Budget negotiations between the White House and Congress collapsed yesterday after an extraordinary face-to-face bargaining session between President Reagan and House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.). Congress now will try to write a budget on its own with about $75 billion in tax increases and spending cuts for next year.
"As of this point, I see no realistic possibility of a bipartisan agreement," said Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) in disclosing that Reagan and O'Neill failed to reach agreement on virtually all major items in the budget.
Baker said the Senate Budget Committee will now begin drafting an alternative to Reagan's high-deficit spending plan for the fiscal year that will begin Oct. 1, and the committee announced last night that it will begin doing so today.
O'Neill said he was directing House committees, too, to begin work on the budget, and House Budget Committee Chairman James R. Jones (D-Okla.) said his committee will start up next week.
Reagan planned to go on national television at 8 tonight to lay out his side of the controversy. Democrats promptly asked the networks for equal time.
Yesterday's three-hour meeting, held in the elaborately appointed President's Room, just off the Senate floor, was billed as a make-or-break finale to five weeks of intensive, secretive negotiations between White House aides and congressional leaders of both parties, talks that stalled earlier over taxes, Social Security and defense spending.
The negotiations were aimed at paving the way for swift congressional approval of a bipartisan alternative to Reagan's budget that would reduce the huge deficits projected for fiscal 1983 and beyond and thereby ease pressure on interest rates. Now Congress will attempt to do the job without the election-year protection of an accord on the specifics between Reagan and O'Neill.
Baker, who had warned earlier that Congress faced a "jungle of conflict" if the negotiations failed, said that guess still holds true.
According to Baker, the talks broke down after Reagan agreed to consider a 90-day delay in the effective date of the third installment of his individual income tax cut, now scheduled for July, 1983, if the Democrats would split the difference between their target figures and the Republicans' for spending cuts and tax increases. The Democrats rejected the proposal, Baker said.
However, Democrats offered a somewhat different explanation. Rep. Richard Bolling (D-Mo.), who was O'Neill's representative in the bargaining sessions, said Reagan also proposed a three-month delay in this year's cost-of-living adjustment (COLA) for Social Security and other big benefit programs, now scheduled for July.
"That, for all practical purposes, was not a deal at all," Bolling said.
White House officials said Reagan only indicated that he would consider a delay in the tax cut in the context of an overall compromise, and denied that he proposed any modification of this year's increase in Social Security benefits.
Democrats had opposed any limits on this year's COLA payments, although they indicated willingness to consider limits for future years. They also wanted substantially more of the total deficit reductions to come from tax increases and defense spending cutbacks than Reagan wanted. Reagan, in turn, wanted more of the savings to come from domestic spending than the Democrats were willing to give.
The split-the-difference proposal from Reagan on spending cuts and tax increases would have cut $28 billion from the Republicans' last offer for defense spending over the next three years and would have added $41 billion for domestic appropriations and entitlement programs over the same period, Baker said.
He also said it would have produced $122 billion in tax increases over the next three years. White House officials said the comparable figure in Reagan's original budget was $49 billion.
About all the parties agreed on was general deficit targets, according to O'Neill. The work sheet from which Reagan and O'Neill were negotiating yesterday aimed at deficits of from $105 billion to $110 billion for 1983, $83 billion to $88 billion for 1984 and $38 billion to $50 billion for 1985.
"We will try to meet those targets," Jones said.
Meeting those targets would entail tax increases and spending cuts of $72 billion to $77 billion for next year alone, according to the negotiators' assumption that the fiscal 1983 deficit would be $182 billion without any congressional action.
Democrats generally avoided direct criticism of Reagan. But at least some Republicans blamed O'Neill.
"The president is a sincere person," O'Neill said. "He truly believes his tax program is going to work. He believes his program cuts . . . are not hurting anyone out there in America . . . . We have a basic philosophical disagreement."
"We had hoped for give and take up there," said White House chief of staff James A. Baker III, who led the White House team, "and what we found was take and very little give." Reagan, he said, "held out the hand of compromise," but it was rejected.
Senate Budget Committe Chairman Pete V. Domenici (R-N.M.) said, "The president did walk the extra mile . . . . Speaker O'Neill did not want a compromise." Noting the tax and spending increases that Reagan indicated a willingness to accept yesterday, he asked, "If none of that is acceptable, what would be?"
Despite the Republican criticism of O'Neill, there was also a strong suggestion from Republicans as well as Democrats that failure was likely, if not inevitable, in light of the deep philosophical differences between the Democrats and Republicans on tax and spending policies.
"We just plain had fundamental policy differences," Bolling told reporters after the talks broke down.
Sen. Paul Laxalt (R-Nev.), who sat in on the talks as Reagan's closest friend in Congress, stressed the same point: there were "such fundamental philosophical differences that the talks may have been dead in the water from the beginning."
"I don't think anybody's to blame in a matter like this," said Sen. Baker. "I don't doubt Speaker O'Neill's dedication and conviction to his principles and certainly not the president's," he added, noting that, while "voices were raised on occasion," there was "no bitterness, no personal animosity."
So controversial was the issue of Social Security COLAs that neither side was prepared to discuss it, Baker told reporters.
The point was underscored even before the final negotiations began, when O'Neill met with some key Democratic senators and was told to "hang tough" on Social Security, one of the speaker's aides said.
But Social Security continued to be an issue after the talks ended, with Democrats accusing the White House of trying to mousetrap them into accepting Social Security cuts and Republicans accusing the Democrats of privately advancing Social Security modifications and then backing away from them.
O'Neill told reporters he had told Reagan "in no uncertain terms he Reagan was trying to set us up" on Social Security. The president denied the charge, O'Neill added.
The reluctance to move out too far ahead of the opposition continued right to the end of yesterday's negotiations between Reagan and O'Neill, also attended by about 10 other congressional leaders and top administration officials.
According to one participant, when no one seemed to want to go first in ending the talks, it was left to White House aide Baker to offer a solution. "Let's all get up together," he said. They did.