view of Congress's budget conference. Negotiators agreed there was a crisis, but that's where accord stopped

Imagine a big family sitting around a kitchen table and planning all its activities for the coming year. Now multiply its decisions by several thousand, and the result is approximately the task facing House and Senate budgetmakers.

The two sides took their positions late last week in an elegant wood-paneled room of the United States Capitol. After an earlier blowup, the lawmakers returned to try to break the budget logjam. At the long table a line of senators stared across at their counterparts from the House.

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Looking down on all was a portrait of former Sen. Mike Mansfield, majority leader when the federal budget deficit was often less than $10 billion a year. Now the red ink has reached $214 billion and is rising.

Negotiators for both sides agree the problem has reached a crisis, but that's where the accord stops.

``You're dealing with all of the priorities of America in one vote, in one package,'' said House Budget Committee chairman William E. Gray III earlier in the day, when asked why the budget process is so difficult.

The unflappable Representative Gray, a Pennsylvania Democrat, is leading his committee into conference for the first time. He displays supreme self-assurance and the speaking skills of the Baptist preacher that he is.

Across from him, the earnest and solemn Sen. Pete V. Domenici, a veteran chairman of the Senate Budget Committee, presides over the House-Senate budget conference. The New Mexico Republican appears to be carrying the weight of the budget deficit on his shoulders.

``It's imperative that if there is some ray of hope that we proceed,'' said Senator Domenici, who only two days earlier had broken off talks when the House refused to accept a Senate plan to freeze social security benefits.

Into the short meeting, their last before the July 4 break, the negotiators crammed every major controversy. While they reached no agreement, they raised the problem issues, political and substantive, to the surface.

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The budget conference circled around social security, proving again that most members of Congress see the issue as something akin to a skillet full of hot grease. The program, which is one-fifth of the nearly $1 trillion federal budget, is so big that a small cut would yield big savings. It would also risk offending 36 million recipients.

Conference leaders handled the issue cautiously.

``This offer didn't come from any senator,'' said Domenici as he pointed to a suggestion by House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts that wealthier social security recipients pay more taxes on their benefits. The Republican had latched onto the proposal as a way out of the budget impasse.

House Democrats could not retreat fast enough from the O'Neill idea, however. ``It's inaccurate to describe the Speaker's comments as a proposal,'' demurred Gray.

``He didn't offer this to break a logjam but rather to express his own philosophical view,'' hastened House majority leader Jim Wright (D) of Texas.

``If we listened to everything the Speaker said, we'd believe the Red Sox were the best team in baseball,'' said Rep. Thomas Downey (D) of New York, a Yankees fan.

Chairman Domenici, after seeing the GOP Senate battered because of its proposed freeze on social security cost-of-living adjustments, saw a tiny moral victory. ``It appears that there's a rather rapid running away'' by Democrats from the Speaker's comments, he said.

But within minutes, Domenici backed away from a proposal from his own side. A hastily prepared plan, formed in part by Sen. Slade Gorton (R) of Oregon and Sen. Rudy Boschwitz (R) of Minnesota during a morning exercise run together, would raise taxes by $59 billion over three years to help balance the budget.

The forbidden words ``tax increase'' have been voiced repeatedly in Washington, by Republicans and Democrats in Congress and by David A. Stockman, the President's budget director, as a warning. But virtually no one in the capital believes a tax hike can be enacted without support from Mr. Reagan, who remains firmly opposed.

``The chairman does not support'' the plan, Domenici told the conference after Senator Gorton described a budget that would both freeze social security and raise taxes to bring down the deficit. Domenici said that without support from the President and the Speaker, a plan to raise taxes lacks ``political muscle.''

Democratic House members were equally wary of the tax increase. Such a plan would ``signal the death to the President's tax reform,'' charged Representative Downey, who is a member of the House tax-writing Ways and Means Committee. That committee could not raise taxes and reform them in the same year, he said.

Gray agreed to study the proposal, offered by three Senate Democrats and three Republicans as a way to restart the budget talks. But he took care not to put House fingerprints on it. ``You are proposing a new direction,'' he said, reminding the senators that they had just offered a budget with the two riskiest plans, freezing social security and raising taxes.

The conference ended. Members left with a promise to meet again after the week-long recess. Efforts to resolve publicly aired problems moved to private talks.

Speaker O'Neill and Senate majority leader Robert J. Dole (R) of Kansas met to discuss a compromise on social security that would include taxing benefits and bringing state and local workers into the program. Domenici has dropped his insistence that the cost-of-living adjustment be reduced.

Leaders of both Houses have been willing to move closer on the defense budget, despite an earlier vow by Domenici to stick to the Senate's higher figure. And both sides have been flexible on domestic programs.

The congressional recess may offer just the necessary breather before the budgetmakers gather around the confence table again.

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