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Congress appears headed toward tax hike, defense cuts. Bipartisan pressure put on Reagan by budgetmakers

Members of the Senate Budget Committee say they have come close to forging a federal budget proposal for fiscal 1987 that keeps both Republicans and Democrats happy -- possibly close enough to reach an agreement today or tomorow. Yet the potential for political gridlock over the budget has not disappeared. The bipartisan budget solution the Senate committee is expected to produce will almost certainly include $16 billion to $18 billion in new revenues, cuts in domestic spending, and a sharp decrease in the Reagan administration's defense requests, say Senate staff members.

President Reagan has repeatedly stated that he will not accept a tax increase or cuts in his defense requests. But some lawmakers continue to entertain the hope that the House and Senate can force a bipartisan budget on the President that includes these elements.

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At breakfast with reporters yesterday, House Budget Committee chairman William H. Gray III (D) of Pennsylvania repeated his oft-stated position that the House will not consider a tax increase unless the President supports it.

``You can't raise revenues in this town without the President,'' said Representative Gray. ``I do not plan to participate in a futile exercise in putting revenues in a budget which: (1) will not be realized and, (2) the Ways and Means Committee of the House cannot achieve because they don't have the President's support.''

The Senate Budget Committee, which voted down the Reagan budget 16 to 6 last week, has been holding public sessions this week, trying to fashion a spending plan for the fiscal year beginning Oct. 1. But the real progress has been made in private meetings between Senate Budget Committee chairman Pete V. Domenici (R) of New Mexico and ranking Democratic member Lawton Chiles of Florida, as well as in separate meetings between other committee members.

``We've been sharing numbers back and forth,'' explained Senator Chiles after a meeting Tuesday.

In past years, Senate Republicans have negotiated on the budget with the White House before going to the Democrats. That approach has often led to stalemate, a condition that especially needs to be avoided this year if Congress is going to meet deadlines set in the Gramm-Rudman budget-balancing law.

Last year's negotiations with the White House frustrated many Senate Republicans, who got White House support for a partial freeze on social security cost-of-living adjustments, only to have the Reagan administration drop its support for the proposal under pressure from House Republicans. This year has been different. ``We've got a good spirit,'' says Chiles.

While the details of the negotiations are sketchy, members indicate that, in addition to a tax increase, the committee's proposed spending plan for fiscal 1987 may call for little or no growth, after inflation, for the military. That means Senate Republicans will have broken with the administration on two of the central issues in this year's budgetmaking effort: taxes and defense spending.

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At a meeting with Republican members of the Senate Tuesday, White House budget director James C. Miller III stuck by the administration's request for an 8 percent increase in defense spending after inflation. The Republican senators responded by telling Mr. Miller that ``this just wasn't the real world,'' said Sen. Charles E. Grassley (R) of Iowa.

Senators Chiles and Domenici were still working yesterday to bridge differences of opinion between members of the Budget Committee. Domenici is reported to be pushing for a slightly higher increase in defense spending than the Democrats want. Chiles is reported to be willing to go along with levels of domestic spending cuts Domenici advocates, though other members of the committee were seeking to protect certain programs.

Democrats, who complained of being stung by the Reagan administration on taxes before, were apparently reluctant to jump on the tax increase bandwagon unless a preponderant majority of Republicans were willing to do so as well.

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