President Reagan told Republican congressional leaders yesterday that he will "vigorously" oppose the $859 billion budget compromise approved Monday night by a House-Senate conference, and key Senate GOP leaders gave the new spending plan the silent treatment.
"It doesn't control spending, it raises taxes as recovery gains force and it shortchanges our defense rebuilding," Reagan was quoted by a White House aide as telling the congressional leaders as the House and Senate prepared to vote later this week or next on the budget proposal.
"I simply must oppose it vigorously," the president said, although congressional sources said it still was not clear whether the White House would mount a full-court press against it.
Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) reserved judgment on supporting or opposing the plan, although he is known to dislike its contents.
Senate Finance Committee Chairman Robert J. Dole (R-Kan.), whose committee is required by the budget to come up with tax increases of $73 billion over the next three years, also remained silent. "He's not at all excited about it," said a Republican leadership aide.
Sources said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), one of the leaders in reaching the compromise, got little immediate response when he appealed for support in a meeting of Senate committee chairmen before an equally noncommittal Republican caucus.
In the Democratic-run House, Minority Leader Robert H. Michel (R-Ill.) said he opposed the conference report, and Republican Whip Trent Lott (R-Miss.) said the Democrats "may find it harder to pass than they expect."
At the White House meeting, Reagan also sharply criticized Democratic efforts to put a $700 limit on the 10 percent tax cut that is scheduled to take effect next month, and House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) responded with a broadside against Reagan on the issue.
Reagan called the Democrats' tax proposal "a permanent tax increase that would significantly hit millions of middle-income taxpayers, two-earner married couples and 2.4 million small businesses, including 350,000 family farms" and said: "I hope this unfairness bill will be stopped in the House."
O'Neill quickly countered that Reagan has "reserved his compassion for the 10 percent of taxpayers affected by the cap" and added: "I believe that if we are going to cut the federal deficits, we need to place at least some of the burden on those at the top."
The conference-drafted budget compromise defies Reagan on nearly all counts by proposing $12 billion in tax increases next year, cutting by half his proposed defense spending increase of 10 percent after inflation and adding about $15 billion to his proposals for domestic spending, along with an $8.5 billion "reserve" fund for recession relief.
It goes beyond setting the targets for taxes and spending by ordering congressional committees to draft legislation by July 22 to enact $73 billion in tax increases by 1986, including next year's $12 billion.
In addition, it requires legislation to impose $12.3 billion in domestic spending cuts over the same three-year period, starting with $2.8 billion next year, which is relatively modest in comparison with the big spending cuts required during the first two years of Reagan's administration.
Most of the savings would come from Medicare, a six-month delay in cost-of-living increases for federal retirees and a three-month delay (from October to January) in a 4 percent pay raise for federal workers. The Medicare savings are not supposed to come from higher fees paid by patients.
The deficit projected by the budget compromise is estimated at $170 billion to $179 billion, depending on how many of the new recession-relief programs are authorized. The programs include government jobs creation, health insurance for the unemployed, extended jobless benefits for the long-term unemployed and protections against home and farm mortgage foreclosure.
Baker's dilemma on the budget is mainly that he must choose between Reagan and one of his major committee chairmen, Domenici, a kind of choice he never likes to make. When the Senate passed its version of the budget by a one-vote margin, he voted against it but was credited by its backers with procedural moves that made it possible for the budget to pass.
An aide said yesterday that if Baker sticks with Reagan against Domenici "he won't be out there beating the sticks . . . . It's not his style."
Although Reagan is not required to sign a budget resolution, he has threatened to veto implementing tax and spending bills that he regards as excessive, regardless of the congressional plan, and lawmakers at yesterday's meeting said they left with no doubt that he would do so.
Baker predicted that Congress would uphold presidential vetoes of any spending bills that "significantly" depart from Reagan's own budget priorities. He also predicted defeat of the $700 limitation in the Senate if the House passes it and said "there is no likelihood that there will be a significant change in tax policy this year."
At the White House meeting, Office of Management and Budget Director David A. Stockman was quoted as saying, in reference to the budget, that "It appears the Congress has thrown in the towel on cutting non-defense spending."