The administration's high-powered push for new budget cuts stalled last night as top White House officials balked at a proposal by Senate Republicans to move ahead now with $163 billion in tax increases and spending cuts over the next three years.
Except for what can be cut from money bills now moving through Congress, the White House "wants to put a hold on everything" until next year, a Senate GOP source said after a two-hour meeting attended by Treasury Secretary Donald T. Regan, Office of Management and Budget Director David A. Stockman and White House chief of staff James A. Baker III.
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said that the decision now rests with President Reagan and that he hopes for an answer today.
"If the president says he'd rather wait, then we'll decide where we go," Domenici said. But then he hastily added, "Certainly we're not going to move inconsistent with the president."
This means that unless Reagan overrules his three aides, which other Senate sources said they consider unlikely, the administration's so-called "September offensive" for new austerity measures to fight burgeoning deficits will go into hibernation until at least January.
Although the administration reportedly contended it would be easier to push for changes in one big package in connection with the 1983 budget that Reagan will propose in January, some senators, including Domenici, argue that delay will only make the job harder.
The administration continued to insist yesterday that it is sticking by its September program, which included $16 billion in spending cuts and tax increases for this year as part of a three-year package of $115 billion in savings atop those that Congress approved last summer. But it also continued to send out contradictory signals.
At the White House, deputy press secretary Larry Speakes said: "We think it's essential to hold down the 1982 budget as close as we can . . . we want it the September proposal all."
But at the same time, Regan was telling reporters that the administration has indefinitely postponed plans to ask Congress for $3 billion in tax increases for 1982, which was part of the September plan. And, according to Senate sources, cuts in benefit entitlement programs also would be postponed.
Regan also predicted yesterday that the economy would be "a real downer" for the rest of 1981, helping to push the budget deficit above $60 billion. He said economic activity is likely to fall at a 3-3 1/2 percent annual rate for the last three months of the year.
Yesterday's meeting, which brought together Reagan's budgetary high command with Majority Leader Howard H. Baker Jr. (R-Tenn.) and other Senate fiscal leaders, was the latest in a series of largely fruitless efforts in the last few weeks to negotiate a compromise that Congress can pass.
There is strong resistance among House Republicans to tax increases, but Domenici and other Senate Republicans have argued that tax increases in 1983 and 1984 will be necessary to achieve spending cuts sought by the administration as well as the balanced budget that Reagan once promised.
Congressional Republican leaders have agreed that Reagan cannot expect to get all, or nearly all, of the savings he wants for this year.
Last Friday, Reagan abandoned his campaign promise for a balanced budget by 1984 but continued to threaten to veto "budget-busting" appropriations bills, leaving open the question of tax increases for future years.
At yesterday's meeting, Senate sources said the White House representatives again mentioned vetoes of money bills and even "left the door open" to veto of the huge stop-gap funding bill that Congress must pass by Nov. 20 to keep the government operating.
A veto of this so-called continuing resolution could lead to a showdown between Congress and the White House, and the senators were reported to have strongly opposed such a strategy, which could lead to temporary paralysis of most of the federal government.
However, there is pressure from other quarters for a veto strategy as the only realistic chance the administration has for getting any savings this year.
Appropriations bills now moving through Congress, which would form the basis for spending levels for a new continuing resolution, fall considerably short of Reagan's September proposal for a 12 percent across-the-board cut from spending he had advocated in his March budget.
The Senate GOP plan anticipates only $6 billion in appropriations savings this year, with $2 billion from defense and $4 billion from non-defense programs. The plan would yield $13 billion in savings if entitlement and revenue initiatives are undertaken during fiscal 1982.
With substantial entitlement cuts and tax increases primarily in 1983 and 1984, the Senate plan would produce $163 billion by 1984, including cuts of $40 billion from entitlements and revenue increases of $48 billion.
This is considerably larger than Reagan's $115 billion package and, unlike it, would produce a budget surplus by 1984, according to Senate Budget Committee estimates.