President Reagan gave a broad signal yesterday that he would be willing to accept an income tax surcharge as part of a budget compromise if it is contained in what aides called "a balanced program" to reduce the deficit.
The 4 percent surcharge is one of the major provisions of the compromise under consideration. Though the president did not specifically endorse it during a nine-minute meeting with reporters in the White House Rose Garden, he said he would look at the surtax or any other proposal presented to him by congressional leaders and administration officials who are discussing an involved compromise. The proposal includes a surcharge, a possible oil import fee and a broad assortment of possible spending cuts, including curtailment of this year's cost-of-living increases in Social Security and other basic benefit programs.
Reagan said he would stay "on the sidelines" until a package the congressional leaders believe has a reasonable chance for success could be negotiated. But he also said that those involved in the discussions, which Reagan pointedly refused to call "negotiations," were "coming close" to agreement.
"I understand they're reasonably optimistic with the discussions that have been going on," Reagan said.
Reagan's comments came as Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) warned that the Senate Budget Committee will begin drafting a budget of its own "sometime next week" if the White House and congressional negotiators have not produced a compromise by then.
Although Baker as recently as last week agreed to a budget-drafting delay at Reagan's request, he said the Senate is "really approaching our own practical deadline," and said that it intends to approve a budget resolution by May 15, the date by which, under law, it is supposed to act.
The president said he would not comment on any specific proposals until an entire program is before him. But aides made it clear that the president isn't taking an advance view that the income tax surcharge, which in some versions would be levied only on upper-income taxpayers, would violate his pledge for a 10 percent tax reduction in July and again next year.
"The third year of the tax cut, the defense cuts, other budget cuts are part of his principles," said White House deputy press secretary Larry Speakes. "As far as any of the specifics, like the surcharge and the oil import charge and all that, he's just not signing off, one by one, on them. It's got to be part of a balanced package that has acceptability on a bipartisan basis."
Since House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) has insisted on some modification of the tax cut as a condition of support, this means that such a "balanced package" would be almost certain to contain a surcharge. Reagan repeatedly has said that he will not accept changes in the scheduled tax reduction.
Baker's vow to get some kind of budget action by next week reflected mounting congressional frustration over the delay in reaching a compromise. Republicans on the Senate Budget Committee were reported to have pushed hard for swift action in a caucus late Tuesday, and Budget Committee Chairman Pete V. Domenici (R-N.M.) was described by aides as ready to move.
But Senate Finance Committee Chairman Robert J. Dole (R-Kan.) said after meeting with Reagan at a bill-signing ceremony yesterday that he was "encouraged that the president has endorsed our recent efforts to put together a compromise budget package." He said, "The president told me that we should 'keep it up' and that it is worth the effort."
Congressional sources close to the negotiations, which were suspended Tuesday and are expected to resume Sunday or Monday, have indicated that there is about a 50-50 chance of success.
In addition to Democrats' reluctance to go along with spending cuts unless Reagan bends on taxes, "a heavy load of issues" remains to be resolved, according to an aide to one participant. "They're dealing with what amounts to a whole budget. It's just not that easy," the aide said.
In conversations with reporters, Baker acknowledged that he and other Senate Republicans would be straying from the presidential fold if they moved out on their own on the budget, although he shied from suggestions that this would amount to "breaking with the president." But he acknowledged that he would be "on my own" if the Senate moved ahead independently on the budget.