President Reagan raised the ante in the budget debate on Capitol Hill yesterday by resuming the attack on Congress and urging that deficits be reduced by further domestic spending cuts instead of tax increases.
In a speech with a crisply confrontational tone that suggested that he eventually may simply ignore the congressional budget resolution, the president told the National Association of Home Builders:
"Yes, the deficit doctors have their scalpels out all right, but they're not poised over the budget. That's as fat as ever and getting fatter. What they're ready to operate on is your wallet."
When the Senate foundered on the budget resolution last week, several leading Republicans called on Reagan to become more involved in the process by agreeing to a tax increase. In yesterday's speech he became more involved, but in the opposite direction.
Calling on Congress to "summon the discipline needed to rein in the budget monster," Reagan said that "simply raising taxes is not the answer to our problem," and urged Congress instead to "cut irresponsible spending." He laid the blame for deficits entirely on Capitol Hill, and accused Congress of violating a pledge to cut $3 in spending for every $1 in new revenues approved in last summer's tax bill.
The Senate hopes to vote this week on a revised budget resolution likely to include not only tax increases but less for defense than Reagan wants and more domestic spending.
Administration officials said yesterday that Reagan may ignore the budget resolution when it comes out of a conference committee if it fails to dovetail with his fiscal goals. The resolution does not go to him for his signature; only subsequent appropriations and tax bills to carry it out do.
In a further sign that Reagan and Congress may be going separate ways on the budget, Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said yesterday after a meeting with other Republicans, "It seems obvious at this point that we are going to have to have a bipartisan budget" including some elements Reagan does not want.
Sen. Lowell P. Weicker Jr. (R-Conn.) said in response to Reagan's speech yesterday, "The Congress has compromised mightily already. It's time the president gets in the compromise process, not the name-calling process."
Speaking to the home builders at the Washington Hilton Hotel, Reagan did not acknowledge that his programs had contributed to deficits in the range of $200 billion a year, nor did he mention the impact of his massive defense buildup on the deficit.
Instead, Reagan warned that "deficit spending represents one of the most alarming dangers to our Republic," and said that deficits could "squeeze up interest rates like toothpaste through the tube," endangering prosperity.
"The root cause of deficits is runaway government, yet most of the deficit reduction proposals I've seen would simply raise taxes and balloon spending," Reagan said. "When you clear away the rhetoric, the issue is quite simple: deficits are the symptom--the disease is uncontrolled spending and the cause is an addiction to big government."
Referring to Congress, Reagan said, "They've got a credit card that's run out of credit, and are asking the American people to raise the limit. We must answer with one word: an overwhelming, unequivocal 'no.' "
Some administration officials have argued internally that Reagan would be better off simply vetoing appropriations bills this year than accepting compromise in the budget resolution.
"If that's what it takes, that's what it takes," White House spokesman Larry Speakes said yesterday when asked about such a scenario.
The House has passed a budget even less to Reagan's liking than the versions under consideration in the Senate, and White House officials doubt whether there is any way they could support what is likely to come out of conference.
However, some officials don't want the budget process to collapse in the Republican-controlled Senate, where Majority Leader Howard H. Baker Jr. (R-Tenn.) has expressed a determination to pass a resolution.
"It may not be the one I like, but I agree with Sen. Domenici that the budget process is urgently needed," Baker said yesterday. "If the president was any more involved in the budget process, I couldn't stand it."
In his address, Reagan attacked the House Democratic Study Group for what he said is its list of "serious alternatives" for raising taxes. As the homebuilders shouted "No! No!" Reagan read a list that included capping the mortgage interest deduction, taxing 10 percent of capital gains on home sales and eliminating capital gains treatment for timber.
"If you'd enjoy that you'd love to be hit on the head with a two-by-four," Reagan ad-libbed.
Richard P. Conlon, executive director of the liberal House study group, said Reagan was using "deliberate distortions." He said the list of tax increases was offered during the House budget debate two months ago as options to limiting the Reagan tax cut, and the group had endorsed none of them.
Reagan also announced in his speech that he will ask Congress soon to approve another $5 billion for FHA mortgage insurance for 1983. He said Congress approved a $6.1 billion increase he proposed in December.
After an hour-long meeting with half his Republican colleagues on the Budget Committee, Domenici told reporters that the committee is likely to approve "something close" to the tax increases that were part of a budget alternative supported by a bipartisan coalition of Democrats and moderate Republicans on the Senate floor last week.
That alternative, rejected 53 to 46, called for increases of $9 billion in 1984, $14 billion in 1985 and $51 billion in 1986, and proposed action this year to implement the increases.
Reagan has called for a total of about $8 billion for the first two years and has proposed that any 1986 tax increase be made contingent on several factors, including enactment of his recommended domestic spending cuts.
The committee also reportedly is considering going beyond the 5 percent after-inflation increase in defense spending that it originally proposed, but sources said it probably would not go beyond 7 percent. Reagan originally asked for 10 percent.
In a gesture of bipartisanship, Democrats as well as Republicans agreed to give Domenici an additional day, until Wednesday, to redraft the budget. Domenici has scheduled a major campaign fund-raising event in New York tonight. The budget would reach the Senate floor again on Thursday.