Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) warned yesterday that Congress faces an "absolute jungle of conflict" unless its leaders can reach a budget compromise with White House officials in a final series of talks this week.
And Sen. Edward M. Kennedy (D-Mass.) rejected any cuts in inflation adjustments for Social Security, a major deficit-reduction proposal under study by the negotiators, adding he believes that House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) shares his view.
The talks, aimed ultimately at producing an accord between President Reagan and O'Neill, resumed yesterday at the White House and are scheduled to wind up on Tuesday or perhaps later if an agreement is near.
If no compromise has been reached by late in the week, Baker has warned that Congress will begin writing its own budget, which he said yesterday could lead to "raging" fights on the House and Senate floors.
Interviewed on the television program "Face the Nation" (CBS, WDVM), Baker asserted that the "raw material is there" to produce a compromise and said the chances are "still as good as 50-50" for a compromise that would reduce fiscal 1983's budget deficit from $180 billion to less than $100 billion.
Reagan told him in a telephone conversation Saturday that he is "pleased with the progress of the negotiations so far," as Baker put it, and "wants to see them continued."
Although the president did not say he would accept tax increases or defense cuts, Baker said he is "encouraged to think" that Reagan would accept an income surtax on the wealthy as well as some reductions in the defense spending increase that the administration wants over the next three years.
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) appeared less optimistic as he arrived at the White House for yesterday's meeting. Asked if the negotiators were close to agreement, Domenici replied, "No."
Several of the participants said they did not anticipate an agreement quickly. "I hope this week, but not today," said House Budget Committee Chairman James R. Jones (D-Okla.). After the three-hour meeting, Senate Finance Committee Chairman Robert J. Dole (R-Kan.) said a compromise was still "a few days" away. "We're making headway," Dole said.
Kennedy, on "Meet the Press" (NBC, WRC), was unequivocal in his opposition to any changes in Social Security this year, reflecting mounting opposition to the idea, especially among Democratic liberals.
Kennedy said he would rule out such changes even if it meant no compromise on the budget. There are "so many other areas where there can be adjustment or change," he said, adding, "I don't hear the administration talking about closing some of the tax loopholes that they created" in last year's tax-cut legislation.
Would Democrats support some limits on Social Security even if Reagan "got out front" on the issue and "took some of the political heat for it," Kennedy was asked. No, he responded, "not on Social Security."
Explained Kennedy: "I just feel very, very strongly that people, when they pay into that system, that they are entitled . . . to receive their dollar's value . . . ."
Asked if O'Neill shared his views, Kennedy said: "I would think he would . . . share that view. He's been a strong supporter of the Social Security system."
One of the options under study calls for a 4 percent limit on cost-of-living increases for Social Security and other retirement programs over the next three years, coupled with a three-month stretch-out in payments so people would receive the increases every 15 months instead of annually.
Baker indicated last week that such a proposal, which would save $12 billion in fiscal 1983 and more in future years, may be impossible to pass. He said yesterday that he still hopes it will be part of an agreement but, if not, he said Congress should consider such a step in future years.
While appearing optimistic about getting an agreement that would satisfy Reagan, Baker said the president is strong enough politically--"strong as horseradish," as Baker put it--to do whatever he wants. "He is very strong in the country," Baker said. "I think people here in this city sort of underestimate how strong the president still is in this country."
Nonetheless, Baker, reflecting mounting impatience with the budget impasse even in the Republican-controlled Senate, has set late this week--aides say Thursday--as the deadline for a compromise agreement. May 15 is the deadline for enactment of a congressional budget, and Baker has vowed to get at least Senate action by then.
If the Senate proceeds to write its own budget, "I think we will then enter an absolute jungle of conflict," Baker said. "We will have a raging debate on the floor of the Senate and in the House of Representatives about all of these items, that is, the third year of the tax cut, about a surtax, about excises, about . . . a fuel tax or oil import fees and all the rest . . . . "
Baker's reference to the third year of the tax cut carried an implicit warning to Reagan, who is adamantly opposed to any tinkering with the third year of the tax cut scheduled for July, 1983.
House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) has said the House would vote to scuttle the 1983 tax cut, and there is reportedly growing sentiment in the Senate, even among Republicans on the Finance Committee, for such action.
But Baker denied that an income surtax of 4 percent levied on taxpayers with incomes of more than $40,000 to $50,000, which the budget negotiators are considering, is merely a "shell game" that negates the effect of the tax cut.
It would bring more "progressivity" to the tax cut while preserving savings and investment incentives for most people, he said. It would raise no more than $5 billion to $10 billion, meaning other taxes also would have to be increased to equal the more than $30 billion loss from the tax cut, he said.
Minimum tax provisions should also be strengthened to assure that the surtax actually is paid, he added.